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Global geopolitical tensions and economic slowdowns are reminding the corporate world of an important lesson: “Cash is king.”

The era of low interest rates post the 2008 crisis – when central banks worldwide reduced rates to record lows to stimulate growth – got businesses used to debt, and fuelled startups growing rapidly on borrowed money. But as interest rates climb back up, companies are seeing the benefits of having surplus cash on the balance sheet. 

There is, of course, a balance between too little cash and too much. Very high cash reserves suggest that investment opportunities are being missed or are not available. Excess undeployed cash is also vulnerable to inflation, which erodes its real value over time.

In FY25, the cash reserves of Nifty 500 companies grew 17% to Rs 17.5 lakh crore, supported by healthy operating margins alongside modest growth in capital expenditure.

Among sectors, the IT consulting & software industry led with cash reserves of Rs 1.17 lakh crore, followed closely by the automobile and auto ancillary sector at Rs 1.15 lakh crore. Metals and mining firms collectively held Rs 1.1 lakh crore, and engineering companies had over Rs 73,000 crore.

Bhavesh Shah, Head of Investment Banking at Equirus, says, “The Covid pandemic triggered a realisation among corporates to maintain higher liquidity for unforeseen challenges. Simultaneously, consumer behaviour, including post-pandemic revenge buying, boosted company performance and added to cash reserves.” 

In this edition of Chart of the Week, we analyse thestocks with the highest and lowest cash reserves and the reasons for the same.

Strong financial positions, steady profits and diversified businesses have enabled companies such as Reliance Industries in the oil and gas sector, Tata Motors in automobiles and auto components, Infosys in software and services, and Larsen & Toubro in the cement and construction sector to maintain high cash reserves.

On the other hand, when it comes to companies with low cash reserves, sectors such as food, beverages, and tobacco, pharmaceuticals and biotechnology, and chemicals and petrochemicals feature in the list. Some companies with low cash reserves include Balrampur Chini, Concord Biotech and Clean Science and Technology, mainly due to high spending on expansion and dividend payments.

Reliance Industries tops cash reserves to fuel expansion and green energy push

Reliance Industries holds the highest cash reserves among Indian companies. In FY25, it reported Rs 1.06 lakh crore in cash reserves, representing a 45.2% CAGR over the five years. 

Reliance generates strong cash flows from its retail and telecom businesses, which now contribute more than half of its consolidated EBITDA. Sanjay Mookim, an analyst at JPMorgan, says, “Back in FY17, a staggering 96% of Reliance’s EBITDA came from its core energy operations. Fast forward to FY25, consumer verticals have taken centre stage.”

For FY26, Reliance plans to invest Rs 75,000 crore through internal accruals and external borrowings for its new energy business, including the development of a 20 gigawatt (GW) solar photovoltaic (PV) manufacturing plant, expansion of retail stores, and a petrochemical expansion. 

Auto and IT strengthen their cash reserves to accelerate EV and AI investments

The growing adoption of electric vehicles (EVs) and rising demand for artificial intelligence (AI) are prompting automobile and software companies to strengthen their cash reserves to fund shifting market needs. 

Tata Motors holds the highest cash reserves in the automobile and auto components sector at Rs 40,834 crore, driven by a profit CAGR of 239% over the past two years. In FY25, Tata Motors repaid its Jaguar Land Rover (JLR) debt, earned higher earnings from increased sales of premium models, and benefited from better pricing. The company earns 70% of its revenue from the JLR business.

Despite its strong financial position, Tata Motors’ sales declined in recent months due to weak demand in both passenger and commercial vehicles, increased competition, macro headwinds, and the expiration of government subsidies such as the FAME scheme.

For FY26, Tata Motors plans to invest £3.8 billion (Rs 40,000 crore) in JLR’s electric vehicle manufacturing facilities in the United Kingdom (UK). In India, the company plans to invest Rs 33,000-35,000 crore by FY30, primarily through internal accruals, to launch new electric vehicle models and upgrade its passenger vehicle manufacturing facilities.

Ashok Leyland holds cash reserves of Rs 7,263.4 crore as of FY25. The company transitioned to a net cash surplus of Rs 4,242 crore from a net debt of Rs 89 crore in FY24, helped by improved margins resulting from lower raw material costs, a more favourable product mix, and higher sales.

K.M. Balaji, CFO, says, “In FY26, we plan to invest Rs 1,000 crore in product development for switch mobility (EV division) and expansion of Hinduja Leyland Finance, using internal accruals.”

Infosys leads the software and services sector with cash reserves of Rs 24,455 crore, supported by higher operating cash flow and better working capital management.

It consistently returned cash to shareholders through dividends and buybacks, raising its dividends at a 16% CAGR over five years to Rs 20,289 crore in FY25.

HCL Technologies holds Rs 21,289 crore in cash reserves in FY25, supported by strong operating cash flows of Rs 22,261 crore and lower acquisition spending of Rs 2,032 crore. New deals in AI and engineering research and development (R&D) services have boosted revenue growth, and high-margin businesses, such as the software segment, have helped the company grow its cash reserves.

C. Vijayakumar, CEO, says, “In FY26 and beyond, cash reserves will fund AI, generative AI, and acquisitions to strengthen market presence.” He also highlights the Rs 77,000 crore order pipeline for FY25 and steady cash reserves that support the company’s FY26 revenue growth target of 2% to 5%.

