Your best friend is the person you’re looking for if you want to share a secret.
You tell your secrets to your best friend because you trust them. When you trust someone, you automatically set high expectations for that person. This is the nature of trust in social terms.
In the financial markets, trust is seen in promoters who have a large stake in their company. Possession of the promoter is a sign of trust.
Imagine, a company is trusted by its promoters (high promoter holding), it has huge growth potential (it’s a small cap) and it has delivered a multi-bagger return!
It would be rare, right?
So in this article we are talking about these rare stocks.
This article could be your answer to how to invest in multibagger stocks that are also fundamentally strong. A high promoter position is one of the hallmarks of fundamentally strong stocks.
Read to know which 5 small cap, multibagger stocks have a high promoter position.
#1 Adani Power
First on our list is Adani Power, one of Adani Group’s lesser known star players.
Adani Power is an Indian power and energy company, a subsidiary of Indian conglomerate Adani Group headquartered in Khodiyar in Ahmedabad, Gujarat.
It is a private heat producer with a capacity of 12,450 MW. It also operates a 40 MW mega solar installation in Naliya, Bitta, Kutch, Gujarat.
Promoters have a high stake in Adani Power. As of September 2020, promoters have retained a nearly 75% stake in the company.
Of the 75% held, 46% shares are owned by Indian promoters and 29% shares are owned by foreign promoters.
How has the company’s stock performed on exchanges?
Adani Power’s investors are a happy couple. In the past year, Adani Power’s share price has increased by 310%.
This means that if you had invested Rs 1 million in Adani Power a year ago, you would have Rs 3.1 million today!
The stock behaved in a series tied pattern until February 2022. After that, Adani Power shares recovered like there is no tomorrow.
In its latest quarterly results, Adani Power reported a 16-fold increase in consolidated profit at Rs 47.8 billion, supported by healthy sales and other revenues.
Consolidated operating income increased by 109% year-on-year to Rs 137.2 billion.
Adani Power is in the spotlight due to the increasing interest in renewable energy shares. The company is one of the top renewable energy stocks in India.
#2 International BLS Services
BLS International Services is an Indian outsourcing services provider for government and diplomatic missions around the world.
The company manages visas, passports, consular services, attestation and civilian services for governments and diplomatic missions of clients in Asia, Africa, Europe, South America, North America and the Middle East.
It also provides civilian services to state and provincial governments.
Promoters have a large share in BLS International Services. In December, promoters had retained a high stake of 74.4% in the company. In June 2021, their total stake rose to 74.6%.
As of June 30, 2022, the total interest of promoters is 74.6%. All shares are held by Indian promoters.
So, how has BLS International Services stock performed on the stock exchanges?
In 2022, BLS International Services has increased by 144%. In the past year, the company’s shares have risen by 50%.
Recently, the company announced that it has partnered with UTI Infrastructure Technology and Services (UTIITSL) to support e-Card printing services for the Government of India.
The company is now officially a PMJAY service agent.
It is also authorized by the Royal Thai Embassy to provide visa services in Chennai.
The company will provide Thai visa application services. It will also provide various value-added services such as form-filling assistance, SMS tracking, photocopying and printing, travel insurance and courier services.
#3 Gujarat Mineral Development Corporation
Gujarat Mineral Development Corporation (GMDC) is a large Indian state-owned mineral and lignite mining company based in Ahmedabad.
GMDC was founded in 1963. Its product range includes essential energy minerals such as lignite, base metals and industrial minerals such as bauxite and fluorspar.
Promoters have a high share of GMDC. They have had a 74% stake in the company for a long time. All shares are held by Indian promoters.
How has the stock performed on the stock markets lately?
GMDC’s investors roll in money. In the past year, GMDC’s stock price rose 170%. This means that if you had invested Rs 1 million in GMDC a year ago, today you have Rs 1.7 million!
For the March 2022 quarter, the miner reported a net profit of Rs 1.7 billion. The company had recorded a consolidated loss of Rs 1.8 billion last year.
This was the result of an increase in revenues. The company’s consolidated income rose to Rs 11 billion, from Rs 6.1 billion in the same period a year ago.
#4 Bharat Dynamics
Bharat Dynamics (BDL) is one of the Indian manufacturers of ammunition and missile systems. It was established in 1970 in Hyderabad, Telangana, India.
Founded as a manufacturing base for guided weapons systems, BDL started with a pool of engineers from India’s munitions factories, the DRDO and the aerospace industry. It began with the production of a first-generation anti-tank guided missile – the French SS11B1.
Promoters have a high stake in BDL. They have had a 74.9% stake in the company for a long time. All shares are held by Indian promoters.
How has Bharat Dynamics stock performed on exchanges?
Patience bears sweet fruit. The investors of Bharat Dynamics know this all too well.
Until February 2022, the BDL share price was range-bound. However, the share price rose after February 2022.
The share of BDL rose by 136% in the past year. On a YTD basis, the share price is up 126%. This is only 10% less than the increase for the whole year.
The company recently received an order of Rs 29.7 billion from the Ministry of Defense.
The contract concerns the supply of ASTRA MK – I Beyond Visual Range air-to-air missile and related equipment to the Air Force and Indian Navy.
#5 Schaeffler India
Schaeffler India, formerly known as FAG Bearings India, is one of the leading manufacturers of ball and roller bearings in India, serving the automotive and multiple industrial core segments.
The company serves all major industry segments including construction, machinery, electrical engineering, fluid technology, etc.
Promoters have a large stake in Schaeffler India. They have had a 74.1% stake in the company for a long time. All shares are held by foreign promoters.
So, how have Schaeffler India’s shares performed on the stock exchanges?
The share price of Schaeffler India has risen on the stock exchanges. In the past 1 year, the share price has increased by 122%. On a YTD basis, the share price is up 69%.
Earlier this month, Schaeffler India opened its largest consolidation and distribution center in Housr. The warehouse extends over an area of 100,000 square meters and is Schaeffler’s largest external warehouse in the Asia-Pacific region.
A stock investor should be very careful. In the stock markets, the advantages can turn around and become disadvantages at any time.
Small cap stocks offer high and fast returns because small cap companies have a high growth rate. But these small-cap stocks also carry a high level of risk.
A high promoter holding indicates the promoter’s confidence in the company.
Therefore, an investor should be careful about red flags in stock, but she also should not be careless about missing the stock’s green flags.
Keep an eye on Equitymaster to learn more about the green flags and red flags of various stocks.
Have fun investing!
Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.
This article is from Equitymaster.com