Small-cap stocks are often overlooked by investors, but they can offer significant growth potential. One key driver of growth for small-cap stocks is capacity expansion. Capacity expansion is the process of increasing a company’s ability to produce goods or services. This can be done by building new facilities, purchasing new equipment, or hiring more workers.
There are a number of benefits to capacity expansion for small-cap stocks. First, it can help companies to meet increased demand for their products or services. As a company’s sales grow, it will need to have the capacity to produce more goods or services in order to meet the needs of its customers. If a company does not have the capacity to meet demand, it may lose customers to its competitors.
Second, capacity expansion can help companies to reduce costs. By increasing its production capacity, a company can take advantage of economies of scale. Economies of scale are the cost savings that result from producing a larger quantity of goods or services. For example, a company that produces a larger quantity of goods can negotiate lower prices with its suppliers.
Third, capacity expansion can help companies to enter new markets. If a company wants to enter a new market, it will need to have the capacity to produce the goods or services that are demanded in that market. By expanding its capacity, a company can enter new markets and expand its customer base.
Five small-cap stocks undergoing heavy capacity expansion
Uflex Limited is a leading manufacturer of flexible packaging materials. The company is expanding its capacity to produce PET films, which are used in a variety of industries, including food and beverage, pharmaceuticals, and personal care.
Kirloskar Industries Limited is a diversified engineering company with interests in pumps, compressors, and engines. The company is expanding its capacity to produce pumps and compressors, which are used in a variety of industries, including power, oil and gas, and construction.
Paradeep Phosphates Limited is a leading manufacturer of fertilizers. The company is expanding its capacity to produce phosphoric acid, which is a key raw material for fertilizers.
Sarda Energy and Gallantt Ispat Limited are both steel companies. The companies are expanding their capacity to produce steel, which is used in a variety of industries, including construction, automotive, and manufacturing.
Overall, A total of about Rs 2,033 crore worth of capacity expansion is done by these companies and capacity expansion is an important tool that companies can use to grow their businesses.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
