Artificial Intelligence is no longer a buzzword, it's a working part of many Indian businesses. As the use of AI grows, it’s finding a place not just in large enterprises but also in nimble, fast-growing companies that fall under the smallcap category. These smaller firms are using AI to sharpen operations, improve customer insights, and build smarter products. For investors, this opens up a lesser-known pocket of opportunity. This article walks through five smallcap stocks in India where AI isn’t just part of the pitch, it's embedded in the business.
How AI Is Finding Ground in Indian Markets
Stock markets thrive on data, and AI thrives on learning from it. In India, more firms are now using AI to manage portfolios, track sentiment, and improve decision-making. AI tools are also helping retail investors get access to insights that were once the preserve of institutional players. But the real story is in how companies themselves are building AI into their core. Whether it’s for improving logistics, marketing, or pricing models, AI is being used to gain an edge, and some of the most interesting use cases are coming from smaller companies.
Why Smallcap Stocks Matter in This Space
Smallcap firms, generally those with a market cap between ₹500 crore and ₹10,000 crore, often have more room to grow than established players. They’re also quicker to experiment with new technology. That makes them an interesting match for AI adoption. At the same time, these stocks carry higher risk, given their volatility and lower liquidity. Still, for investors willing to do the homework, smallcaps that are building strong AI-driven models can be worth the attention.
How These 5 Stocks Were Picked
The list isn’t random. It’s based on three key filters:
A clear, working use of AI in their product or services
Financials that show consistency or improving performance
Long-term potential based on the sectors they operate in and how AI is integrated into their future plans
Here Are 5 AI-Oriented Smallcap Stocks to Watch
1. Affle (India) Ltd.
This mobile marketing firm focuses on ad-tech, using AI to deliver more relevant ads to users. It tracks user behavior and tailors campaigns to increase engagement and conversions. Over the years, Affle has grown its global footprint and acquired multiple platforms that strengthen its data play. For an investor, its strength lies in turning user data into targeted insights, something AI handles well.
2. Kellton Tech Solutions
A digital transformation company that works across sectors including oil and gas, healthcare, and manufacturing. While not a pure AI firm, it’s helping clients embed AI into their operations. Kellton has been involved in projects like intelligent automation, predictive analytics, and customer behavior modeling. Its strength is in acting as a tech enabler for older industries.
3. Zensar Technologies
Part of the RPG Group, Zensar has been pivoting toward smarter tech solutions. Its services include AI-driven analytics, digital engineering, and intelligent automation. They’ve moved from being a traditional IT vendor to a tech partner for companies looking to modernize their systems. For investors, Zensar offers both international exposure and an evolving AI story.
4. RateGain Travel Technologies
RateGain focuses on the travel and hospitality sector, offering real-time pricing tools, market analytics, and customer experience tools. Their platforms process massive amounts of data daily, using AI to track competitor pricing, demand trends, and booking patterns. It serves over 2,000 hotel chains and 300 travel brands, a strong position in a data-heavy industry.
5. Happiest Minds Technologies
Started by industry veteran Ashok Soota, Happiest Minds works on digital transformation with a clear focus on AI, IoT, and cloud technologies. Their work spans industries like banking, edtech, and healthcare. The company positions itself as a ‘born digital’ player, and their consistent performance since listing shows they’ve lived up to the claim so far.
Why This Niche Deserves Attention
These stocks combine two powerful ideas: the agility of smallcaps and the strategic use of AI. If the companies manage execution well, they have room to grow significantly. For investors, this means exposure to newer business models and potentially strong returns, though with the usual risks of the smallcap space.
Caution:
Every investor knows smallcaps are not for the faint-hearted. Prices can swing, and liquidity can dry up quickly. When tech is involved, especially emerging tech like AI, there’s also the risk that things don’t pan out as expected. So, don’t skip the research. Read the annual reports. Follow management commentary. Understand the business model, not just the buzz.
Wrapping Up
AI is still finding its place in Indian business, but the early signs are promising, especially among ambitious smallcap firms. The five companies mentioned here are using AI in ways that go beyond surface-level marketing. They’re solving real problems and carving a space for themselves in crowded markets. If you're building a long-term, growth-focused portfolio and don’t mind a bit of volatility, these AI-driven smallcaps might be worth a closer look.