Cyclical sectors maintain high cash reserves to navigate market volatility

Cyclical sectors including cement and construction, utilities, and metals and mining, are vulnerable to market volatility, compelling companies to maintain substantial cash reserves as a cushion.

Engineering giant Larsen & Toubro (L&T), which operates in the cement and construction sector, had cash reserves of Rs 22,965 crore at the end of FY25, a 49.5% increase from the previous year. 

L&T’s net profit rose 15.1% to Rs 15,037 crore in FY25, on the back of a 15.3% increase in revenue, which reached Rs 2.5 lakh crore. The company reported a strong order book of Rs 5.7 lakh crore. 

R. Shankar Raman, CFO, says, “We expect order inflows and revenues to grow by 10% and 15%, respectively, in FY26. We aim for margins of 8.3% in the projects and manufacturing portfolio and plan to build three semiconductor fabrication facilities in India over the next five to ten years, with potential investments of over Rs 1 lakh crore.”

Grasim Industries, the flagship company of the Aditya Birla Group, held cash reserves of Rs 7,905 crore as of FY25, a 70% increase from the previous year. Strong revenue and dividend inflows from its core businesses—cement (UltraTech Cement), chemicals, and financial services (Aditya Birla Capital)—drove this growth.

In utilities, Tata Power leads with cash reserves of Rs 11,751 crore, supported by higher revenue from improved billing and collections from distribution companies, lower finance costs, and reduced capital expenditure in FY25.

CEO Praveer Sinha notes, “For FY26, we have planned an investment of Rs 25,000 crore, with 50% allocated to renewables, 20% to power generation, and 30% to transmission and distribution, funded through internal accruals and debt.”

In the metals and mining sector, Coal India holds cash reserves of Rs 34,215 crore in FY25, helped by higher coal production, strong demand, and increased e-auction premiums. 

Pharma, food, and beverage sectors face a cash crunch amid huge investments

Large investments have left stocks in the pharmaceutical and biotechnology sector, as well as in food, beverages, and tobacco, with the lowest cash reserves in FY25.

Concord Biotech holds the lowest cash reserves in the pharmaceutical and biotechnology sector, with Rs 1.2 crore as of FY25. Its stock has risen 17.08% over the past year. The company invested Rs 160 crore to upgrade its manufacturing facilities, bringing down its cash reserves from Rs 47 crore in the previous year.

Balrampur Chini holds the lowest cash reserves in thefood, beverages, and tobacco sector, at Rs 3.4 crore in FY25, following an investment of Rs 880.4 crore in the Polylactic Acid (PLA)project. It funded the project through internal accruals and debt, which reduced its reserves.

Godfrey Phillips' cash reserves declined to Rs 30.3 crore in FY25 due to higher spending on fixed assets and a 43.7% dividend payout.

BEML, a manufacturer of heavy-duty trucks and trailers, held Rs 5 crore in cash reserves in FY25, down from Rs 39.3 crore in FY23. This was due to increased spending on fixed assets and higher working capital needs. Despite lower cash flow, BEML paid Rs 85 crore in dividends in FY25, further decreasing its cash reserves.

1. Federal Bank:

Motilal Oswal maintains its ‘Buy’ rating on this bank with a target price of Rs 250, a 14.3% upside. Federal Bank is focusing on strengthening its deposit base by boosting growth in current account (CA) deposits. Overall deposit growth was moderate at 12% in FY25, led by a 15.6% increase in current and savings account (CASA) deposits. However, the CASA ratio remained modest at around 30.2%.

Analysts Nitin Aggarwal, Dixit Sankharva, and Disha Singhal expect deposit growth to pick up pace, projecting a CAGR of 15.1% over FY26–28. A push to grow CA deposits and a stronger non-resident (NR) customer base will be key here. They estimate that the CASA ratio will improve to 34–35% by FY28.

The bank's asset quality remains strong, with gross non-performing assets (GNPA) at 1.8% and net NPA at 0.4% in FY25, along with a healthy provision coverage ratio (PCR) of over 75%. While Federal Bank remains cautious on unsecured lending, it may gradually increase exposure as the environment improves. Analysts estimate the bank will achieve around 17% CAGR in loans over FY26–28.

The health of a bank has historically depended on management keeping a steady head during boom times, and limiting over-lending and unsecured lending. In this vein, Aggarwal, Sankharva, and Singhal note that the new CEO KVS Manian “is focusing on sustainable, returns-driven growth”. They expect return on assets and return on equity to improve by FY28, supported by better margins and a stronger asset mix. However, they add, “near-term net interest margins (NIMs) may face pressure from high funding costs.”

2. Metro Brands:

Emkay reiterates its ‘Buy’ rating on this footwear seller with a target price of Rs 1,400, a 23.2% upside. Metro is strategically filling product gaps in its portfolio and continues to be a preferred platform for international brands entering India. The company has been appointed as the exclusive retail and digital partner for Clarks in India and neighbouring countries—Bangladesh, Bhutan, Nepal, Maldives, and Sri Lanka.

Clarks is known for its comfort-focused premium footwear, with an average selling price of Rs 3,000–7,000. Metro will manage Clarks' e-commerce channels in India, including its website.

