Multibaggers - Small cap's Show

Companies with more than 10000 Crores of Market capitalization are classified as Large caps.
Companies with 1000 Crores to 10000 Crores are classified as Midcap Companies.
And Companies with market cap less than 1000 Crores are known as Small Cap Companies.

Large Cap companies are grown up bigger companies with established track record. Logically the active growth of these companies may have already been over. But they are much more stable.

Midcap companies are fast growing companies which have already started growing. Hence they grow faster than Largecap stocks. Having the potential to grow into Largecap companies.

Meanwhile, smallcap companies are young companies with high risk - high reward ratio. If the business clicks, then these companies grow many fold, rewarding their share holders richly. On the otherhand, if anything misfires then these companies may not have the capacity to hold on and survive. They are like hot air baloons. They sizzle and give multifold returns, but once they fizzle, they crash like pack of cards.

But the fact, today's largecaps were once smallcaps. Identifying them as a smallcap can be rewarding from Investment point of view.

Following are some of the small cap's which are in the process of becoming midcaps. Some of them deserve a closer look.

(1) Symphony :
- Ahmedabad based company
- Manufactures Aircoolers, Airconditioners and Water heaters
- Listed on BSE in 2001
- Has grown 9407.34% (yes it is a 4 digit growth)
- Net profit grew 23 times against net sales of 7 times in past 4 years alone.
- PE is 16.05 Vs Industry average of 13.48
- Profitability to grow as exports from Surat Special Economic zone are fully exempt from tax for 1st 5 years and 50% for next 5 years.
- Current Price is 1384.
- When the price comes down to Rs.1100 levels, it could be a better buy.

(2) EPC Industries :
- Nasik based company
- Involved in manufacturing of drip irrigation systems, sprinklers and industrial pipes and coils.
- Has grown 1788% in past five years
- Was discharged by BIFR after UK based PE player Schroder Credit Renaissance Fund bought 52.3% equity and M&M acquired 38% stake
- PE is 111.65 - very expensive
- But for the govenments boost to irrigation and strong pedigree of M&M, the company has nothing to offer.

(3) Vinati Organics :
- Pharma company
- Produces organic intermediates, monomers and polymers.
- World's largest manufacturer of Isobutylbenzene - basic raw material for manufaturing ibuprofen.
- World's 2nd largest producer of 2-acrylamido 2-methyl propane sulfonic acid.
- Has grown by 1601% in five years
- Net profit leaped 26 times and net sales 5.5 times in these five years
- Has declared One bonus for every two held in 2007 and made a stock split of five for one in 2009
- Investment by World bank's investment arm : International Finance corporation at a conversion prise of Rs.100 per share in July 2011 signal's optimism
- Current price is Rs.63
- Current PE is 6.08 : Highly undervalued when compared to industry average of 16.94

(4) Ador Fontech:
- Bangalore based, Welding equipment maker
- High dividend Yielding company
- Net profit rose 4 times against net sales doubling in five years.
- Current price is Rs.106
- PE multiple is 9.81
- Debt Free, Low competition makes it an attractive buy.