In the bustling world of stock markets, where large-cap companies often steal the spotlight, savvy investors recognize that true wealth can be found in the less flashy corners of the market. Today, we unveil three intriguing small-cap stocks that are backed by the formidable Life Insurance Corporation of India (LIC), which boasts a staggering Rs 49 trillion in assets under management. These lesser-known contenders are not just random picks; they are solid companies with promising fundamentals and a heavyweight investor making a significant bet on their growth.

Why LIC’s Investments Matter

When LIC, India’s largest institutional investor, discreetly accumulates shares in small-cap companies, it sends a powerful message to the market. This isn’t mere speculation; it’s a strategic move that signals potential value in these overlooked gems. Let’s explore these hidden opportunities before they become the talk of the town.

1 CARE Ratings: A Leader in Credit Assessment

First on our radar is CARE Ratings, a prominent credit rating agency operating in India. Established and headquartered in the country, CARE Ratings specializes in providing credit ratings, research, and risk advisory services across a multitude of sectors.

• Revenue Composition: While credit ratings currently make up 94.52% of its turnover for FY24, CARE is diversifying its revenue streams, with non-rating contributions rising from 6% in FY23 to 10% in FY24.
• LIC’s Stake: As of March 31, 2025, LIC holds a 9.5% stake in the company.

In terms of performance, CARE Ratings has achieved a 10% CAGR in top-line growth over the past three years, with a 4% CAGR in net profit. Its return on equity (ROE) stands impressively at 13%.

Looking towards the future, CARE Ratings aims to enhance its role as a knowledge hub in the industry. With the anticipated growth of India’s economy towards a US$ 5 trillion target, the company is preparing to seize new opportunities in investment and funding, positioning itself as a vital intermediary.

2 Dhanuka Agritech: Innovating the Agrochemical Sector

Next up is Dhanuka Agritech, a leading player in India’s agrochemical industry, recognized for its innovative product development.

• National Reach: With a presence across major Indian states, Dhanuka operates four manufacturing units and maintains 41 warehouses, catering to around 6,500 distributors and 80,000 retailers.
• LIC’s Stake: As of March 31, 2025, LIC holds a 2.95% stake in Dhanuka.

Financially, Dhanuka has reported an 8% CAGR in revenue over three years and a 5% CAGR in net profit, with an impressive 22% ROE.

Despite recent consolidation in stock price, the company is optimistic about FY25, forecasting a 14% revenue growth driven by strong demand, particularly due to favorable rainfall predictions. With plans for eight new product launches over the next two years, Dhanuka is well-positioned for growth.

3 Easy Trip Planners: Revolutionizing Travel Solutions

Lastly, we have Easy Trip Planners, commonly known as EaseMyTrip, which stands as one of India’s foremost online travel agencies.

• Foundational Growth: Founded in 2008, the company initially concentrated on B2B2C distribution, later expanding into B2C and corporate travel sectors.
• LIC’s Stake: As of March 31, 2025, LIC holds a 2.36% stake in the company.

In terms of financial metrics, Easy Trip Planners has achieved a remarkable 52% CAGR in revenue and a 38% CAGR in net profit over the last three years, boasting a 41% ROE.

However, recent stock performance has faced challenges due to significant losses from the write-off of recoverables associated with Go Airlines. Nevertheless, the outlook for the travel sector remains strong, with a significant emphasis on expanding non-air services. The company aims to increase contributions from non-air segments to 25% of total business by FY26, up from about 14% in 9MFY25.

Conclusion: Small-Cap Stocks Worth Considering

Although small-cap stocks can be perceived as high-risk investments, the involvement of a conservative giant like LIC speaks volumes. Known for its disciplined investment strategies, LIC’s backing of these companies suggests they hold untapped potential and stability that might not be immediately visible to the average investor.

While this doesn’t guarantee success for retail investors, LIC’s endorsement often indicates a level of reliability and latent value. However, it’s crucial for individual investors to conduct thorough research and seek independent advice before diving into these opportunities.

Happy Investing!

Disclaimer: This article is intended for educational purposes only and should not be considered as investment advice. Always consult with a financial advisor before making investment decisions.