Kaushal Paresh, CFO, said during the Q4 results, “E-commerce is growing faster than our overall business. Going forward, the focus will shift to profitability while also exploring opportunities in quick commerce. We will continue to spend 3 to 4% of revenue on advertising to promote new launches and boost brand awareness.”

Metro has declined by 6.6% over the past six months. Analysts Devanshu Bansal and Mohit Dodeja highlight that the stock has delivered a 15% revenue CAGR over the last decade and has the potential to perform even better in the coming years.

3. Radico Khaitan:

Sharekhan initiates a ‘Buy’ rating on this beverage company with a target price of Rs 3,090, a 20.2% upside. In FY25, the company’s operating profit margin rose by 160 basis points to 13.9%, driven by higher sales of premium products and cost optimisation in its production and packaging verticals.

Since April 2022, the company has incurred a capex of Rs 950 crore (funded partly by debt of Rs 631 crore), for the expansion of its Rampur and Sitapur facilities. Management plans to reduce debt by 35–40% in FY26 and aims to become debt-free by FY27. Analysts believe this will improve earnings growth and expect the return on equity to rise to 18% by FY27 from the current 13%.

Over FY21–25, the company’s revenue and volume from the prestige & above (P&A) segment grew at a CAGR of 25% and 19%, respectively, thanks to strong performance in its core brands. Analysts expect a double-digit growth momentum in the P&A segment, with a CAGR volume growth of 52% by FY27 from new launches in premium and luxury brands and expansion in both domestic and international markets.

Management aims to improve profit margins by approximately 100 basis points each year, reaching a target of around 17–19% in three years. Analysts believe the UK-India free trade agreement (FTA) will reduce import duties and boost the company’s profitability on UK exports. They estimate revenue and net profit to grow by 18% and 41%, respectively, over FY26–27.

4. Escorts Kubota:

Geojit BNP Paribas initiates a ‘Buy’ rating on this commercial vehicle manufacturer with a target price of Rs 3,801, a 14.5% upside. In FY25, revenue rose 15.7% to Rs 10,705.1 crore, while net profit grew 20.5% to Rs 1,264.9 crore, driven by an increase in tractor sales, lower commodity costs and price realisation.

Analyst Saji John writes that Escorts Kubota is the third-largest agricultural tractor manufacturer in India with an 11.1% market share. He expects its volume growth to improve in FY26 due to strong agricultural output and the government’s infrastructure projects, which will support sales of construction equipment.

The company has planned a capital expenditure of Rs 350–400 crore for FY26 to expand its manufacturing facility and develop new products. Management plans to launch the new Powertrac paddy series of tractors in the 52–60 horsepower (HP) range for southern markets in Q3 FY26. Additionally, it aims to introduce mid-segment tractors in the 40–45 HP range in Q2 FY26 to fill product gaps.

The analyst projects mid-single-digit growth for the domestic tractor segment in FY26, driven by new product launches in both the construction equipment and tractor segments. They expect exports to grow by 20–25% in FY26 and estimate revenue and net profit will rise by 10.5% and 16%, respectively, over FY26–27.

5. GAIL (India):

ICICI Securities reiterates its ‘Buy’ rating on this utility company, with a target price of Rs 245, a 29.2% upside. In FY25, revenue rose 6.6%, while net profit grew 25.7% to Rs 12,499.8 crore, driven by higher gas and polymer production volumes.

The management aims to achieve a profit of Rs 4,000–4,500 crore from the gas business in FY26, down from Rs 4,833 crore in FY25. This is due to the shutdown of its Kanpur fertiliser plant and the delay in commissioning the Durgapur-Haldia and Dhamra-Haldia pipelines. However, the management plans to sell 105 million standard cubic meters per day (mmscmd) of gas in FY26, up from 101 mmscmd in FY25, through new domestic and international contracts.

The company plans to invest Rs 10,700 crore in FY26 to expand its petrochemical facility at Usar and the Dabhol Liquefied Natural Gas (LNG) terminal. Analysts Probal Sen and Hardik Solanki expect the company to boost its revenue by raising gas tariffs by 15–20% in the first half of FY26.

Analysts see strong business prospects for GAIL by FY27 and FY28, driven by a recovery in its petrochemicals segment and the commissioning of new LNG plants, which will boost demand for gas transportation and trading. They forecast net profit growth of 10% over FY26–28.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.

(You can find all analyst picks here)

1. Zee Entertainment:

This broadcasting & cable TV company has risen over 13% in the past week after sharing a positive business outlook. Zee announced plans to achieve breakeven in its digital platform, Zee5, which reported an EBITDA loss of Rs 548 crore in FY25. 

The company says that it is moving away from a ‘growth-at-any-cost’ strategy to a more focused and disciplined approach. To support this turnaround, it aims to cut costs, improve content monetization, and boost user engagement. Zee5 has been weighing down the company’s overall performance in recent years, and a turnaround is likely to be challenging.

Zee aims to improve its EBITDA margin to 18–20% in FY26, up from 14.4% in FY25. The firm is also targeting a rise in TV viewership share to 17.5%, compared to 16.8% last year. The stock has declined 7% over the past year.

