Why Mukul Agrawal is betting Rs 125 crore on high-ROCE SMEs

Four of these new picks are listed not in the mainboard but on the SME exchange, while one of them is a mainboard listed small cap, specialising in Women’s health. The question on most minds now is if Agarwal is rooting for FY27 to be the year of SMEs, or is there more than what meets the eye. Let us try to find out.

The SME Strategy and Liquidity Risks

Before I go on telling you about these 5 fresh picks, I must give you this heads-up. Because like always, SMEs come with a warning: Buyer Beware.

The SME exchange requirement to trade in fixed lots creates a liquidity bottleneck, often leaving investors stranded when prices crash. Also, the tiny equity base of these companies invites manipulation, fuelling ‘pump and dump’ schemes designed to trap retail capital. And lenient reporting standards frequently mask poor financial health, which the investors only come to know about when it’s too late.

Having said that, let us dive into the 5 stocks to see if they are worth your watchlist

#1 Scaling Beyond the Base: The 44% ROCE Logistics Play in True Colors

Incorporated in October 2021, True Colors Limited imports and distributes digital textile printers and supplies products for the digital textile printing industry. With a current market cap of Rs 496 cr, the company just saw a 1.6% stake by Agarwal worth Rs 8 cr.

One of the first things any investor would notice when they look at the company is its ROCE (Return on Capital Employed), which is 44%, while the industry median is hardy 17%. Which means for every Rs 100 the company uses as capital it generates a profit of Rs 44 on it while its peers manage about Rs 17.

While this could be a reason for Agarwal’s interest in the company, it is not the only one. Let us look at the financials of the company to get a better understanding.

The company’s sales have seen a compounded jump of 196% (on a very small number base though) between FY22 and FY25. The EBITDA (earnings before interest, taxes, depreciation, and amortization) logged a 245% compound growth from Rs 1 cr in FY22 and Rs 41 cr in FY25. The net profit logged a 270% compound growth in the same time period.

The share price of True Colors Ltd was around Rs 180 when listed in September 2025, which fell to Rs 125 in March 2026. However, post Agarwal’s stake, the price jumped back to its current price of Rs 199 as of 29^th April 2026.

The company’s share is trading at a current PE of 14x while the industry median when compared to peers is 33x.

The company plans to expand its market reach into new domestic and international geographies while broadening its customer base, alongside improving operational efficiency through restructuring, adoption of ERP and digital tools, and streamlined workflows.

#2 Specialized Medicine: Decoding the 45% Surge in Gaudium IVF’s Portfolio Entry

Incorporated in March 2015, Gaudium IVF and Women Health Limited have engaged in In Vitro Fertilization (IVF) treatments throughout India. With a market cap of Rs 842 cr, the company has just seen a 3.4% stake by Agarwal worth Rs 29 cr.

Like True Colors, Gaudium too boasts of an impressive ROCE of 49% while the industry average amongst peers is 26%. Also, out of the 5 fresh picks of Agarwal, Gaudium is the only one listed on the main board on both NSE as well as BSE.

Looking at the financials for the last 3 fiscal years, the company’s sales have grown at a compound rate of 25%, the EBITDA grew at a compound rate of 28% and the Net profits logged a compound growth of 29%.

The share price of Gaudium IVF and Women Health Ltd was around Rs 80 when listed in February 2026 and as on 29^th of April 2026 it was Rs 116, which is a 45% jump in 2 months.

The company’s share is trading at a PE of 44x while the current industry median is 33x, which means the market is willing to pay a premium to own a piece of the company.

The company plans to expand its hub-and-spoke network by establishing new IVF hubs in major cities and adding spoke centres in underserved Tier 2 and Tier 3 regions. This strategy aims to strengthen its referral pipeline and improve patient reach.

#3 Infrastructure Visibility: Why E to E Transportation’s Rs 478 Crore Order Book Anchors This Rs 65 Crore Bet

Incorporated in 2010, E To E Transportation Infrastructure Limited is engaged in providing system integration and engineering solutions for the railway sector. With a market cap of Rs 471 cr, Agarwal just bought a 14% stake in the company worth almost Rs 65 cr.

The company’s clientele includes Indian Railways (Zonal Railways), PSUs under Ministry of Railways, Metro rail corporations (Hyderabad, Nagpur, Mumbai, Chennai). In the private sector, Steel plants, power plants, ports, cement companies, industrial siding owners.

