Small Caps: Cheap for a Reason? Data Says Yes (But Look Closer) Market Cap vs Drawdown & EV/EBITDA - < ₹2,000 Cr → -33% drawdown | 11.3x - ₹2,000–5,000 Cr → -29% | 13x - ₹5,000–10,000 Cr → -26% | 16.5x - ₹10,000–25,000 Cr → -22% | 17.7x - ₹25,000–50,000 Cr → -20% | 22.3x - > ₹50,000 Cr → -12.6% | 21.1x Clear Pattern - Smaller company → deeper fall (26–33% corrections) - Smaller company → lower valuation multiple (11–16x) - Larger company → shallower correction (~13–20%) - Larger company → richer valuations (~21–22x) Translation - Small caps already corrected 26–33% from 52W highs - Now trade at 11–16x EV/EBITDA - Large caps corrected ~13–20% at ~21–22x Key Takeaway: Small caps look cheap post-correction but deeper drawdowns signal higher risk – not a free lunch despite the valuation gap.