10 hidden gems stocks in India to buy now (2021)

The mid and small cap segment of the market, which is sometimes overlooked by institutional investors due to liquidity issues, is generally home to hidden gems stocks. After more than two years of relative under-performance, as investor interest begins to pick up in this segment of the market, now may be a good time to begin hunt for hidden gems stocks. To assist our readers with this exercise, we ran a couple of screens to dig out an initial list of stocks. The result is the assortment of 10 hidden gems stocks we present below.

What are hidden gems stocks?

Hidden gems stocks are shares of quality companies with strong underlying business and growth prospects, but for some reason are yet to be discovered by the investor community.

In short, hidden gems stocks represent quality businesses that are yet to receive investor interest.

They are generally found in the mid and small cap space, as institutional investors, with large AUMs, cannot allocate meaningful assets in them and therefore institutions do not find sufficient motivation to research them.

To dig-out hidden gems stocks from the universe of publicly traded stocks in BSE, we run a 2 step screen:

  1. First, we ran a screen to list out quality stocks,
  2. Then, we ran a second screen on the results to filter out only the undiscovered stocks

Our objective interpretation of the word ‘hidden’ in hidden gems stocks are those companies that are under-owned by institutions.

More specifically, we are looking for stocks with institutional ownership of 5% or less, domestic and foreign combined.

Methodology

We ran the following 2 screens:

Screen 1

screen - hidden gems stocks

Screen 2

Institutional holding current quarter < 5

The second screen was ran on the result-set of screen 1 and we manually removed any stocks with negative earnings in past 5 years, extremely low or fluctuating OPM

The results are the following 9 stocks discussed below.

Amines and Plasticizers

Amines and Plasticizers Limited is engaged in the manufacturing of alkyl alkonalamines, morpholine, alkyl morpholine and gas treating solvents.

Company’s products finds application in various industries, such as oil refineries, natural gas plants, ammonia plants, petrochemical plants, pharmaceuticals and agro chemicals.

Key products include Methyl Monoethanolamine (MMEA), Methyl Diethanolamine (MDEA), Ethyl Diethanolamine, Mono-n-propyl Monoethanolamine, Mono-n-propyl Diethanolamine (PDEA), N-Formyl Morpholine (NFM), N-Acetyl Morpholine (NAM) and N-Butyl Morpholine (NBM).

amines & plast. - hidden gems stocks

amines & plast. - shareholding

Share holding pattern

  • Promoters 73.17%, while public holds the remaining 26.83%.
  • No change in share-holding pattern in the past 10 years.

While there has been zero institutional interest in the company in the past decade, stock price during the same period has grown at 26% CAGR, handsomely rewarding patient share-holders (disclosure: author holds a position in this stock)

Chamanlal Setia Exports Ltd

Chaman Lal Setia Exports Ltd. is an India-based manufacturer and exporter of basmati rice. The Company also offers non-basmati rice, such as Sugandha, Sharbati, Prll and Sona Massouri. The Company’s diverse product line covers products, such as Sella Rice, Bhatti Sella, Rice for Diabetic peoples, Smoked rice and Pesticide Residue free rice.

In the international market, the Company is exporting rice to over 70 countries across the world in the Maharani brand or under the private labels of the customers. Its Maharani Product range includes Basmati Rice 1121, Maharani Basmati Rice, Royal Basmati Rice and Supreme Basmati Rice.

Its basmati product range includes Mithas Basmati Rice, Begum Basmati Rice and Nezzah Indian Basmati Rice. The Company also offers private labeling to all its customers.

hidden gem stock chamanlal setia

chamanlal setia shareholding

Share holding pattern

  • Promoter 73.87%, public 25.99%, FII 0.15%
  • Promoter holding has marginally declined over the years

Stock has given a healthy return of 28% over the past 10 years.

Shri Jagdamba Polymers

Shri Jagdamba Polymers Ltd. is based in Ahmedabad, India. The company has an installed capacity of 1000 MT per month to process woven polypropylene/polyethylene fabrics on both circular as well as sulzer looms. More than 80% of production is exported to the USA, Europe and several other countries.

Product range includes PP Woven Bags, FIBC, Box Bags, Silt-fence, Ground Cover, Fabrics, Geotextile, Lumber Cover, etc.

The company has targeted to double its capacity to 2000 MT per month in next five years by installing higher end products to cover several other areas of the global market. Plans have also been laid to put up captive wind power generation. As a part of backward integration plans are being finalized to put up in-house additive unit and machinery workshop.

hidden gems stock sh. jagdamba polymers

sh jagdamba shareholding

Share holding pattern

  • Promoter 73.16%, DII 4.67% and public 22.17%
  • Promoter holding is virtually unchanged over the decade

Stock has grown by whopping 56% CAGR in past 10 years, although it’s a very illiquid stock.

