IPOs and industry gains boost Australian small-cap stocks

Outsized gains

After years in the doldrums, Australian small-cap stocks are finally outperforming their larger peers. As of the final week of October, the S&P/ASX Small Ordinaries index is up roughly 20%, and the S&P/ASX Small Industrials index has gained 12%, compared to the Australia 200 (ASX 200), which is up approximately 10% year-to-date (YTD).

The S&P/ASX Small Ordinaries Accumulation index posted its second-best quarterly performance in a decade, rising about 15% in the September quarter, just behind its June 2020 rally of nearly 24%.

S&P/ASX small ordinaries

In Australia, small caps are generally defined as companies with a market capitalisation between $250 million and $2 billion, essentially anything outside the top 200 listed companies.

ST Wong from Prime Value Asset Management identifies four factors likely to keep driving small caps through the end of the year:

• Fear of missing out (FOMO): the catch-up trade from investors who have been waiting on the sidelines
• Liquidity: as investors anticipate further interest rate cuts
• Strong annual general meeting (AGM) updates: with positive corporate guidance from listed companies
• Easing tariff concerns: which reduce uncertainty for exporters and industrials.

Greatland Resources (ASX: GGP)

The ASX Small Resources index has been a standout driver of the rally, and Wong highlighted Greatland Resources (ASX: GGP) as a small-cap stock with potential to outperform its larger peers.

Greatland Resources daily candlestick chart

Greatland Resources buy/sell indicators 

IPO revival

While the Australian initial public offering (IPO) market has struggled to return to pre-Covid-19 levels, activity in the small end of the market is picking up.

Carma (ASX:CMA)

An example is Carma, which is preparing to list on the ASX at an issue price of $2.70 per share. The online used car retailer refurbishes and resells quality vehicles and has raised $100 million, comprising roughly $70 million in new shares and $30 million from existing shareholder sell-downs.

Carma is not yet profitable, but Dean Fergie highlights its first-mover advantage in the local market, drawing comparisons with the highly successful United States (US)-listed Carvana (NYSE:CVNA), whose share price has surged nearly tenfold in just two years.

Carma is debuting with a market capitalisation of around $370 million and is forecasting financial year (FY) 2026 revenue of approximately $120 million alongside an expected loss of about $30 million.

Carvana chart

Advanced Innergy Holdings (ASX:AIH)

Advanced Innergy Holdings, a United Kingdom (UK)-based materials science company, is set to make its ASX debut on Friday, 31 October.

The industrial small cap specialises in the design and engineering of mission-critical protection systems for high-value infrastructure, primarily in the energy sector. Its products include fire protection systems, buoyancy solutions, and subsea equipment such as umbilicals, risers, and flowlines (SURF).

While there’s some investor scepticism about a UK company choosing to list in Australia, Cyan Investment Management’s Dean Fergie says it appears to be a high-quality business, generating more than $300 million in annual revenue with earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins north of 15%.

The IPO aims to raise $150 million at $1.00 per share, comprising $90 million in new shares and a $60 million shareholder sell-down, valuing Advanced Innergy Holdings at around $400 million on listing.

Big returns

While small caps have outperformed large caps so far this year, the valuation gap between Australian small and large companies remains near 20-year extremes. Much of the strength has come from resource stocks, particularly gold, but the rally has yet to fully extend to the industrial and technology sectors.

Symal Group (ASX:SYL)

Gregg Taylor from Salter Brothers highlighted Symal Group as a standout opportunity. The diversified services provider, founded in 2001 and operating across 14 locations, primarily along Australia’s east coast, focuses on resilient end markets.

Symal Group daily candlestick chart

In FY 2025, Symal exceeded its prospectus forecasts, delivering normalised EBITDA of $106.1 million and net profit of $45.7 million.

Symal Group buy/sell indicators

BETR Entertainment (ASX: BBT)

BETR Entertainment is another small-cap pick that Taylor expects will outperform in the coming years. BETR is an online wagering platform that emerged when it merged with the existing ASX-listed company Blue Bet.

BETR Entertainment daily candlestick chart

PointsBet (ASX:PBH)

In recent months, BETR has launched a high-stakes bid to acquire PointsBet, the listed operator PointsBet. As of mid-September 2025, Betr held over 27% of PointsBet shares. 

PointsBet  daily candlestick chart

The move highlights the broader consolidation trend in Australia’s digital wagering sector and supports Taylor’s view of BETR as a consolidation play with upside. 

PointsBet buy/sell indicators