Top Undervalued Holdings Inside the Nippon India Small Cap Fund Today

The Nippon India Small Cap Fund has earned a strong reputation among Indian investors for identifying emerging businesses early and holding them through years of compounding growth.

Many of its portfolio companies operate in niche segments with scalable models, strong cash generation, and expanding market share, which are traits that often define future mid-cap and large-cap leaders.

Despite strong fundamentals, several of the fund’s core holdings still appear undervalued relative to their earnings potential.

For investors, studying where the fund has placed its largest bets can reveal which under-the-radar Indian businesses active managers believe have the best risk-reward profiles heading into 2025.

Here are some of the top undervalued holdings inside the Nippon India Small Cap Fund and why they continue to stand out in India’s fast-evolving equity landscape.

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APAR Industries (APARINDS)

APAR Industries (APARINDS) is a diversified Indian manufacturing company operating across conductors, specialty oils, and cable solutions. It supplies products to sectors such as power transmission, automotive, renewable energy, and infrastructure.

The company has delivered strong financial performance over the last five years, with average annual revenue growth of approximately 20-23%, supported by export demand and capacity expansion. Its 3-year average return on equity (ROE) is around 26-27%, reflecting solid profitability and efficient capital allocation.

APAR Industries maintains a dividend payout ratio of roughly 25% and offers a dividend yield of around 0.6%. With growing international exposure and a product portfolio aligned with energy and infrastructure growth, the company is well positioned for continued expansion.

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The Karur Vysya Bank (KARURVYSYA)

The Karur Vysya Bank (KARURVYSYA) is a private sector bank in India offering retail, corporate, and treasury services. It has a long-standing presence in southern India and caters to small and medium enterprises, traders, and agricultural customers.

The bank has reported sharp earnings growth, with a five-year average net profit increase of over 40% annually (as of FY 2025 data). Its 3-year average return on equity (ROE) stands around 16.2%, supported by significantly improving asset quality (with Net NPA at very low levels) and operating efficiency.

Karur Vysya Bank maintains a dividend payout ratio of approximately 10% to 12% and provides a dividend yield close to 1.0%. With a continued focus on digital banking, prudent credit practices, and a stable liability franchise, the bank is strengthening its position in India’s mid-sized banking segment.

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HDFC Bank (HDFCBANK)

HDFC Bank (HDFCBANK) is India’s largest private sector bank by assets and is now one of the world’s most valuable banks following its merger with Housing Development Finance Corporation (HDFC Ltd.) in July 2023. It offers a full range of retail, corporate, and wholesale banking services through an extensive branch network and a strong digital platform, serving diverse customer segments.

The bank’s financial profile has seen a significant change post-merger. Its recent revenue growth has been substantial, with annual revenue for FY 2025 increasing by over 16%, although year-on-year growth rates crossing the merger date are highly impacted. The bank’s Trailing Twelve Months (TTM) Return on Equity (ROE) is approximately 13.5% to 14.5%, reflecting consistent profitability despite the larger equity base post-merger.

HDFC Bank maintains a dividend payout ratio around 20%-22% and provides a dividend yield of about 1.1% to 1.3%. With strong asset quality, a dominant deposit base, and disciplined growth strategies, it remains one of the most reliable and well-capitalized banks in India.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!