On June 16, the company’s board approved issuing up to 17 crore fully convertible warrants to promoter group entities at Rs 132 per warrant, around 2.6% above SEBI’s floor price. This move will bring in about Rs 2,240 crore in capital and increase promoter shareholding from around 4% to over 18%.

Analysts believe the promoters are funding the warrant purchase using money recovered from Essel Group dues — about Rs 600 crore has been recovered recently, with a potential recovery of up to Rs 1,800 crore over the next 12–18 months. The Essel Group (Zee’s promoter) had borrowed heavily and pledged Zee shares to repay other debts. While Zee hasn’t specified how the fresh funds will be used, analysts see the move as sentimentally positive.

In FY25, the company’s revenue declined by 4%, largely due to a 11% drop in domestic advertising revenue, impacted by a weak macro environment and a packed sports calendar. Mukund Galgali, Deputy CEO and CFO, said, “We are targeting improvement in ad revenue through re-entry into free-to-air channels (free TV channels), launch of new genres such as mini-series, and a focus on regional content. We are hopeful of an 8–10% increase in advertising revenue during FY26.”

Motilal Oswal maintains a ‘Neutral’ rating on the stock, as the company hasn’t clarified how the newly raised funds will be used, and a market purchase of shares may have been a better option. The brokerage also believes that a steady recovery in advertising revenue is crucial for Zee to achieve its targeted 8–10% revenue CAGR with its current portfolio.

2. KPIT Technologies:

This IT consulting & software company fell over 6% on June 24 after it released a mid-quarter update about the uncertainty surrounding its business. Rising geopolitical concerns and confusion around US’ auto tariffs have spooked clients across geographies. Management highlights that even though the order pipeline remains strong, conversions are much slower. In the medium term, management expects offshoring to grow further, with auto OEMs hoping to lower overall costs as the dust surrounding tariffs settles.

In FY25, the company reported revenue growth of 22% and net profit growth of 41%. Revenue came in line with estimates, while net profit was 6% ahead of estimates. Forecaster projects 10% YoY revenue growth in Q1 FY26; however, expects net profit to be flat YoY. The acquisition of Caresoft’s Global Engineering Solutions business is expected to close by the end of Q1, which is expected to boost consolidated revenue by 4% starting Q2.

The company gets 50% of its revenue from the UK and Europe, 30% from the Americas region, and the remaining 17% from the rest of the world. KPIT in its latest update, notes that Europe is looking positive while the US and Asia are somewhat uncertain. This is a stark contrast to Q4, where revenue from Asia grew by 73% and the US grew by 4% YoY, while declining by 6% YoY in Europe.

Co-founder and Chairman Ravi Pandit, said, “The deal closures have been going up consistently – from $202 million in Q1 to $280 million in Q4, while revenues haven’t yet fully reflected this,” noting that the pipeline is strong. He acknowledged that clients have turned cautious following Trump’s recent auto tariffs, but expressed confidence that trade agreements will likely be resolved within the next three to four months.

Geojit maintains a ‘Buy’ rating on the stock with a lower target price of Rs 1,456 per share. Despite investment in technology and salary hikes, analysts at Geojit expect margins to stabilise at 20-21% for FY26. The brokerage highlights that delays in the integration and ramp-up of large-scale projects due to global trade tensions could impact revenue, affecting short-term financial performance and growth projections.

3. Grasim Industries:

This cement & cement products company touched a 52-week high on 27th June as its paints subsidiary, Birla Opus Paints started operations of its resin manufacturing plant in Mahad (Maharashtra) this week. This plant has an installed capacity of 22 million litres per annum (MLPA), with which Grasim expects to meet its resin needs for paint manufacturing in-house.

Since entering the decorative paints market in 2021 under the Birla Opus brand, Grasim Industries has been a disruptor, capturing over 10% revenue share in the organized paints sector. Deep discounts, strategic hires, and well-placed manufacturing units have helped its market cap jump 84% in four years, while rivals like Asian Paints, Berger, and Kansai Nerolac saw a 23% decline.

The company posted a 13.4% increase in revenue for FY25, but net profit fell 34.2% due to higher costs of key raw materials, particularly cellulosic fibre used in textiles and packaging. It marginally surpassed the Forecaster operating revenue estimate by 1.1% led by a positive growth in the cement and paint businesses. The company appears in a screener of stocks with strong momentum.

Himanshu Kapania, MD & Business Head of Birla Opus, said, “ We have achieved the fastest capacity ramp-up in the world, with 5 out of 6 plants commercialized by March 2025, adding 1,096 MLPA in FY25, a 21% share of the organized decorative paints capacity. Our final plant in Kharagpur is set to be launched in H1FY26, which will raise our total capacity to 1,332 MLPA. With the launch of the Kharagpur plant, Birla Opus will achieve a 24% capacity share in the sector, paving the way to scale up from our current high single-digit revenue market share to one that better reflects our capacity leadership.”

Geojit BNP Paribas has retained a ‘Buy’ rating on Grasim Industries with a higher target price of Rs 3,033. The brokerage believes Grasim’s diverse portfolio positions it to tap into emerging growth opportunities. It expects strong growth in the cement segment, driven by government infrastructure spending and rural demand. In paints, the company is likely to gain ground in the premium segment through new plant launches and high capacity utilisation at Birla Opus.

