Increased foreign institutional investor (FII) activity observed in three smallcap stocks, potentially suggesting investment opportunities for investors.

Catch these FIIs-loved Small/Mid-cap Stocks soaring in Q4FY25 🔴

Increased foreign institutional investor (FII) activity observed in three smallcap stocks, potentially suggesting investment opportunities for investors.

India's financial year 2025 Q4 witnessed a whirlwind of equity offloadings by the Foreign Institutional Investors (FIIs), totalling ₹1,16,559 crore. However, while the markets might have seen red, some small-cap and mid-cap stocks managed to catch the attention of these high-rollers. Here are three of the lucky ones: Southern Petrochemicals Industries Corporation Ltd. (SPIC), Zota Health Care Ltd. (ZOTA), and Vasa Denticity Ltd. (DENTALKART).

each of these stocks, FIIs upped their stakes, with SPIC, ZOTA, and DENTALKART each seeing over 3% point rises in FII holdings. Let's take a closer look at the unique factors that made these stocks irresistible for the big players!

🔵 Southern Petrochemicals Industries Corporation Ltd. (SPIC)

SPIC, a prominent petrochemical brand, saw a 4.03% rise in FII holdings during Q3FY25, ending the quarter with a respectable 4.87%. Known for its Urea and nitrogenous chemical fertilizers, SPIC's 62% year-on-year (YoY) sales growth in Q3FY25 (from ₹506 crore to ₹818 crore) likely piqued the FIIs' interest[1]. Moreover, its net profit grew by 15.7% YoY (from ₹33 crore to ₹38 crore), while earnings per share (EPS) climbed to ₹1.89 from ₹1.63 per share[1].

The valuation of this petrochemical manufacturer might have also played a role in attracting FIIs, as the stock price to earnings (P/E) is just 10.1, close to the 10-year median of 10.4. Meanwhile, its industry P/E is at 18.9, suggesting that SPIC is selling cheaper than its peers. Other possible factors may include SPIC's excellent Return on Capital Employed (ROCE) at 17.8%, compared to the industry average of 13.0%.

🔵 Zota Health Care Ltd. (ZOTA)

Zota Health Care is another small-cap gem that whet the appetite of the FIIs. Known for its extensive line of pharmaceuticals, ayurvedics, and nutraceuticals, ZOTA boasts a wide network of exportation to regions like Asia, Africa, Russia, and Latin America. During Q4FY25, FIIs upped their stake in this firm by 3.36% points, taking the overall holding up to 3.60%.

While it can be challenging to pinpoint the exact factors that drew FIIs to this stock, there are a few possibilities. First, the company has consistently grown sales for five consecutive quarters, starting with the December 2023 quarter[1]. Between Q2FY25 and Q3FY25, sales shot up by 49% and 54% YoY, respectively. Moreover, although the company hasn't yet shown profits, its expansion business model may explain the declining profits, even as the FII stake increased.

In Q4FY25, the Valiant Mauritius Partners Offshore Limited purchased a 1.92% stake in ZOTA.[1]

🔵 Vasa Denticity Ltd. (DENTALKART)

Vasa Denticity, a prominent dental products retailer, saw a 3.32% rise in FII holdings during Q4FY24, reaching an overall holding of 3.60% in the company. Since the June 2024 quarter until December 2024, the firm has consistently seen net profit surges YoY. This could be one reason for the FIIs' interest, especially as net profit grew by 34% in Q1FY25, 44% in Q2FY25, and a whopping 63% during the December 2024 quarter.[1] Additionally, in Q4FY24 sales grew by 71% YoY.[1]

A few other potential factors for FIIs' interest in DENTALKART might include its ROCE, which is more than double the industry median, and its 3-year Return on Equity (ROE) of 49%. Despite a slightly higher P/E of 52.8 (compared to the industry P/E of 41.8), the stock is trading cheaper than its 10-year median of 65.2.[1]

So, if you're wondering if these old adages still hold true for the Indian equity market, consider throwing a few bucks at these promising stocks!

[1] Data extracted from Screener.in

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Maumita Mitra 🌟 Follow Us Maumita Mitra specializes in breaking down complex financial concepts for a wide audience, using her knack for clarity and attention to detail. Invest at your own risk, always consult an advisor before making investment decisions. Disclaimer: The information presented in this article is intended only for educational purposes and does not constitute financial advice. The writer and her dependents do not hold the stocks discussed in this article, and the views expressed in this article are solely her personal opinion.

1. The surge in Foreign Institutional Investor (FII) interest in small-cap and mid-cap stocks during Q4FY25, despite the overall market downturn, highlights the potential for profit in defi investment.
2. Southern Petrochemicals Industries Corporation Ltd. (SPIC) attracting FIIs may be due to factors such as its impressive sales growth, lower P/E ratio compared to industry peers, and a high ROCE.
3. Zota Health Care Ltd. (ZOTA), known for its exports to various international regions, has seen FII investments increase due to factors like its continuous sales growth and Offshore Limited's purchase of a significant stake.
4. Vasa Denticity Ltd. (DENTALKART), a dental products retailer, has captured FIIs' attention due to its consistent net profit surges and a ROCE more than double the industry median.
5. It's crucial for investors to consider these promising stocks, as they might benefit from the unique factors that have made them appealing to FIIs.
6. Stay informed about the investment landscape by following Maumita Mitra's enlightening articles and expert insights on finance, especially when it comes to investing in stocks like SPIC, ZOTA, and DENTALKART.

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