Let us look at the financials. Between FY23 and FY25, the company’s sales logged a compound growth of 36% from Rs 135 cr to Rs 251 cr, while the EBITDA grew at a compound rate of 39% from Rs 15 cr to Rs 29 cr. Regarding the Net profits, the company logged a compound growth of 32% from Rs 8 cr to Rs 14 cr.

The share price of E to E Transportation Infrastructure Ltd was around Rs 328 when listed in January 2026 and as on 29^th of April 2026 it was Rs 273, which is a 17% correction.

The company’s share is trading at a PE of 33x while the current industry median is 18x, so while the price corrected, the market still is probably factoring the future growth into the valuations.

According to the January 2026 investor presentation, the company has of over Rs 478 cr across 50+ projects and hence a multi-year revenue visibility with defined execution timelines.

#4 The 116% ROCE Outlier: Brandman Retail’s Aggressive Pivot to Athleisure

Established in 2021, Brandman Retail Limited distributes international sports and lifestyle brands. With a market cap of Rs 354 cr, the company recorded a 4% stake by Agarwal worth Rs 14 cr.

The company has a current ROCE of a market beating 116% while its peers average only about 14%. Also, the company has a current ROE (Return on Equity) of 108% while peers average about 13%. Which means for every Rs 100 of shareholders’ equity, the company is generating Rs 108 in net profit, whereas its competitors are only managing to return Rs 13.

Looking at the financials, the company has data available on screener only since FY24. Between FY24 and FY25, the company’s sales grew from Rs 123 cr to RS 135 cr logging a growth of 10%, while the EBITDA jumped from Rs 12 cr to Rs 31 cr. As for the the Net profits, the company logged a jump of 163% from Rs 8 cr to Rs 21 cr.

The share price of Brandman Retail Ltd was around Rs 192 when listed in February 2026 which is same as its current price as on 29^th of April 2026.

The company’s share is trading at a PE of 17x while the current industry median is more than double at 36x.

The company plans to use Rs 28 cr from the IPO proceeds to establish 15 new EBO’s (Exclusive Brand Outlets) and MBO’s (Multi-Brand Outlets).

#5 Asset-Light Alpha: Analyzing the 166% ROE in Agarwal’s Digital Agency Stake

Incorporated in 2016, Yaap Digital is a new-age digital content and marketing services agency. With a market cap of Rs 421 cr, the company has seen a 1.4% stake by Agarwal worth Rs 6 cr.

The company has a current ROCE of an impressive 41% while its peers average only about 16%. Plus, the company has a current ROE of 66%, one of the highest when compared to peers from the industry.

Looking at the financials for the period of FY21 to FY25, the company’s sales grew from Rs 37 cr to Rs 153 cr logging a compound growth of 43%, while the EBITDA climbed from losses of Rs 2 cr to Rs 16 cr in the same period. And the Net profits of the company recorded growth from losses of Rs 2 cr to profits of Rs 12 cr.

The share price of Yaap Digital Ltd was around Rs 133 when listed in March 2026 and as on 29^th of April 2026 it was Rs 201, which is a jump of 51%.

The company’s share is trading at a PE of 40x while the current industry median is at 34x.

As for the future plans, the company plans to utilise the money raised by the IPO to a proposed acquisition of GoZoop Online Private Limited (“GoZoop”), Funding capital expenditure to be incurred for Establishment of an AI-Led Short-Form Content Production Hub and funding inorganic growth through unidentified acquisitions and general corporate purposes.

Decoupling the Super Investor Signal from SME Reality

Mukul Agarwal’s Rs 125 cr entry into these five firms reveals a clear appetite for high-efficiency business models, yet it highlights the inherent tension of the Indian small-cap market. By targeting companies where Returns on Capital Employed (ROCE) is one of the strongest plays, the ace investor is betting on capital productivity over sheer size. These choices signal a belief that in an economy facing fiscal tailwinds, the nimble players, those capable of generating massive returns on every rupee spent, will outpace the broader indices.

However, for the average observer, the move is as much a lesson in market structure as it is in stock picking. With four of the five bets placed in the SME segment, liquidity remains the primary ghost in the machine. While Agarwal’s entry often acts as a catalyst for price discovery, the “buyer beware” tag on these stocks still persists.

The big question is no longer just whether these companies can sustain their fast-paced growth, but whether the broader market’s infrastructure is ready to support the transition of these SMEs into the mainboard titans of tomorrow. For now, the “High-Five” remains a high-conviction experiment in whether agility can truly trump scale.

Add these stocks to your 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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