4. IndiaMART InterMESH:

Thisretail company rose 6% on July 25 after Nuvama Institutional Equitiesupgraded it to a 'Buy' rating from 'Reduce', with a target of Rs 3,800 per share. The brokerage expects the company to enter a new demand cycle in Q2 and Q3 of FY26, driven by increased subscriber additions, an expansion of the in-house sales team, and higher marketing expenditures.

IndiaMART operates a business-to-business (B2B) online marketplace that connects buyers with suppliers. The company controls 60% of the market. Most of its revenue comes from paid subscriptions available to the suppliers listed on the platform. These subscription plans include Platinum and Gold plans, which contribute 75% of total revenue, while the entry-level Silver plan accounts for the remaining 25%.

The brokerage highlights that the company has improved the platform segment and expanded its in-house sales team to reduce churn in the Silver segment. Indiamart projects revenue to grow at an 18% CAGR over FY26–28.

Average revenue per user (ARPU) improved by 11% to Rs 61,000 in FY25, driven by a price hike in gold and platinum subscription plans. Dinesh Agarwal, CEO,said, “For FY26, we aim to maintain ARPU growth of 9–10% by addressing churn and improving product-market fit.”

The silver subscription segment had a monthly customer churn rate of over 7% in Q4 FY25. Agarwalsaid, “We have achieved a 66% reduction in supplier cancellations in the silver segment, and we aim to reach 80% by the end of Q2 FY26. By improving lead quality and user experience, we expect to retain more silver segment suppliers, boost subscriber growth, and drive higher revenue.”

The company’s net profitrose 64.9% to Rs 550.7 crore in FY25, beatingForecaster estimates by 15%, driven by higher other income and lower marketing and sales expenses. Revenue grew 16% to Rs 1,388.3 crore, driven by improved realisation from suppliers and a broader customer base.

In FY25, the company’s EBITDA margin stood at 38%. Jitin Diwan, CFO,said, “Margins will likely normalise to 33%–35% from the current 38%–40% once customer churn in the silver segment reduces, and we plan to increase advertising spend to Rs 50–100 crore annually, which could reduce margins by up to 500 basis points.”

5. NLC India:

Thismining and power company rose 2.3% on June 23 after receiving anorder from Tamil Nadu Green Energy Corp. The order is for the development of three Battery Energy Storage System (BESS) projects, with a combined capacity of 250 MW/500 MWh, located at Ottapidaram, Annupankulam, and Kayathar in Tamil Nadu.

In FY25, the company beat its revenue and net profitForecaster estimates. Its revenuerose 17.6% to Rs 15,280.7 crore and its net profit grew 41.4% to Rs 2,621.4 crore. Strong coal and lignite productiondrove this growth. 

The commissioning of a new unit at the Ghatampur thermal plant in Q4 contributed over Rs 700 crore in revenue.Favourable tarifforders also added around Rs 600 crore to net profit, as NLC was able to recover pending dues and interest from state power distribution companies.

Commenting on future plans, Director (Finance) Prasanna Kumar Acharya,said “We want to have a lignite mining capacity of 104.4 million tonnes, a thermal power generation capacity of 10,020 MW and renewable energy (RE) capacity of 10,110 MW by 2030, making the RE capacity more than conventional capacity” 

The company hasguided a capex of Rs 1,16,880 crore for this expansion by FY30. Acharya mentions that this expansioncould more than double NLC India’s revenue to Rs 37,000 crore and nearly double its net profit to Rs 5,300 crore by FY30, implying a CAGR of 19% and 14%, respectively.

However, NLC India may face somechallenges. Land acquisition is a major issue, especially at Neyveli, where lignite output is expected to be only 3 million tonnes in FY26 against a capacity of 7 million tonnes. Power plants are often directed by state load dispatch centres to reduce their generation, especially during the daytime when solar generation is high, which affects their revenue. The Ghatampur unit,despite generating revenue, reported losses as it could not run at full capacity. Projects like the Pachwara coal block and the lignite-to-ethanol plant are also delayed because of pending approvals and re-tendering.

Axis Direct hasmaintained its ‘Buy’ rating on the stock, citing strong growth visibility from capacity expansions across thermal, mining, and renewable energy. It also highlighted the company’s plans to list its green energy business, NLC India Renewables, by Q2FY27, to fund its renewable energy expansion.

Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations

India’s small caps are once again in the news – this time, not for higher volatility or FII sell-offs. Analysts and investors alike are increasingly upbeat about this space.

“We believe that over the long term, in a growth economy like India, small-cap stocks will outperform large caps,” Venugopal Manghat of HSBC Mutual Fund says. His optimism stems from a combo of tailwinds: low inflation, falling interest rates, rising liquidity, and strong support in manufacturing, infrastructure, and financial growth.

Market experts like Shankar Sharma of GQuant Investech call India 'a fundamentally small-cap market', while Gautam Shah, Founder, Goldilocks Research, takes a bolder stance. He suggests ignoring the Sensex and Nifty and focusing on the broader market that includes smallcaps.

Smallcap stocks have seen a remarkable expansion in market value, jumping from Rs. 17 lakh crore in 2017 to Rs. 92 lakh crore by the end of 2024, according to Bajaj Finserv AMC. That’s a nearly 5x jump.

