A portfolio shake-up by Dolly Khanna—the renowned “Queen of small caps”—has sent a wake-up call through the Indian smallcap market, as she exited six notable stocks in the latest quarter. Investors are debating whether these swift exits are a mere “spring cleaning” of her celebrated portfolio or a cautionary sign for the broader segment.financialexpress
Which 6 Stocks Did She Exit?
According to recent filings and portfolio trackers, Dolly Khanna trimmed or fully exited the following smallcap names:smallcase+1
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20 Microns Ltd: After a 650% gain, marking profit-booking and possibly concerns about further upside.
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Polyplex Corporation Ltd: A dominant player in the PET films space.
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Rajshree Sugars & Chemicals Ltd: Involved in sugar and industrial alcohol production.
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Sarla Performance Fibers Ltd: Producing and exporting specialized nylon and polyester yarns.
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Talbros Automotive Components Ltd: Major supplier in automotive gaskets and components.
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Prakash Pipes Ltd (also noted in Q2 portfolio updates): Maker of pipes and packaging films.
Why Did Dolly Khanna Sell?
While only Khanna’s internal strategy team knows the full logic, such large-scale exits have made many market-watchers speculate:
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Profit Booking: With some stocks generating outsized returns, Khanna may simply be locking in profits.financialexpress
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Sector Overheating: Sharp rallies in smallcap stocks earlier this year have led to froth—valuations in many segments appear stretched, making risk management through selective exits prudent.financialexpress
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Portfolio Rebalancing: Her moves may reflect a shift towards other cyclical themes or sectors with better risk-reward.
Is This a Warning Sign?
Khanna’s track record for early exits sometimes precedes broader corrections in smallcaps. Her bulk offloading is a reminder that:
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When smart money moves out, it’s often a signal to review overhyped or richly valued names in personal portfolios.smallcase+1
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Smallcaps remain volatile and can be the first to correct if broader market sentiment sours.
What Should Investors Do?
Stocks that lose the “Queen of small caps” as a backer often face increased scrutiny. While not every exit means inevitable downside, heightened vigilance on fundamentals, sector health, and valuations is now warranted for:
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20 Microns
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Polyplex Corp
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Rajshree Sugars & Chemicals
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Sarla Performance Fibers
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Talbros Automotive
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Prakash Pipes
Investors should reassess their smallcap holdings and avoid blind hero-worship—strategic exits by seasoned investors like Khanna are sometimes the best warning signals the market ever gives.
Backed by disciplined approach and strong research, combined with a focus on long-term value, she has made a name for herself in the markets. Currently her portfolio holds 11 stocks worth almost Rs 487 cr. Her portfolio is managed by her husband Rajiv Khanna and often, it leans towards more traditional stocks in manufacturing, textile, chemicals, and sugar industries.
So, when she decides to sell off 6 of her holdings in a single quarter, it does send the investor community into an overdrive, trying to figure out if these are strategic exits or signs of distress in the small cap space? Let us investigate.
#1 Exit: 20 Microns – Cashing out after 650% gains?
Incorporated in 1987, 20 Microns Ltd is in the business of Industrial Micronised Minerals and Speciality Chemicals. The company is India’s largest manufacturer of micronized to nano-sized minerals, and has a current market cap of Rs 743 cr,
As per Trendlyne, Dolly Khanna held a stake in the company which began with a 1.29% stake in September 2024 and went up to 1.99% for the quarter ending June 2025, before it fell below 1% as per exchange filings for the quarter ending September 2025. This means Khanna has partially or completely exited this stock.
The EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed from Rs 66 cr in FY20 to Rs 117 cr in FY25. That is a compounded growth of 12%.
As for the net profits, the company saw a compounded growth of 21% from Rs 24 cr in FY20 to Rs 62 cr in FY25.
The share price of 20 Microns Ltd was around Rs 28 in October 2020 and as on closing of 24th October 2025, it was Rs 211, logging in a jump of 654%.
#2 Exit: Zuari industries – loss-making conglomerate dumped?
Incorporated in 1967, Zuari Industries Ltd is in the business of real estate, investment services, engineering services, management services, manufacturing and trading of furniture, manufacturing and sale of sugar and its by products, ethanol and generation of power. The current market cap of the company is Rs 1,025 cr,
As per Trendlyne, Dolly Khanna bought a 1.17% stake in the company in June 2022, which was 1.65% for the quarter ending June 2025. And as per the recent exchange filings for the quarter ending September 2025, her holding has fallen below 1%, meaning a complete or partial exit.
The sales for Zuari have grown at a compound rate of just 5% from Rs 771 cr in FY20 to Rs 970 cr in FY25.
The EBITDA was a negative Rs 260 cr in FY20 and as for FY25, an EBITDA of 50 cr was logged in.
The net profit is an area of concern which could be a reason for Khanna’s exit from the stock.
The share price of Zuari Industries Ltd was around Rs 52 in October 2020 and as on closing of 24th October 2025, it was Rs 344, which is a jump of 562%.
The other sell offs
Polyplex Corporation Ltd – A leading global PET film manufacturer with a polyethylene terephthalate (PET) film capacity of 4,78,500 metric tonnes (MT). It has over 35 years of experience in plastic films, 7 manufacturing facilities in 5 countries with multiple warehouses & liaison offices worldwide.
Rajshree Sugars & Chemicals Ltd – Amanufacturer and marketer of white crystal sugar and industrial alcohol engaged in three segments, Sugar, Cogeneration and Distillery.
Sarla Performance Fibers Ltd – A manufacturer and exporter of polyester and nylon textured, twisted and dyed yarns, covered yarns, high tenacity yarns and sewing thread with a strong customer base.
Talbros Automotive Components Ltd – A leadingbrand in manufacturing of Gaskets and Heat Shields, Forgings, Chassis Systems, Suspension Systems and Modules, Anti-vibration Components and Hoses.
Portfolio clean up or a bigger game at play?
Dolly Khanna has time and again proved that her stock picking and dropping skills are second to none, and in most cases, she laughs her way to the bank. And it catches more attention because she does this in a category that scares many investors away – Small Caps.
So, when she drops 6 stocks at once, it causes investors of all categories to stop and take notice. While the companies we saw today that Dolly Khanna dropped are lesser-known, they were sure interesting to her and were a part of her portfolio for quite some time.
Why did they fall out of favour is something only Khanna would know. But it does raise speculation if this was a portfolio clean up or is there something that Khanna is seeing which the average investor is bound to miss. Whatever it may be, it could be a clever idea to have these stocks on a Watchlist.
Note: We have relied on data from http://www.Screener.in and http://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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