From The Economic Times · Nikhil Agarwal · · 1m 50s
Smallcaps surge 2.3x since April 2023
Smallcaps have surged 2.3x since April 2023, but Vikas Khemani says they remain India's best growth story.
In brief
Smallcaps have surged 2.3x since April 2023, but Vikas Khemani says they remain India's best growth story. Smallcaps have surged 2.3x since April 2023, but Vikas Khemani argues they remain the most direct way to participate in India's domestic growth story. Originally reported by The Economic Times.
Smallcaps surge 2.3x since April 2023
Smallcap market value has grown 2.3 times since April 2023, compared with a 1.4 times increase for largecaps.
Smallcaps trade at 32.5x earnings
Smallcaps trade at 32.5 times trailing earnings, compared with 21 times for largecaps.
Smallcaps expected to grow profits 22% annually
Smallcaps are expected to grow profits at a 22% annual rate between FY26 and FY28, compared with 16% for large caps.
Smallcaps offer purer domestic India exposure
Around 59% of smallcap profits come from India’s domestic, non-financial economy, including factories, hospitals, retailers and builders.
Smallcaps dominate healthcare and industrials
Healthcare accounts for 12% of small and midcaps compared with 5% for largecaps. Industrials account for 17% versus 13%.
Smallcaps outperform global businesses
Between FY23 and FY26, largecap global businesses grew revenue by just 1.8% annually, while their domestic businesses grew 12.4% annually.
Smallcaps hold emerging Indian themes
None of the nine listed electronics manufacturers and none of the 13 railway companies in Carnelian’s universe are large caps.
Smallcaps show strong growth potential
Between FY16 and FY26, 279 smallcaps compounded profits at more than 20% annually, compared with only 13 largecaps.
Smallcaps have high growth dispersion
Since April 2023, 354 smallcaps have more than tripled, while 171 have delivered negative returns.
Smallcaps face higher risk
Smallcaps tend to fall harder during market corrections and can take years to recover.
Carnelian launches smallcap mutual fund
Carnelian Capital plans to launch the Carnelian Small Cap Mutual Fund, marking its entry into the category.
What it means
Smallcaps have surged 2.3x since April 2023, but Vikas Khemani argues they remain the most direct way to participate in India's domestic growth story.
