Forget growth stocks. Dolly Khanna is betting on these 2 high-dividend small-caps – Stock Insights News

The Queen of Small Caps, ace investor Dolly Khanna, a well-known, followed, and respected investor, has an eye for spotting future multibaggers. Backed by thorough research with a focus on long-term value, her disciplined approach has made her portfolio a gold standard for those chasing steady, profitable returns.

Investing in the stock markets since 1996, Dolly currently holds 17 stocks worth Rs 574 cr, in her portfolio, which is managed by her husband Rajiv Khanna. Khanna is typically known to lean towards more traditional stocks in manufacturing, textile, chemicals and sugar. 

And now she has seen some potential in 2 small companies that are dividend masters, with a strong return on capital employed, trading at fair valuations.

Sarla Performance Fibers Ltd

Incorporated in 1993, Sarla Performance Fibers Ltd manufactures various types of polyester and nylon yarns.

With a market cap of Rs 969 cr, Sarla Performance Fibers Ltd exports to around 60 countries and has clientele that has names like Nike, Prada, Amante, Adidas, JW Marriott, Fitlene SL, Page Industries, Vardhaman, Elevate textiles, American & Efird, etc

Dolly Khanna just bought a 1.04% stake in the company worth around Rs 10 cr as per the exchange filings made by the company for the quarter ending June 2025.

The sales of the company were Rs 311cr in FY20 which grew at a compound rate of 6% to Rs 425 cr in FY25. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) went from Rs 51cr to Rs 92 cr in the same period, logging in a compound growth of 13%.

The net profits logged in a compound growth of 17% between FY20 and FY25.

The share price of Sarla Performance Fibers Ltd was around Rs 16 in July 2020 and as on 30^th July 2025, it is Rs 116, which is a jump of 625%.

The stock is trading at a PE of a 15x, which is lower than the industry median of 28x. The 10-Year median of Sarla Performance Fibers is 14x and the industry median for the same period is 14x.

The company has a ROCE (Return on Capital Employed) of 15%, which means for every Rs 100 the company puts in as capital, it makes a profit of Rs 15 on it. The company also has a dividend yield of 2.6%, which is in all probability the highest when compared to peers, as the industry median is close to 0%.

Apart from Dolly Khanna, another Warren Buffet of India, Anil Kumar Goel (Holds 34 Stocks Worth Rs 2,170 cr) also holds a 3% stake in the company.

Southern Petrochemicals Industries Corporation Ltd

Incorporated in 1969, Southern Petrochemicals Industries Corporation Ltd is engaged in manufacturing and selling Urea and Nitrogenous chemical fertilizers.

With a market cap of Rs 2,056 cr Southern Petrochem is a leading Fertiliser Supplier for Tamil Nadu and Puducherry. There are 12,673 ePOS devices deployed in Tamil Nadu and Puducherry, which the company utilizes to carry out sales activities.

As per the exchange filings for the quarter ending June 2025, Dolly Khanna just bought a 1.7% stake in the company worth Rs 32 cr.

The sales of the company have grown at a compounded rate of 8% from Rs 2,079 cr in FY20 to Rs 3,086 cr in FY25. EBITDA went form Rs 113 cr to Rs 281 cr in the same period, which is a compounded growth of about 20%.

The company recorded a compounded profit growth of 18% from Rs 67 cr in FY20 to Rs 156 cr in FY25.

The share price of Southern Petrochemicals Industries Corporation Ltd was around Rs 22 in July 2020 and as on 30^th July 2025 it was Rs 101, which is a jump of 360%.

The company’s stock is trading at a PE of a modest 13x, while the industry median is double at 26x. The 10-Year median PE for the company is 11x and the industry median for the same period is 13x.

The company has a ROCE of 17%, which means for every Rs 100 the company puts in as capital, it makes a profit of Rs 17 on it. The company also has a dividend yield of 1.52%, while the industry median is close to 0.12%.

The company has also recently seen a jump in FII (Foreign Institutional Investor) holdings.

Follow Dolly Khanna’s Strategy?

Many investors are sceptical of smallcaps, which have been widely misunderstood as carriers of huge risk, and then there is Dolly Khanna who has repeatedly disproved all such theories. She proved that with the correct strategy and some research, even small caps could be helpful in building solid potential wealth over time.

The two stocks we saw today, Sarla Performance Fibers and Southern Petrochemicals Industries Corporation Ltd, haven’t seen any losses in the last decade atleast, have a strong financial hold, pay good dividends and are making the most of the capital they invest in the business. No wonder they caught the attention

Whether these two stocks turn out to be the future multibaggers or some costly mistakes is something we have to wait and watch. But adding them to the watchlist and keeping an eye on them to ensure one does not miss any upswing, is a good idea.

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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