Top 5 Cash-Rich Smallcap Stocks to Add to Your Watchlist

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Small-cap stocks are often overlooked by mainstream investors due to their relatively lower market capitalisation and lower visibility. However, these companies can hold tremendous growth potential, especially when backed by solid financial foundations. Smallcap companies that boast substantial cash reserves are particularly intriguing as they possess the financial muscle to weather market uncertainties, pursue growth opportunities, and maximize shareholder value.

In this article, we shine a spotlight on the top smallcap cash-rich stocks, uncovering the hidden gems that have the potential to outshine larger counterparts in the investment landscape. Here are five companies that should be on your radar. The first stock on our list is NBCC (India) The company is a government of India Navratna Enterprise under the Ministry of Housing and Urban Affairs.

It operates in three major segments - project management consultancy, engineering procurement & construction, and real state. Despite being categorised as a small-cap stock, this company stands out with an impressive cash position that dwarfs many of its peers. NBCC’s cash in hand of ₹49.2 bn stands at 66.1% as a percentage of its market capitalisation of ₹74.4 bn.

However, most of this cash is earmarked for specific projects and cannot be used for other purposes. The company’s business model entails execution of PMC (project management consultancy) projects against customer advances. Despite being in the highly working capital-intensive construction space, the working capital cycle of the company is moderate.

NBCC transfer most of the risks with respect to execution, cost pass-through, etc. to sub-contractors through back-to-back arrangements and bank guarantees. This also