In fact, what qualifies as “small” has also changed dramatically. Back in 2019, the large-cap threshold was Rs. 26,000 crore. Today, it’s Rs. 1 lakh crore. Small-caps jumped from just Rs. 2,000 crore to Rs. 11,000 crore (the BSE smallcap index has an even higher threshold, with the largest stock, Hitachi Energy, at Rs. 80,000+ crore).

So, while the whole market cap ladder has moved up, smallcaps have climbed the fastest. 

In this week's Analyticks,

A smallcap boom: Small, rising players are back in the news

Screener: Favourite smallcap stocks among analysts, where consensus is 'Strong Buy'

The smallcap space is riding on high enthusiasm

Varun Goel of Mirae Asset Investment Managers believes that small caps are now one of the best long-term bets. These companies are set to benefit from the revival in private capex, cleaner balance sheets, and a steady pickup in consumption as incomes rise. 

Analysts seem to support this view. Among the top 250 small-cap stocks, 117 have strong analyst coverage (five or more forecasts) in Trendlyne’s Forecaster tool. Most of these companies are expected to deliver double-digit growth in both revenue and earnings over the next year.

On the revenue side, Utilities, Metals & Mining, Consumer Durables and NBFCs lead the pack. For earnings, the highest forecasted growth is seen in Consumer Discretionary, Transport & Logistics, Metals & Mining, Chemicals, and Auto. These sectors are closely tied to India’s infrastructure and consumption cycles.

Optimism is backed by results

A growing economy, along with the recent market correction and lower risk premiums, have encouraged investors to favour smaller, domestically-focused companies that are likely to benefit more from India’s consumption and capex revival. But the story does not stop here. 

For the second consecutive month, small-caps are beating their largecap peers in earnings growth. In May, earnings per share for the Nifty Small Cap 250 Index rose by 2.3% MoM against a flat line for the Nifty 50 Index. And smallcaps rose 9.6%, higher than the Nifty 50’s 1.7% — a sign that investor confidence is returning.

Mutual fund investors are favouring smallcaps

Sometimes the best way to gauge market sentiment is to follow where institutional money is flowing. The mutual fund data reveals a pattern that's been building steadily over the past year - investors have steadily increased their allocation to smallcap funds. 

From June 2024 to May 2025, small-cap schemes saw Rs. 43,954 crore in net inflows, followed closely by midcap at Rs. 43,133 crore and much higher than largecaps at Rs. 26,389 crore. This does not include multicap or flexicap schemes. Starting this year, inflows in smallcap schemes have beaten midcaps by 15% and large caps by 78% on average. 

“The sharp decline in largecaps points to a shift among investors toward higher-growth, though riskier, segments like mid and small caps. It also reflects some degree of profit booking, as large-cap indices had already seen a considerable run-up in the months prior”, explains Himanshu Srivastava of Morningstar Investment Research India.

It can get nail-biting: uncertainty and smallcaps go together

It's important to highlight that smallcaps are often the first to react when sentiment turns sour — and not in a good way. Downgrades and drawdowns are more common here due to their thinner margins, lower liquidity, and greater earnings volatility. 

What complicates matters more is that many small-caps don’t enjoy the luxury of close institutional tracking. Even a minor change in outlook or performance can lead to sudden re-ratings, both upward and downward.

In the recent earnings season, 31% of small-cap companies missed earnings expectations compared to 17% of large-cap companies, according to JM Financial. Thus, we need to be cautious while selecting smallcaps to invest in.

Smallcaps defy the stereotype: most are healthy

But despite widespread concerns about quality and valuations in the smallcap space, a deeper analysis reveals that this is a surprisingly healthy group. 

Out of 250 companies, 150 have a ‘Good’ durability score (above 55). That’s 60% of the smallcap index. It shows that a majority of small-cap companies have solid and consistent fundamentals. This finding aligns perfectly with Bajaj AMC's research, which found that 74% of the top 250 small-cap companies reported double-digit return on capital employed (ROCE).

Only 10 companies scored ‘Bad’ on durability (less than 35), which is a relatively small number. One-fourth have a valuation score of less than 30, while almost 60% are fairly priced.

Momentum is even more skewed. 188 companies (two-thirds) fall in the ‘Mid’ category, suggesting neutral or unremarkable price action. Only 19 are in the Good momentum category, while 43 are in Bad, reflecting recent volatility and cooling off after earlier rallies.

Who are the standouts in this space?

As always in small-cap investing, selectivity matters more than broad-based exposure. We analysed small-cap companies based on Trendlyne’s Durability and Momentum scores that are seen positively by market analysts.

Companies with a good durability (55+) and momentum (60+) scores and a high operating margin (15% and above) included:  MCX, Narayana Hrudayalaya, KFIN Technologies, Karur Vysya Bank, Deepak Fertilisers, and Intellect Design Arena. These stocks are not exceptionally overvalued.

MCX

New products like electricity derivatives, rising retail interest in options, and volatility in key commodities are driving MCX’s stock prices. Anshul Jain, Head of Research at Lakshmishree Investments, sees growth potential in the stock, though at a more measured pace than before.

