Despite the ongoing polarisation in markets with the largecaps mainly contributing to the gains in the benchmark indices, select smallcap stocks have delivered startling returns in the last 3 years.

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While Sensex has given 52 percent returns in the last 3 years, BSE Smallcap has given only 11 percent returns during this period. The smallcap index performed very well in 2017 but has been on a downtrend in the last 2 years since the IL&FS crisis shook the markets. Most stocks from broader markets have been in a bear's grip with many wiping out up to 99 percent of investors’ wealth.

However, three little-known companies in the BSE smallcap index have delivered more than 2,000 percent returns in the last 5 years, which means, an investment of Rs 10,000 in these stocks in 2017 would have turned to over Rs 2 lakh currently.

Topping the list is Coastal Corporation, which surged over 3,200 percent from around Rs 9 in 2017 to Rs 284 today. A sum of Rs 10,000 invested in the stock in 2015 would have turned to over Rs 3.3 lakh in 2020. Incorporated in 1981, the company has business dealings in aquaculture space.

Following the trend is Tasty Bites Eatables, which rallied 2,800 percent in just three years, rising from around Rs 280 to Rs 8,260 today. The company manufactures and markets Tasty Bite, a range of shelf-stable, all-natural and ready-to-serve ethnic food products.

The third multi-bagger on this list is Dolat Investments. The Mumbai-based company gained from around Rs 2.5 per share to Rs 58 currently.

Other smallcap names that gave robust returns in 3 years included Mangalam Organics, Sadhna Nitro Chemicals, Goldstone Infratech, and HEG, up between 500 percent and 650 percent.

As per analysts, smallcap stocks generally tend to rise more due to inexpensive valuations. However, most investors miss the rally as they look at largecap safe stocks.

That being said, a number of multi-baggers also witness temporary rallies that are not backed by fundamentals and hence may lead to a steeper fall in the future. Hence analysts advise looking at stocks, that are fundamentally backed and don't have major promoter issues like pledged shares or high debt.

First Published:Jan 8, 2020 2:26 PM IST