Associated Alcohols

Associated Alcohols & Breweries Limited is a distillery company. The Company is engaged in the manufacture of alcoholic liquor. It operates through Potable Alcohol segment. It is also engaged in the business of bottling vodka and Scotch whisky for international brands.

It has presence in all varieties of potable alcohols, country liquor (CL), rectified spirits (RS), extra neutral alcohol (ENA), distilled grain spirit, Indian made foreign liquor (IMFL) in the whisky, brandy, rum, gin and vodka categories, and bottling scotch whisky for other international brands.

It manufactures and markets in house brands, such as Red & White, James McGill, Bombay Special (in the whisky segment), London Bridge (in the gin segment) and Jamaican Magic in the rum category.

Its licensed brands include Smimoff Vodka, Captain Morgan rum, HAIG Scotch whisky, Masterstroke whisky, Glen Drummond single malt Scotch whisky and Royal Crown whisky. It has a production capacity of 42 million liters per annum.

hidden gem stock associated alcohol

associated alc share holding

Share holding pattern

  • Promoters 58.45%, Public 40.81%, FII 0.74%
  • Promoter holding has remained unchanged in the past 10 years.

While institutional interest in this company has been historically low, the stock has returned 31% CAGR in the past 10 years.

Ganesh Benzoplast Ltd

Ganesh Benzoplast Limited is engaged in the manufacture, export and import of a range of specialty chemicals, food preservatives and industrial lubricants. The Company also provides conditioned storage facilities for bulk liquids and chemicals at various ports in India.

Its segments include Chemical Division and Liquid Storage Terminal (LST) Division. Its LST division provides storage tanks which are leased on rent for storing liquid chemicals, oil products, petrochemicals, molasses and edible oils, among others. The Company’s Chemical Division processes a range of food preservatives, lubricants and active pharmaceutical ingredient (API) drugs.

Its range includes Sodium Benzoate, Food Preservatives, Lubricant Additives, Lubricant Components and API/Bulk Drugs, among others. The Chemical division manufactures over 70 products. Its products and services include storage facilities and cargo handling, and manufacturing of organic and inorganic chemicals.

hidden gems stock ganesh benzo

ganesh benzo shareholding

Share holding pattern

  • Promoters 43.33%, public 56.22%, DII 0.17% and FII 0.28%
  • Promoter holding is virtually unchanged for past 10 quarters

While total institution holding is less than 0.5%, stock has given a 22% return over past 10 years

Poly Medicure Ltd

Poly Medicure Limited is an India-based manufacturer and exporter of medical devices. The Company exports plastic medical disposables/surgical devices.

It manufactures and supplies approximately 100 types of disposable medical devices in the product verticals of Infusion Therapy, Anesthesia, Urology, Gastroenterology, Blood Management and Blood Collection, Surgery and Wound Drainage, Dialysis and Central Venous Access Catheters.

It supplies its products to approximately 100 countries. Its products include Safety I.V. Cannula with Adva Needle Technology, Quick Flashback I.V. Cannula, Style/Mandrin with luer lock, Central Venous Catheters, Suction Catheters, Oxygen Mask with Reservoir, Fixed Concentration Mask, Infant Feeding Tube, Thoracic Drainage Catheter-Straight, Haemodialysis Catheter, Mucus Extractors and Blood Collection Needle.

The Company operates over four manufacturing facilities in Faridabad (Haryana), Jaipur (Rajasthan) and Haridwar (Uttarakhand).

poly medicure price

Share holding pattern

  • Promoter 48.76%, public 48.13%, FII 2.86%, DII 0.25%
  • Promoter holding has remained unchanged for more than a decade

Stock has generated 29% CAGR over the past 10 years.

KMC Speciality Hospitals Ltd

KMC Speciality Hospitals (India) is a healthcare services and pharmacy company. The Company is engaged in providing medical and healthcare services. It is a part of the KMC group of hospitals based at Tiruchirappalli.
The company is in the business of running a super speciality hospital having 175 beds with team of dedicated specialists. They provide quality healthcare to patients in key specialty areas such as Neurosurgery, Cardiovascular & thoracic surgery, Orthopedics, Plastic and Reconstructive Surgery, Gynecology, Neonatology and Nephrology (including renal transplants).

