Robust June quarter fuels small cap scrips

Small-cap stocks are back in limelight on the bourses. The BSE (Bombay Stock Exchange) small index today closed an all-time high. The small-cap index touched 5,855.46 during intra-day trading and closed new lifetime high of 5,830.69 today.

In the last one week, the small-cap index has outperformed all indices by wide margins. The index appreciated by 7.31 per cent from 5,433.36 on August 24. On the comparison, the Sensex gained by 1.75 per cent to 7,745 (7,612) and the mid-cap index by 3.8 per cent to 4,014.24 (3,865.68).

Of the 497 stocks that constitute the small-cap index, 90 per cent (446 stocks) have had positive returns in the last one week. Of these advancing stocks, 29 stocks gained over 20 per cent while market prices of 175 stocks appreciated in the range of 8-20 per cent.

Aegis Logistic, BF Utilities, Eskay K'n'it, Galaxy Entertainment, Lloyds Steel, Onward Technologies and RPG Life Science continue to hit upper limit of circuit-filter in the last three days.

The 39 stocks from the small-cap index trading at their lifetime highs on the BSE include Phoenix Mills (Rs 27,890.70), Manugraph India (Rs 862.10), Hindustan National Glass (Rs 450), BF Utilities (Rs 426.50), Dolphin Offshore (Rs 340.55), Indian Card Clothing (Rs 320.75) and Spanco Telesystems (Rs 195.95).

The healthy financial performance during the April-June 2005 quarter by these small companies has led to this rally in small stocks.

The promoters of Aarvee Denim, Everest Industries and Rei Agro declared interim dividends after these companies had posted double-digit growth in their net profits during the first quarter.

As per the quarterly results for the June 2005 quarter - available for 461 of the 497 companies - the companies posted 100 per cent growth in their aggregate bottomline. The aggregate net profit of these 461 firms increased 113 per cent to Rs 1,799.97 crore (Rs 845.24 crore).

The largest gainer, Flex Industries, appreciated by 51 per cent from Rs 69.09 on August 24 to Rs 104.55 today. The company posted 81 per cent rise in net profit to Rs 18.18 crore in the June quarter against Rs 10.02 crore net profit in the corresponding quarter last year.

Spanco Telesystem's market price gained 47 per cent to Rs 195.95 from Rs 133.60, Surana Telecom 45 per cent to Rs 47.80 (Rs 33.04), Hitachi Home & Life Solutions 43 per cent to Rs 115.15 (Rs 80.75) and Shah Alloys 41 per cent to Rs 326.70 (Rs 232.30).