Small cap firms outperform bigger peers in profit growth

421 small cap firms post aggregate net growth of 68% against 27% growth recorded by 237 midcap players.

The companies listed on the Bombay Stock Exchange (BSE) Small-cap index have outperformed the Sensex and mid-cap firms in net profit growth during the July-September quarter.

The 421 small-cap firms have posted a combined net profit growth of 68 per cent compared with 27 per cent growth recorded by 237 mid-cap companies and 21 per cent by the 30 Sensex stocks.

The market share of small-cap firms to the total net profit of corporate India increased to 9.12 per cent in September quarter from 6.84 per cent in the corresponding quarter of the previous year.

In the April-June 2005 quarter, small-cap companies reported 107 per cent rise in net profit against 53 per cent registered by mid-cap firms and 40 per cent jump reported by the Sensex stocks.

The aggregate net profit of 2,071 companies increased 19.42 per cent from Rs 25,215.66 crore to Rs 30,111.76 crore during the second quarter this year. The combined net profit of 421 small-cap companies increased to Rs 1,958.07 crore in the July-September quarter against Rs 1,164.92 crore in previous year quarter.

However, the bottomline of mid-cap firms jumped to Rs 5,177.57 crore from Rs 4,090.75 crore and of the Sensex to Rs 17,216.30 crore from Rs 14,200.55 crore during the September quarter.

Of the 421 small cap firms, net profit of 101 companies more than doubled. While 25 companies posted a growth in the range of 70-100 per cent, 18 firms reduced their losses and 21 turned the corner.

However, 89 firms reported fall in net profit during the September quarter.

Among the small-cap, FCGL Industries (Rs 106.32 crore), IFSL (Rs 3 crore), Kriti Finvest (Rs 4.04 crore), Vindya Telelinks (Rs 1.04 crore), Liberty Shoes (Rs 4.47 crore), VIP Industries (Rs 82 lakh), GTN Textiles (Rs 1.76 crore) and Harrisons Malayalam (Rs 61.53 crore) posted more than 1,000 per cent growth in bottomline. ITI reduced its net loss by 25 per cent to Rs 98.14 crore against Rs 130.10 crore in previous year quarter.

Whirlpool India, managed to reduce net loss from Rs 46.59 crore to Rs 19.18 crore, Morarjee Realities to Rs 1.99 crore (Rs 13.43 crore), Remi Metals Gujarat to Rs 3.07 crore (Rs 15.53 crore) and Amforge Industries to Rs 87 lakh (Rs 4 crore).

The bottomline of TRF, Dwariskesh Sugar, Ansal Infrastructures, Mangalam Cement, Manali Petroleum and Universal Cables increased seven fold during the quarter. Of the 231 mid-cap stocks, 3i Infotech, Balrampur Chini, BOC India, Nagarjuna Fertilisers, Hindustan Construction Company (HCC) and Videocon Industries, net profit jumped by more than 1000 per cent and other 31 firm's bottomline rose in the range of 100-1000 per cent.

Among the Sensex stocks, Larsen and Tourbo, Gujarat Ambuja Cement, Grasim Industries, Tata Power and Hindalco reported fall in net profit.

The bottomline growth of ITC, Hindustan Lever, Tata Steel, Tata Motors and NTPC was lower than 21.55 per cent growth rate reported by 30-Sensex stocks.