Archive · 20 Sep 2025
Study: Small-Cap Stocks Have Low Rate of Growth
Think of small companies trying to become big ones.
A study checked thousands of these small companies over seven years.
It found that very few actually grew into larger, more successful companies.
While investors often hope to find the next big thing, most small companies face challenges that prevent them from scaling up.
This means picking the right small company is very important, as it is hard to make quick money from these stocks.
Only 0.8% of small-cap stocks graduated to mid- or large-cap status.
The study analyzed 4,012 small-cap stocks from December 2017.
CG Power & Industrial Solutions was the only company to move to the large-cap category.
Factors include high volatility, thin resources, and limited capital.
Investors need to be selective and patient with small-cap stock investments.
- Who
- Study based on AMFI data
- What
- Upward mobility of small-cap stocks examined
- When
- December 2017 to June 2025
- Where
- Based on AMFI's market capitalization rankings
- Why
- To examine the graduation rate of small-cap stocks
Investor Expectations
Market Reality
Growth Potential
Investor Expectations
Small-cap stocks are often seen as a nursery for future giants with high growth potential.
Market Reality
Data shows that most small-cap stocks rarely grow into larger companies.
- Graduation Rate
- 0.8%
- Base Universe Size
- 4,012
- Study Period
- December 2017 - June 2025
- Largest Cap Gain
- CG Power and Industrial Solutions
- Mid-Cap Cutoff 2017
- ₹8,580 crore
- Mid-Cap Cutoff 2025
- ₹30,404 crore