These five stocks have rallied up to 70% during the smids bloodbath

A lot has been written about which stocks have fallen during this period. But what about the outliers?

In this article, we look at five small cap and mid cap stocks that are rallying amid the selloff. We’ve considered the stocks’ performance from 10 December 2024, which is when the mid cap and small cap indices started their downtrend.

#1 Indo-Thai Securities

While small cap stocks have been taken to the cleaners in the past two months, Indo-Thai Securities has bucked the trend, delivering more than 69% gains since mid-December.

Indo Thai Securities is the flagship company of the Indo Thai Group, which comprises 16 companies that serve corporate clients, individuals, and retail investors.

The company is a member of NSE, BSE, MSEI, MCX, NCDEX and a depository participant of CDSL. It also provides mutual funds services as a member of the Association of Mutual Funds in India (AMFI).

So, what explains the steep rise in its shares?

One reason could be the technical factors coming into play. The stock has broken out from multi-year highs and is trading at all-time highs. Usually, when a stock breaches multi-year highs, it signals strong investor confidence and triggers increased buying, pushing the price further up.

Another reason could be buying from foreign institutional investors (FIIs). During the December 2024 quarter, FIIs’ stake in the company stood at 0.13%, after being zero for many years.

After turning profitable in FY24 (following a loss in FY23), the company is eyeing another profitable year, going by the quarterly earnings for FY25. Nevertheless, you should remain cautious as the regulatory environment is making investors ever more wary of broking firms.

#2 Tanfac Industries

Tanfac was incorporated by Tamil Nadu Industrial Development Corporation (TIDCO) as a joint sector company.

In 1980, the Aditya Birla Group bought a stake in the firm, thereby becoming the co-promoter. In March 2022, Anupam Rasayan acquired the stake from Aditya Birla Group and became the co-promoter.

Tanfac produces aluminium fluoride, anhydrous hydrofluoric acid and more. It is the largest producer of aluminium fluoride acid in India. It is also among the leading producers of hydrofluoric acid and its derivatives. These products find application in industries such as aluminium smelting and petroleum refining.

Since mid-December 2024, when the correction in small caps started, Tanfac has stood out with 50% gains.

What explains this? Well, most of the gains could be attributed to its standout quarterly earnings. During the December quarter, Tanfac Industries doubled its sales to ₹180 crore while net profit grew more than three-fold to ₹35 crore from ₹10 crore in the same quarter of the previous year.

Apart from upbeat earnings, the stock is also benefitting from Russian aluminium major Rusal’s production cuts, which has tightened global supply. Demand for critical inputs such as aluminium fluoride is thus expected to rise, which means Tanfac Industries could benefit significantly.

Going forward, the company plans to increase its hydrofluoric acid plant capacity. Recently, Tanfac announced the successful commissioning of this new expansion, which achieved 100% of capacity within just 10 days of operations.

#3 MPS Ltd

MPS Ltd is a leading player globally in the publishing outsourcing space. It’s a B2B company that serves the scholarly and research community, education community, edtech, and corporate learning space. Its clients include Macmillan, Cengage Learning, McGraw-Hill, Elsevier, Wolters and Kluwer.

The company operates in multiple segments, offering solutions for content creation and delivery, and a platform that offers a range of solutions throughout the entire content lifecycle.

Its stock has thrived during the small cap correction, gaining 26%.

So what explains the rally? The primary reason could be strong Q3 results, in which it reported 38% year-on-year sales growth to ₹190 crore. Profit rose to ₹41 crore from ₹30 core in the same period a year ago.

The company’s content solutions and eLearning segments registered strong growth (more than 30%) during the quarter, while its partnership with HighWire’s business platform almost doubled in revenue. The company also declared an interim dividend of ₹33 a share after the results.

Management aims for ₹1,500 crore of revenue by FY28, almost five times the current top line, with a significant contribution (60%) from acquisitions. The operating profit margin is currently north of 40% while the balance sheet remains debt-free.

#4 Benares Hotels

A Tata group company, Benares Hotels is a subsidiary of the Indian Hotels Company, operating hotels such as Taj Ganges and Nadesar Palace in Varanasi, and Ginger Hotel in Gondia, Maharashtra. Taj Ganges is currently adding a 100-room tower with larger rooms, taking the total inventory to 230 rooms.

Benares Hotels stock has stood out with 25% gains amid the broad correction in small cap and mid cap stocks.

The recent rally followed decent, in-line earnings by the company.

In the December quarter, Benares Hotels revenue came in at 39 crore compared to ₹34 core in the year-ago period. Profit grew to ₹14 crore from ₹10.9 crore a year ago.

For the nine months to December, revenue stood at ₹90.2 crore, reflecting marginal growth from last year’s ₹87.2 crore.

Commenting on the results, the company’s chairman said domestic demand continues to be strong, and the company expects record revenue in the fourth quarter thanks to the Kumbh Mela.

#5 Blue Jet Healthcare

Blue Jet Healthcare is a pharma and healthcare ingredients and intermediates company. It was the first manufacturer of saccharin and its salts in India.

The company supplies critical intermediates and advanced intermediates to three of the largest contrast media manufacturers in the world, while also supplying high-intensity sweeteners to several multinationals, including Colgate and Unilever.

Amid the crash in small and mid cap stocks, Blue Jet Healthcare has stood out with 44% gains in two months.

The rally comes after the pharma company reported a three-fold year-on-year jump in net profit for the December quarter, during which revenue almost doubled to ₹320 crore. The strong earnings were largely driven by its pharma intermediates and high-intensity sweetener businesses.

It was also driven by new capacity additions in unit 2, which became fully operational in the December quarter. During the quarter, the company commissioned new capacity, adding 120 KL in phase 1 and 37 KL in phase 2 for cardiovascular intermediates and contrast media, respectively.

The company also has several new products in the pipeline.

Conclusion

As US tariff tensions escalate, equity markets worldwide are seeing wild swings. But that’s not all investors are worried about. There are also concerns about overvaluation, FIIs pulling out, weak corporate earnings, and the rupee’s depreciation against the dollar, among other things. As a retail investor, you should make use of selloffs to buy quality companies, as historical data suggests this is a winning long-term strategy.

Meanwhile, here’s a list of high-stress and low-stress strategies our co-head of research Tanushree Banerjee shared with her readers.