Calendar 2015 turned out to be an insipid year for the market with the bellwether Sensex down over 6 per cent. Yet, the picture on ground is different: for, 10 per cent of the stocks listed on the Bombay Stock Exchange (BSE) doubled or more between December 31, 2014 and December 17, 2015. While four out of every 10 stocks delivered 20 per cent plus returns, almost half the scrips traded on BSE gained 10 per cent or more.

The winners’ list is long. As many as 1,415 out of 2,511 stocks (that have been quoting on the BSE since last December) held their heads high in calendar 2015.

In pole position is drug-maker Mangalam Drugs & Organics, which zoomed 1,440 per cent in less than a year. Also flying high — gaining about 1,060 per cent — is plywood manufacturer Uniply Industries. The stock of condom-maker Cupid shot up 940 per cent. In all, 15 stocks ran up 500 per cent plus (six times or more) this year and 297 gave 100 per cent plus (doubled or more).

Small stocks, big gains

The majority (about 95 per cent) of stocks that delivered returns of two times or more are small-caps, with a market capitalisation of less than ₹3,000 crore. Just two stocks — Rajesh Exports and Essar Oil — among these big winners are large-caps with a market capitalisation of over ₹10,000 crore.

Interestingly, even among small-cap winners, investors and traders have been partial to defensive plays such as pharma and IT stocks — in keeping with the overall mood of the market. For instance, among the top 15 gainers, there are three pharma and four IT stocks — these include firms that have been flying under the radar such as Brawn Biotech, Alpa Laboratories, Intrasoft Technologies and Cambridge Technology Enterprises.

Interestingly, a couple of alcoholic beverage stocks — Pioneer Distilleries and GM Breweries — are on a high. Among the stocks which have doubled or more, over a fifth are from pharma and IT sectors.

Risky bets

Small-caps on the rampage could be a sign of an overheated bull market. The valuations of the top gainers seem to have moved away from their comfort zones. For instance, the price-to-earnings (PE) ratio of Mangalam Drugs & Organics, and Cupid is 37-44 times, while that of Uniply Industries is 55 times — much higher than the valuation of larger peers. PEs of many other small-cap are also in high double-digit or even triple digit.

Sure, profits and sales of some of these companies are growing at a good pace. Mangalam Drugs, for instance, swung into profit in 2014-15 after losses the previous two years. The company, a known supplier of bulk drugs for anti-malarial formulations, is expected to benefit from new launches.

Cupid too improved profit sharply in 2014-15 and in the first half of 2015-16. Increasing sales of high-margin female condoms and an order from the National Department of Health, South Africa, boosted the company’s prospects.

For Uniply Industries, a change in management and the company moving into profit in 2014-15 and the first half of 2015-16 from losses in the year-ago periods gave the stock a lift. Planned acquisitions also helped.

But many among the top gainers made losses or saw a sharp dip in profit in 2014-15. Also, many small-cap stocks were assigned the risk group ‘T’ or ‘XT’ by the BSE. Some were also moved under Group Z, which lists companies that have failed to comply with listing or other regulatory requirements.

Heavy loser too

In a twist to the tale, while small-caps top the list of big winners this year, they also lead the list of heavy losers.

Among the stocks that have lost 50 per cent or more this year, nearly 97 per cent belong to the small-cap category. No surprise then that despite the superlative showing by many in the category, the S&P BSE Small-Cap index is up just about 4 per cent this year.