Narayana Hrudayalaya

Despite recent rallies, the healthcare major remains attractively valued compared to peers. Its PE Ratio stands at 51x/43x on TTM/Forward basis vs. its peers: Max Healthcare (108x/62x), Apollo Hospitals (70x/53x), Fortis (74x/56x) and KIMS (65x/56x).  

KFIN Technologies

Strong revenue growth, expanding EBITDA margins, and accelerated momentum in the company’s international operations has turned Jefferies bullish on this stock. The brokerage justifies its premium valuation based on consistent execution, expanding addressable market, and a high-margin, tech-driven business model. Its ROCE and ROE have consistently remained above 20% for the last four years. 

Karur Vysya Bank 

Emkay is optimisticabout the bank’s future performance, backed by strong RoA, asset quality, capital/provision buffers, and stable management. It boasts one of the lowest NPAs among small & mid-sized private banks, with NNPA at just 0.2%. It also has one of the lowest borrowing costs among its peers at 5.8%.

Deepak Fertilisers

Deepak's Q4FY25 net profit rose 23% on strong crop nutrition products demand. Unlike agrochemical firms facing demand volatility in both domestic and export markets, fertilisers are showing resilience in domestic demand. The management is doubling down on its speciality product portfolio and capacity expansion, while an above-normal monsoon is expected to improve its market share.

Intellect Design Arena

Intellect Design management projects 15% revenue growth in FY26, driven by its new AI platform and banking solutions. The Chairman has set an ambitious target of Rs. 5,000 crore in AI revenues over five years, from the current total revenue of just over Rs. 2,500 crore in FY25. Of course, ambitions are so far, just ambitions. But it's worth keeping an eye out.

Screener: Smallcap Favourites: Smallcap stocks with rising momentum, where Forecaster consensus is 'Strong Buy'

Birla Corp, JB Chemicals have Strong Buy consensus from Forecaster

Wars and tariffs have made high volatility the defining trend of 2025, and  smallcap stocks have borne the brunt. The BSE Smallcap index fell 3.3% over the past six months. In this environment, there are outperformers and laggards, so we look at smallcap stocks with positive analyst consensus. This screener shows stocks from the Smallcap index with rising Trendlyne momentum scores, where Forecaster consensus recommendation is 'Strong Buy'.

The screener consists of stocks from the pharmaceuticals, agrochemicals, iron & steel products, capital markets, and cement & cement products industries. Major stocks in the screener are DCB Bank, Birla Corp, JB Chemicals & Pharmaceuticals, Dhanuka Agritech, Balrampur Chini Mills, Nuvama Wealth Management, RR Kabel, and VRL Logistics.

Birla Corp has a Forecaster consensus of ‘Strong Buy’ with its Trendlyne momentum score growing to 57.1 over the past month. Analysts at Motilal Oswal are confident on this cement & cement products company on the back of strong growth in its Mukutban plant, an increase in realisation, and capacity expansion set to be commissioned in FY28-29. However, analysts expect a near-term volume moderation due to capacity constraints and peak capacity utilisation.

JB Chemicals & Pharmaceuticals also features in the screener with a ‘Strong Buy’ consensus from Forecaster. This pharmaceuticals company’s Trendlyne momentum score increased to 53.2 over the past month. Analysts at Prabhudas Lilladher expect its growth to continue, led by the geographical expansion of legacy brands, improvement in the medical representative (MR) segment productivity, scale-up in acquired brands, new launches, and scaling up of contract manufacturing business.

You can find some popular screeners here.

The Indian market has been navigating unpredictable times since the start of the financial year in March. The chaos started early, with Trump’s “Liberation Day” tariffs on April 2 and continuing through the India-Pakistan and Iran-Israel conflicts. Every time things seem to settle, a new twist appears. Despite the uncertainty and the feeling that we are stuck inside a bad thriller movie, the Nifty 50 is up 7.2%since the beginning of the financial year.

Companies ended FY25 on a strong note, with Nifty 500 firms posting better-than-expected returns in Q4. The momentum and strong FY26 guidance have kept investors focused on earnings as the Q1FY26 results draw near.

Commenting on the outlook, Nilesh Shah, Managing Director at Kotak Mahindra AMC, said, “We expect earnings to improve gradually over the next few quarters for corporate India. Rural demand is recovering, interest rates have come down, and liquidity has improved. We expect Nifty earnings to grow 11–13% in FY26.”

In this edition of Chart of the Week, we analyse the top 20 stocks with the highest earnings per share (EPS) and revenue growth projections for Q1FY26.

Laurus Labs and Gujarat Fluorochemicals are among the companies expected to post strong EPS growth in the upcoming quarter results, according to Trendlyne’s Forecaster. Favourable product mix and improved operating margins are projected to lift profitability.

Kaynes Technology, Bharat Dynamics, and C.E. Info Systems are gearing up to deliver strong topline growth through capacity expansion and the execution of government contracts.

Inox Wind, FSN E-Commerce Ventures, Sobha, and Coforge aim to drive EPS and revenue growth by scaling up new operations amid rising demand.

Expansion and cost control to lift Q1 net profit

Trendlyne’s Forecaster highlights stocks expected to post the highest EPS growth in Q1FY26 across sectors such as hotels, restaurants & tourism, chemicals,pharmaceuticals & biotechnology, andFMCG.

Rising rural demand, new product launches, income tax relief, and lower food inflation drive the growth. 

