Small-cap stocks poised for strong growth in FY27, says 360 ONE

Small-cap enterprises are likely to deliver notably stronger earnings expansion than large-cap counterparts during the financial year 2026-27, according to Mayur Patel, an investment strategist at 360 ONE Asset Management.

Patel projects that small-cap earnings could expand at approximately 30 per cent during FY27, substantially exceeding the mid-teens growth anticipated for large-cap companies. This significant differential in growth rates underscores the divergent performance trajectories expected across market capitalisation segments.

The relatively robust growth outlook for smaller companies reflects their greater operational flexibility and exposure to faster-expanding market segments. Small-cap firms often benefit from higher growth potential in emerging sectors and from their ability to capture market share as the broader economy expands.

The earnings growth differential carries implications for portfolio allocation strategies, with some market participants viewing the small-cap segment as offering compelling value relative to larger, more established corporations. However, investors typically balance the higher growth potential against the elevated volatility and liquidity considerations associated with smaller-capitalisation stocks.