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Top five small-cap stocks below ₹200 with a low-debt

Upstox
By Upstox News Desk

5 min read | Updated on May 14, 2024, 18:43 IST

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SUMMARY

Let's look at 5 small-cap companies trading at less than ₹200, and are backed by high sales growth, low debt, high profit and ROE.

Stock list

AEROFLEX
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LLOYDSENGG
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FOCUS
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Small cap stocks.jpg

Small-cap stocks below ₹200 with a low-debt

As we all know, stocks with low debt levels are much safer than those with high debt levels. This stands critical, especially when the market turns volatile, as these stocks have lower interest expenses and hence a higher probability to give out profit as dividends. They also have higher credit ratings. If the debt levels are lower, then the company is much more financially flexible during downturns and can also add debt for expansion or strategic acquisitions.

If you're searching for small companies with great growth potential, focus on those with high Return on Equity (ROE) and low debt. ROE is determined by three things: Net profit margins, Asset turnover, and Leverage.

Why low debt and high ROE?

When a company has low debt, it means that its value for shareholders comes mainly from how well it uses its assets (Asset turnover) and how much profit it makes from its sales (Net profit margins). This kind of ROE is more likely to last over time compared to ROE based on borrowing money.

Let's look at 5 small-cap companies trading at less than ₹200, with high sales growth, low debt, high-profit growth, and high ROE:

As of 14th May, 2024
Sr NoNameCMP (Rs)MCap (Rs Crore)P/E (x)NPM last year (%)Sales growth (%)D/ESales growth (3Y) %Profit growth 5(Y) %Avg ROE (3Y) %
1Avantel1102,6674825450.1424233.3
2KMC Speciality881,4414717180.5173227.2
3Aeroflex1411,8234313180304327.0
4Lloyds Engineering616,93886131000.21079421.9
5Focus Lighting1531,0143013260193019.5
Source: screener

1. Avantel (CMP: ₹110)

Avantel, established in 1990, provides telecom products and software solutions. They focus on creating products using advanced wireless and satellite technologies for high-speed internet and communication. They use both standard and custom software tools for designing, developing, and integrating their products.

The company's profit margin is 25% with very low debt compared to its equity (0.1). It has been growing its sales at an average rate of 42% each year for the past 3 years, and its Return on Equity (ROE) over the same period has been 33.3%. The current market value of the company is ₹2,667 crore.

2. KMC Speciality (CMP: ₹88)

Established in 1982, KMC Speciality Hospitals (India) operates a multi-specialty hospital in Trichy, focusing on healthcare. It is part of the Kauvery Hospitals group, primarily providing medical services and healthcare. KMC Speciality Hospitals has an outpatient department exclusively like a Coronary artery disease clinic, Pediatric Cardiology, Vascular Heart disease clinic, Arrhythmia Clinic, and Cardiovascular surgery department.

The company makes 17% profit on its sales and has a debt-to-equity ratio of 0.5. Its sales have been increasing by an average of 17% per year for the past 3 years, and its Return on Equity (ROE) during this time has been 27.2%. The current market value of the company is ₹1,441 crore.

3. Aeroflex (CMP: ₹141)

Established in 1993, Aeroflex Industries Limited produces and supplies environmentally friendly metallic flexible flow solution products. They cater to global as well as domestic markets. It exports its products to many countries including Europe, the USA and others.

The company makes a 13% profit on its sales and has no debt. Its sales have been increasing by an average of 30% per year for the past 3 years, and its Return on Equity (ROE) during this time has been 27%. The current market value of the company is ₹1,823 crore.

4. Lloyds Engineering (CMP: ₹61)

Founded in 1974, Lloyds Steels Industries mainly designs, manufactures, and sets up heavy equipment, machinery, and systems for industries like oil and gas, steel plants, power plants, nuclear plant boilers, and complete projects.

The company earns a 13% profit on its sales and has a low debt compared to its equity, with a debt-to-equity ratio of 0.2. Its sales have been growing rapidly at 107% per year for the past 3 years, and its Return on Equity (ROE) during this time has been 22%. The current market value of the company is ₹6,938 crore.

5. Focus Lighting (CMP: ₹153)

Established in 2005, Focus Lighting & Fixtures Limited manufactures and trades innovative LED lights and fixtures. They offer a variety of products for retail, office, home, hospitality, and infrastructure lighting, including cabinet lights, Dione Cove, EOS, lightning systems, pendants, recessed, semi-recessed, surface, track, and trimless lighting. The new range of luminaires has been designed and developed by the finest product designers from Germany, proficient in the field of lighting design; supported by a proficient team of Indian Professionals.

The company makes a 13% profit on its sales and has no debt. Its sales have been growing at 19% per year for the past 3 years, and its Return on Equity (ROE) during this time has been 19.5%. The current market value of the company is ₹1,014 crore.

(Disclaimer: All the stocks discussed above are given for educational purposes only. Kindly consult your financial advisor before making any financial decision.)
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About The Author

Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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