It is very common in the Indian investment communities to associate most microcap stocks with myths that limit the interest of many retail investors in them. The most common one is that these stocks are more volatile and riskier than larger companies. Hence, investors perceive these stocks as speculative ideas with poor fundamentals as compared to blue-chip or midcap multibaggers.
This perspective fundamentally ignores their opportunity microcaps carry of generating tremendous returns. Many microcap stocks just win quietly, achieving respectable financials without catching the eye of most investors. Of course, it is a risky idea to invest in microcaps and there are many of examples of unsuccessful stocks, but it is not correct to categorize all microcaps as unreliable when many can potentially build wealth for their investors.
Here are two such microcap stocks that still haven’t caught the eyes of many investors but are silently going for the kill when it comes to making operating profits and profits in the money invested as capital.
Jyoti Resins and Adhesives Ltd
Incorporated in 1993, Jyoti Resins and Adhesives Ltd is a manufacturer of synthetic resin adhesives and various types of wood adhesives (white glue), under the brand name of EURO7000, which was launched in 2006.
With a market cap of Rs 1,525 cr, the company’s brand Euro7000 is the 2nd largest wood adhesive white glue brand in India in the retail segment.
The company’s current ROCE (Return on Capital Employed) is 50%, higher than the industry median of 15%. Which in simple words means that on every Rs 100 the company spends as capital for the business, it makes a profit of Rs 50.
The sales for Jyoti Resins have grown at a compound rate of 31% from Rs 74 cr in FY20 to Rs 284 cr in FY25.
The EBITDA (earnings before interest, taxes, depreciation, and amortization) for Jyoti Resins has also grown from Rs 62 cr in FY20 to Rs 195 cr in FY25, logging in a compound growth of about 26%.
Talking about the net profits, Jyoti Resins has seen a compounded growth of 56% as the profits went from Rs 8 cr in FY20 to Rs 74 in FY25.
The share price of Jyoti Resins and Adhesives Ltd jumped from around Rs 40 in May 2020 to its current price of Rs 1,274 (as on 13th May 2025), which is a jump of over 3,000%. Rs 1 lac invested in the company 5 years ago would have been close to Rs 32,00,000 today.
Even at the current price of Rs 1,274, the share is trading at a 30% discount from its all-time high price of Rs 1,818.
The company’s share is trading at a current PE of 21x, while the 10-year median is around 26x. The industry median however is 29x currently and 24x for the 10-year period.
The company is also debt free and maintains a good dividend payout of about 15%.
As per the latest investor presentation, the company plans to continue to maintain +30-40% ROE (Return on Equity) and +40% ROCE. Also stay debt free and generate positive operating cash flows and free cash flows, keeping liabilities for expenses below 30-35% of Revenue.
They also have plans to foray into new states & increase market share in existing states and continue to target 20% Volume CAGR over the next 3-5 years.
Swastika Investmart Ltd
Incorporated in 1992, Swastika Investmart Ltd provides complete financial services, including Stock, currency and Commodity Trading, Depository Services as a Depository Participant (DP) of both Central Depository Service (India) Limited (CDSL) and National Securities Depository Limited (NSDL) depositories, Portfolio Management and Investment Advisory, Technical and Fundamental Research based Advices, Internet and Mobile Trading, Initial Public Offering (IPO), Mutual fund and Insurance. The Company is also involved in the field of Hire Purchase and Lease Finance.
With a market cap of Rs 227 cr, Swastika Investmart has over 800 market experts with them that cater to over 4.4 lac customers.
The company has a current ROCE of 33% while the industry median is 19%.
As for the financials, the company’s sales grew from Rs 53 cr in FY20 to Rs 141 cr in FY25 which is a compounded growth of 22%.
EBITDA grew from Rs 7 cr in FY20 to Rs 35 cr in FY25, logging in a compound growth of about 38%.
The net profit has grown at a compounded rate of a huge 95% from Rs 1 cr in FY20 to Rs 20 cr in FY25.
Swastika’s share price was around Rs 14 in May 2020 which has jumped by over 835% to its current price of Rs 131 (as on 13th May 2025).
The current price is around a 44% discount on the stocks all-time high price of Rs 234.
The company’s share is trading at a current PE of 11x while the industry median when compared to peers is 13x. The 10-year median PE for the company is 7x and the industry median for the same period is 17x.
The company has reduced debt considerably in the last 5 years and has also been consistently paying dividends every year since 2005.
Midas’s Microcaps or Mistakes?
While many investors steer clear of microcaps due to reasons we already know, the category of stocks has some underdogs that silently are raking up the monies without breaking headlines.
Like the 2 stocks we saw today, Jyoti Resins & Adhesives and Swastika Investmart, who have been consistently shining in areas like ROCE, Operating Profits, Sales, Net Profits etc. With big jumps in almost all numbers, these companies still haven’t caught the fancy of the super investors of the Warren Buffetts of India.
Does this mean that despite of strong financials, these stocks still have something that does not look right to the big names or are they waiting for the right time to enter. Whatever it may be, given the growth these stocks have shown in the past few years, clubbed with the fact that they are trading at a discount right now warrants a place for these stocks in one’s watchlist
Note: We have relied on data from www.Screener.in and www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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