Your best friend is the person you look for when you want to share a secret.
You tell your secrets to your best friend because you trust them. When you trust someone you automatically place high expectations on them. This is the very nature of trust in social terms.
In the financial markets, trust is seen in promoters having a high stake in their company. The promoter’s holding is a sign of trust.
Imagine, a company is trusted by its promoters, (high promoter holding), it has huge growth potential (it’s a smallcap), and it has given a multibagger returns!
It would be rare, right?
So, in this article, we talk about these rare stocks.
This article could be your answer to how to invest in multibagger stocks that are also fundamentally strong. High promoter holding is one of the characteristics of fundamentally strong stocks.
Read to know which 5 smallcap, multibagger stocks have high promoter holding.
#1 Adani Power
First on our list is Adani Power, one of the lesser-known star players of Adani Group.
Adani Power is an Indian power and energy company, a subsidiary of Indian conglomerate Adani Group with head office at Khodiyar in Ahmedabad, Gujarat.
It is a private thermal power producer, with a capacity of 12,450 MW. It also operates a mega solar plant of 40 MW at Naliya, Bitta, Kutch, Gujarat.
Promoters hold a high stake in Adani Power. Since September 2020, promoters have maintained a stake of almost 75% in the company.
Out of the 75% holding, 46% shares are held by Indian promoters, and 29% shares are held by foreign promoters.
How have the company’s share performed on bourses?
Adani Power’s investors are a happy lot. In the past year, Adani Power’s share price rallied 310%.
This means if you had invested Rs 1 m in Adani Power a year ago, you would have Rs 3.1 m today!
The share was behaving in range bound pattern up until February 2022. However, after that Adani Power’s shares rallied like there is no tomorrow.
In its latest quarterly results, Adani Power reported a 16-fold YoY increase in consolidated profit at Rs 47.8 bn backed by a healthy top line and other income.
Consolidated revenue from operations grew by 109% YoY to Rs 137.2 bn.
Adani Power has been in focus due to increasing interest for renewable energy stocks. The company is one of the top renewal energy stocks in India.
#2 BLS International Services
BLS International Services is an Indian outsourcing service provider for government and diplomatic missions worldwide.
The company manages visa, passport, consular, attestation, and citizen services for client governments and diplomatic missions in Asia, Africa, Europe, South America, North America, and the Middle East.
It also provides citizen services to state and provincial governments.
Promoters hold a high stake in BLS International Services. In December, promoters had maintained a high stake of 74.4% in the company. In June 2021, their total stake increased to 74.6%.
As of 30 June 2022, the total stake held by promoters is 74.6%. All of the shares are held by Indian promoters.
So, how have the BLS International Services share performed on the bourses?
In 2022, BLS International Services has surged 144%. Over the last year, the company’s shares have risen by 50%.
Recently, the company announced that it has entered into a partnership 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 has also been authorised by the Royal Thai Embassy to provide visa services in Chennai.
The company will provide Thai visa application services. It will also provide several value-added services like form filling assistance, SMS tracking, photocopy and printing, travel insurance, and courier services.
#3 Gujarat Mineral Development Corporation
Gujarat Mineral Development Corporation (GMDC) is a major Indian state-owned minerals and lignite mining company based in Ahmedabad.
GMDC was founded in 1963. Its product range includes essential energy minerals like lignite, base metals, and industrial minerals like bauxite and fluorspar.
Promoters hold a high stake in GMDC. For a long time now, they have held a stake of 74% in the company. All of the shares are held by Indian promoters.
Recently, how has the share performed on the bourses?
GMDC’s investors are rolling in money. In the past year, GMDC’s share price rallied 170%. This means that if you had invested Rs 1 m in GMDC a year ago, you have Rs 1.7 m today!
For the March 2022 quarter, the mineral miner reported a net profit of Rs 1.7 bn . The company had posted a consolidated loss of Rs 1.8 bn in the year-ago period.
This was on the back of a rise in revenue. The consolidated income of the company increased to Rs 11 bn, from Rs 6.1 bn in the same period a year ago.
#4 Bharat Dynamics
Bharat Dynamics (BDL) is one of India’s manufacturers of ammunition and missile systems. It was founded in 1970 in Hyderabad, Telangana, India.
BDL was established to be a manufacturing base for guided weapon systems and began with a pool of engineers drawn from Indian Ordnance Factories, DRDO, and aerospace industries. It began by producing a first-generation anti-tank guided missile – the French SS11B1.
Promoters hold a high stake in BDL. For a long time now they have held a stake of 74.9% in the company. All of the shares are held by Indian promoters.
How have the Bharat Dynamics share performed on bourses?
Patience bears sweet fruits. The investors of Bharat Dynamics know this very well.
Until February 2022, the share price of BDL was range bound. However, the share price rallied after February 2022.
In the past year, BDL share rose 136%. On a YTD basis, the share price is up by 126%. This is only 10% lesser than the whole year’s increase.
The company recently bagged an order of Rs 29.7 bn from the Ministry of Defence.
The contract is for the supply of ASTRA MK – I Beyond Visual Range air-to-air missile and associates equipment to Air Force and Indian Navy.
#5 Schaeffler India
Schaeffler India previously known as FAG Bearings India is one of India’s major ball and rolling bearing manufacturers servicing the automotive and multiple core industrial segments.
The company caters to all major industry segments including Construction, Machinery, Electrical Engineering, Fluid Technology, etc.
Promoters hold a high stake in Schaeffler India. For a long time now they have held a stake of 74.1% in the company. All of the shares are held by Foreign promoters.
So, how have the Schaeffler India shares performed on the bourses?
Schaeffler India share price has been rising on the bourses. In the past 1 year share price rose by 122%. On a YTD basis, the share price has gone by 69%.
Earlier this month Schaeffler India inaugurated its largest consolidation and distribution centre in Housr. The warehouse expands across 100,000 sq feet in area and is the largest external warehouse of Schaeffler in the Asia Pacific region.
A stock market investor has to be very careful. In stock markets, the pros can turn around and become cons at any time.
Small-cap stocks offer high and quick returns because small-cap companies have a high growth rate. But these small-cap stocks also bear high risk.
High promoter holding indicates the promoter’s trust in the company.
Hence, an investor should be careful of red flags in stock, but she should not be careless about missing the green flags of the stock too.
To know more about the green flags and red flags of different stocks, stay tuned to Equitymaster.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com