Here’s a pick of potential small-cap stars to watch out for in coming months

The Indian stock market has gyrated to the tune of a faster-than-expected tapering signal from the US Federal Reserve and persisting uncertainty from the impact of the new coronavirus strain Omicron.

Benchmark indices have corrected nearly 10% from the peaks in October, and analysts expect another round of bearish trajectory is around the corner even though there has been a marginal uptick after the big slide last week.

We sought to identify a few small-cap stocks that could provide potential gains as investors look at adding new companies to their investment basket.

The idea was to identify small-cap stocks with good quarterly growth rates, reasonable valuations and positive analyst coverage.

We filtered companies on the basis of market capitalization being under Rs 2,000 crore, year-on-year quarterly net profit growth as well as sequential net profit growth last quarter in excess of 20%, trailing 12-month price earnings growth of less than 2 and positive stock sentiment by brokerages.

We get a list of around two dozen stocks that meet our criteria. Looking at them from the top of the charts by market value we get names like Siyaram Silk Mills, kitchen appliance maker Butterfly Gandhimathi, food products firm Prataap Snacks, luggage maker Safari Industries, LG Balakrishnan, apparel exporter Gokaldas Exports, Gravita India, PSP Projects and Time Technoplast. 

Lower down the order we have names like Shaily Engineering, Jagran Prakashan, West Coast Paper, JMC Projects, NRB Bearings, Dwarikesh Sugar, J Kumar Infraproject, Capacit'e Infraprojects, Transpek Industry, Lumax Industries, Wonderla Holidays, Lumax Auto Tech, The Anup Engineering, Vishnu Chemicals, Ador Welding and Oriental Hotels. 

Some of these companies, like hospitality firms Wonderla and Oriental Hotels, could benefit once concerns around coronavirus dissipate.