Analysts expect a demand uptick for companies such asWestlife Foodworld,Gujarat Fluorochemicals,Titan Company, andJubilant Foodworks.

Pharmaceuticals company Laurus Labs has gained 56% in the past year, driven by strong order inflow in its contract development and manufacturing organisation (CDMO) business and improved capacity utilisation. These factors helped boost the EBITDA margin by four percentage points to 19.8% in FY25. 

For Q1FY26, Trendlyne Forecaster estimates Laurus Labs to post the highest EPS growth among Nifty 500 peers at 782.6% YoY and 24.5% revenue growth. This sharp increase comes as the company reported a steep 50% drop in net profit in Q1FY25 due to weak active pharmaceutical ingredient (API) demand and margin pressure, making the Q1FY26 profit growth appear much higher in percentage terms.

McDonald’s restaurant operator Westlife Foodworld expects a dramatic 614% YoY EPS growth in Q1FY26 and revenue growth of 10.8% due to higher footfall and stabilised commodity prices driving a recovery in same-store sales. In contrast, in Q1FY25, net profit fell 88% YoY to 3.3 crore, due to higher store expansion expenses and weak discretionary spending.

The company added 81 stores over the last two years, expanding from 357 outlets in FY23 to 438 in FY25. It aims to cross 630 stores by the end of FY27.

Its competitor, Jubilant FoodWorks, added 325 stores across Domino’s Pizza, Dunkin’ Donuts, and Popeyes brands in FY25, taking the total store count to 3,316. Trendlyne Forecaster estimates EPS growth of 110% YoY and revenue growth of 12.6% in Q1FY26, driven by the company’s expansion into Tier 2 and 3 towns and a stronger focus on premium offerings.

Meanwhile, Trendlyne Forecaster estimates Gujarat Fluorochemicals to post 146.9% YoY EPS helped growth and 19.4% revenue growth in Q1FY26, driven by its focus on high-value products such as battery chemicals and Fluoropolymers.

In FY25, its fluoropolymer segment recorded strong revenue growth, thanks to higher volumes and stable product prices as the company ramped up production capacity. It also shifted towards higher-margin fluoropolymers used in electric vehicle batteries, which boosted realisations and improved operating margins by 3.4 percentage points to 24.1%.

To capitalise on EV growth, Dr. Bir Kapoor, CEO, said, “We are investing Rs 6,000 crore to expand capacity for EV battery materials and aim to enter high-demand markets in the US and Europe by FY28 through this vertical.” 

IT and consumer durables set for revenue boost on rising demand and order wins

Trendlyne Forecaster estimates strong Q1FY26 revenue growth forKaynes Technology,Bharat Dynamics,C.E. Info Systems,National Aluminium Company, andCoforge.

Kaynes Technology, a consumer durables company, has delivered a 900% return to shareholders over the past three years. During this period, its revenue grew at a CAGR of 58.5% and profit at 91.9%, driven by strong demand from the automotive and industrial automation sectors and support from government-backed Production-Linked Incentive (PLI) schemes. Trendlyne Forecaster projects 58.8% YoY revenue growth and 38.2% EPS growth for Q1FY26.

Jairam Sampath, CFO, said, “We are projecting 60% revenue growth for FY26 and expect EBITDA margin to improve by 50 basis points to 15.6%, helped by a strong order book and execution of new business opportunities. We also expect exports to contribute 20–25% of revenue, up from the current 10%.”

Forecaster expects C.E. Info Systems (MapmyIndia) to post 40.1% revenue growth and 25.3% EPS growth in Q1FY26, driven by a strong order book from the automotive segment and government contracts. In FY25, its order book stood at Rs 1,500 crore.

Rakesh Verma, CMD, said, “In FY25, we expanded into the Southeast Asian market, and we project revenue from this region to grow from Rs 26 crore in FY26 to Rs 80 crore by FY28, with the order book expected to cross Rs 2,000 crore.”

Capital goods and realty stocks lead Q1FY26 profit and revenue forecasts

Analysts expect strong EPS and revenue expansion in the upcoming quarter for stocks includingInox Wind,FSN E-Commerce Ventures,Sobha,Coforge, andMulti Commodity Exchange, supported by healthy demand and margin improvement.

Inox Windholds a 15% market share and gained 21% over the past year. It leadsNifty 500 peers with a 158.2% YoY revenue growth and EPS growth of 616.8% for Q1FY26. The company postedpositive EPS in FY25 of Rs 3.4 after the promoter infused Rs 2,200 crore in FY25 to reduce debt and improve working capital.

Management aims toachieve1,200 MW of wind turbine execution in FY26 and expects revenue realisation to increase to Rs 5.5 crore per megawatt (MW), up from Rs 5 crore. In FY25, its order book stood at 3,203 MW. Analysts at Axis Directproject strong revenue visibility over the next 2–3 years and expect revenue to grow at a CAGR of 69% during FY26–27.

Realty playerSobha has seen its share pricerise 20% over the past three months. Its average price realisation rose 23% Rs 13,412 per sq ft in FY25 as it entered high-income markets such as Mumbai and Greater Noida. Trendlyne’s Forecasterestimates EPS growth to be 440% and revenue growth to be 122.5% YoY for Q1FY26.