The Microcap Gambit: Why a ‘Super Investor’ is Thinking Small
Ace investor Mukul Agrawal, or as we call him one of the Warren Buffetts of India, just added Rs 25 cr worth of shares to two of his existing holdings. What has made the markets take notice is that both these stocks are microcaps, a segment many consider too risky.
One of these stocks is non-deposit taking Non-Banking Financial Company (NBFC) with impressive QoQ profit growth, while the other is a market intelligence platform struggling to log in profits.
This extreme contrast between the two stocks in terms of profits is what has gotten market pundits and smart investors take notes and see if they can find out what is the strategy behind this stake addition.
Let us try and find out what could have been the reason behind Mukul Agarwal’s decision to raise his stakes.
Credit in the Hinterlands: Dissecting Laxmi India Finance Ltd.’s MSME Engine
Incorporated in 1996, Laxmi India Finance Limited is a Non-Banking Financial Company.
With a current market cap of Rs 570 cr, the company is a non-deposit taking non-banking
financial company which specializes in providing a range of financial products, and services to individuals, businesses, and institutions.
Ace investor Mukul Agarwal bought a 3.8% stake in the company per the exchange filings made for the quarter ending September 2025, which stayed same even at the end of December at a value of Rs 21 cr.
However, as per the bulk deal data on screener.in, Agrawal bought another 2 lac shares of the company worth over Rs 18.5 cr, making the overall holding value almost Rs 40 cr and the stake closer to 8%.
Now, since Laxmi India Finance is an NBFC, we must look at a different set of metrics than we usually look at. NBFCs require a distinct perspective from traditional industrial metrics, focusing instead on the company’s efficiency as a credit engine.
As of the latest H1 FY26 disclosures, Laxmi has logged what can be called a disciplined growth trajectory with its Assets Under Management (AUM) crossing Rs 1,386 cr, an impressive 25% year-on-year increase.
The company maintains a high-yield profile, primarily driven by its focus on the underserved MSME sector, which allows for a Net Interest Margins (NIM) of 10.9%.
Despite localized environmental challenges like the Rajasthan floods slightly nudging the Gross NPA to 1.59%, the Net NPA remains lean at 0.84%, supported by a Provision Coverage Ratio (PCR) of 47%.
Furthermore, following its August 2025 IPO, Laxmi has strengthened its balance sheet with a Capital Adequacy Ratio (CAR) of 31.90%, providing a massive equity cushion that is nearly double the regulatory requirement.
This capitalization, paired with a consistent Return on Assets (ROA) of 2.56%, hints at a business model that is on a positive trajectory and is doing so with a vigilant hold over solvency and risk-adjusted returns.
Looking at some core metrics, Laxmi’s revenue has grown at a compound rate of 36% in the last 3 financial years, while Net profits grew at 35% CAGR in the same period.
The share price of Laxmi India Finance Ltd was around Rs 135 at listing in August 2025 and as on 11th February 2026 it was Rs 109, which is a considerable decline in just about 6 months.
This drop could be because the Q3FY26 reported figures show a revenue of Rs 66 cr, which is a of 7% growth YoY, but a decline of over 10% compared to the previous September quarter (Rs 76 crores). Markets are known to be stricter towards sequential (QoQ) dips in growth for high-growth-rated companies.
Regarding valuations, the company’s share is currently trading at a PE of 13x, and the current industry median is 20x. It is probably this price correction and the undervaluation that Agrawal sees as an opportunity to double down on what he foresees as a possible bounce back story.
Like many growing NBFCs, Laxmi has also faced negative operating cash flow due to the heavy deployment of funds into new loans. Also, recent one-time provisions for gratuity liabilities under the new labour code (noted in the recent board meeting) affected the bottom-line sentiment in the short term.
In my analysis, Laxmi is currently in what we can call a “Growth-Ready” phase. They raised fresh capital, so they have the capital adequacy to grow their loan book notably without needing to dilute equity again soon. The only thing one must keep an eye on is if that 1.59% GNPA (Gross Non-Performing Assets) stays stable as they expand into newer territories.
Intelligence Without Income: A Contrarian Bet on Tracxn Technologies Ltd
Incorporated in 2012, Tracxn Technologies Ltd offers Tracxn ‘Platform’ which tracks and curates’ data of startups, on a subscription basis.
With a market cap of Rs 395 cr, the company operates on a Software-as-a Service (SaaS) model where access to its platform is available upon upfront payment of a subscription fee.
Mukul Agarwal has held a stake in the company since December 2022 exchange filings and per filings for the quarter ending December 2025, this holding was 1.9% worth Rs 7.4 cr.
However, with a bulk deal on the 9th of February 2026, Agrawal bought another 1.9% stake in the company worth Rs 6.6 cr.
Let us dive into the financials of the company, which is interesting as the company is facing some rocky terrain but still managed to attract Agrawal to double down on his holding.
The company’s sales have grown at a compound rate of 18% from Rs 37 cr in FY20 to Rs 84 cr in FY25. And for the 3 quarters of FY26 ending December 2025, sales of Rs 63.5 cr have been recorded.
In case of the EBITDA, the company logged inn operating losses up until FY22, which showed some respite from FY23, but FY25 the number dipped again.
| FY | FY20 | FY21 | FY22 | FY23 | FY24 | FY25 |
| EBITDA/Rs Cr | -22 | -17 | -2 | 3 | 5 | 1 |
The net profits also logged a pattern like EBITDA and saw a big drop in FY25.
| FY | FY20 | FY21 | FY22 | FY23 | FY24 | FY25 |
| Net Profit/Rs Cr | -54 | -5 | -5 | 33 | 6 | -10 |
The share price of Tracxn Technologies Ltd was around Rs 91 when it was listed in October 2022, which has fallen sharply to Rs 37 as on 11th February 2026.
For a tech-led data platform like Tracxn, growth is the topmost priority. However, Tracxn’s top line has remained almost flat on a quarterly basis for nearly two years. For smart investors, a SaaS company with flat growth has lost its tech premium and hence begins to be valued like a traditional service firm.
The company’s share is trading at a negative PE due to its inability to log sustained profits.
Mukul Agrawal’s interest in Tracxn has probably made investors take a note, as Agrawal probably is seeing something in the company that the average investor is missing. The stock saw over a 10% jump in price after the news of Agrawal’s additional stake came out.
In the recent earnings call, the management clarified that they are investing in growth initiatives, primarily across Sales, sales support & Marketing. These investments led to a net increase in headcount and a temporary reduction in profitability. The management however believes these investments will accelerate growth and lead to higher profitability within the next few quarters.
Is a Microcap Bull Run Imminent?
When an investor like Mukul Agarwal doubles down on existing microcap holdings, one can be sure this isn’t a sentimental decision. Investors like Agrawal are known and followed for their knack of identifying value where the broader market sees only volatility.
For Laxmi India, the play appears to be a bet on a robust credit engine temporarily slowed by seasonal headwinds. For Tracxn, it is a high-risk bet that a pivot toward growth-centric expenditure will eventually translate into the scalability that SaaS investors crave.
The contrast between both of his holdings is however very stark. But as we know, wealth is often built in the quiet moments of accumulation, far from the noise of a bull market. While the share prices of both firms have faced a decline since their respective listings, the management of both companies are confident of a bounce back.
To ensure you don’t miss out on any big movements, it is advisable you add these stocks to a watchlist and keep an eye on them.
Disclaimer:
Note: We have relied on data from www.Screener.in and www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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