The company provides comprehensive general healthcare to patients in their local communities and in the surrounding areas. They have the state-of-the-art equipments and trained personnel required for managing critically ill patients.

kmc speciality hidden gem stock

kmc speciality shareholding

Share holding pattern

  • Promoter 75%, public 24.92%, institutions 0.08%
  • Promoter holding has remained unchanged for more than a decade

Institutions held no stake in the company till FY20 – even present holding is negligible. Despite that stock has grown by 29% CAGR over past 10 years.

Transpek Industry Ltd

Transpek Industry is engaged into the manufacturing and export of a range of chemicals servicing the requirements of customers from a diverse range of industries – Textiles, Pharmaceuticals, Agrochemicals, Advanced Polymers, etc.

The Company manufactures various chemical products, such as anti-knock preparations, anti-freeze preparations, liquids for hydraulic transmission, composite diagnostic or laboratory reagents, writing or drawing ink, chemical substance used in manufacturing of pesticides and other chemical product.

The Company also manufactures organic and inorganic chemical compounds. Its organic products include Tri Ethylene Glycol Dichloride, Cetyl Chloride, Pivaloyl Chloride and Terephthaloyl Chloride. Its inorganic products include Thionyl Chloride, Sulphur Monochloride, Sulphur Trioxide and Chloro Sulphonic Acid. The Company’s products are used in various applications, such as polymers, plastics, performance materials, agrochemicals, coatings, pharmaceuticals, personal care, flavors and fragrance.

transpek price

transpek holding

Share holding pattern

  • Promoters 58.35%, public 38.61%
  • Government & FIIs hold 0.66% and 1.99% respectively
  • Promoter holding is virtually unchanged (marginal decline) over the past decade.

Stock has given a 28% return over the past 10 years.

Vidhi Speciality Food Ingredients Ltd

Vidhi Speciality Food Ingredients Limited, formerly Vidhi Dyestuffs Manufacturing Limited, is a food color manufacturing company. The Company is engaged in the manufacturing and trading of synthetic food colors and chemicals. The Company is a manufacturer of dyes and pigments from any source in basic form or as concentrate, and other non-specialized wholesale trade.

The Company provides color solutions in applications for various industries, such as food and beverage, confectionary, pharmaceuticals, feeds, cosmetics, confectionary and dairy.

It offers products, including synthetic water soluble colors, such as Tartrazine, Quinioline Yellow, Carmoisine, Erythrosine, Amaranth, Indigo Carmine, Allura Red, Black PN, Chocolate Brown HT and Ponceau 4R; aluminum lakes, such as Lake Tartrazine, Lake Sunset Yellow FCF, Lake Quinoline Yellow, Lake Amaranth, Lake Ponceau 4R, Lake Erythrosine, Lake Allura Red AC, Lake Patent Blue V and Lake Carmmoisine, and natural colors. 

Share holding pattern

  • Promoter holding is 64.27%, public 35.58%. FIIs hold negligible 0.15
  • Promoter holding has remained unchanged for more than a decade

Stock has generated a whopping 43% CAGR over the past 10 years.

Oriental Aromatics Ltd

Oriental Aromatics Limited, formerly Camphor & Allied Products Limited, is engaged in the business of manufacture of fine chemicals. The Company’s principal products and services include Perfumery Chemicals, and Camphor & Isoborneol. The Company operates in two geographical segments, which include Domestic and Export.

The Company is engaged in the manufacturing and selling of camphor, terpineols, resins, aromatic and terpene chemicals, fragrance chemicals and fragrance chemical intermediaries. The Company offers a range of products, which include synthetic camphor, terpineols, pine oils, resins, astromusk, perfumery chemicals and specialty chemicals. The Company serves various industries, including flavors and fragrances; pharmaceuticals; soaps and cosmetics; rubber and tire, and paints and varnishes.

The Company operates from its plants, which are located at Clutterbuckganj, Bareilly in Uttar Pradesh and Nandesari, Vadodara in Gujarat.

Share holding pattern

  • Promoter holding is 74.17%, public 25.60%. DIIs hold negligible 0.23
  • Promoter holding has remained unchanged since 2018 when there was a significant increase in promotor holding

Stock has generated 23% CAGR over the past 10 years.

Conclusion

As markets try to come out of the shadows of pandemic and economic activity starts picking up, its time for investors to take a hard look at their portfolios and do some clean-up, replacing the non-performers with the emerging leaders.

To that effort, have presented an initial list of companies which we hope will assist you in your hunt for hidden gems stocks.

We will continue to refresh the list. Should you wish to receive updates to this list and similar stories, drop a note, or comment below to stay connected.

If you enjoyed reading the article share it with a friend or colleague.

Credits

  1. Graphic credits – screener.in
  2. Company overview credits – Reuters

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