Despite volatility, 2/3 of small-caps still multi-baggers from pandemic low

A significant proportion of smaller companies remain multi-baggers despite the recent dip.

As many as 164 stocks, or over two-thirds of all the small-cap stocks, were multibaggers as of February according to data collated by DSP Mutual Funds in their Netra Report. In comparison, just 53 per cent of the mid-cap and large-cap stocks generated higher returns in the same period. Meanwhile, about 61 per cent of the overall stocks were multi-baggers.

The report considers the post-pandemic returns on the top 500 of the Association of Mutual Funds in India (AMFI) basket of stocks. The data is based on stock performance as of 26 February 2024 since March 2020.

The S&P BSE SmallCap index fell 1.9 per cent on Wednesday and is down 5.3 per cent from its all-time high. Individual companies have seen larger volatility.

The Securities and Exchange Board of India defines a large-cap company as one which is among the top 100 stocks in terms of market value. Those ranked between 101-250 are considered mid-caps. Companies beyond the 250-mark are considered small-caps. The mutual fund industry body AMFI updates the list on a periodic basis.

Some of this outperformance is also to do with the fact that markets have gone up significantly from their pandemic lows. Around 28 per cent of all the stocks have higher returns than the Nifty 500 companies. It is 35 per cent for small-cap stocks.

A larger share of small-cap stocks, however, also generated negative returns since the pandemic lows. About 11 per cent of the small-cap stocks lost money compared to 10 per cent of stocks overall. Meanwhile, just 5 per cent of the large-cap companies generated negative returns.