Benchmark indices hit trading on Thursday, the day of the weekly F&O expiration, as geopolitical tensions between Ukraine and Russia continued unabated. In addition, Brent crude prices above $120 a barrel also contributed to investor woes. The front-line S&P BSE Sensex hovered 690 points over the course of the day before settling at 57,596, down 89 points or 0.15 percent. The Nifty50, on the other hand, ended at 17,223, down 23 points or 0.13%. The 50-stock index had hit intra-day highs and lows of 17,292 and 17,091 respectively. Here is a list of four small cap stocks owned by Angel One Ltd. have been proposed and which can yield up to 63 percent upwards:
Suprajit Engineering |BUY| CMP: Rs 331 | TP: Rs 485 | Top: 47%
Suprajit Engineering (SEL), is the largest supplier of automotive cables to the domestic OEMs with a presence in both 2Ws and PVs. SEL has evolved over the years from a single product/customer company in India to diversified exposure, which combined with its low-cost player proposition has allowed it to gain market share and more business from existing customers.
SEL has outperformed the Indian auto industry in recent years (with positive growth versus low double digits for the domestic 2W and PV industry in FY21). The company believes that consolidating suppliers and adding new customers would help maintain the trend of market share gains in the market/wallet. SEL has grown profitably over the years and therefore has a strong balance sheet (net cash). We believe that SEL primarily benefits from an increase in production by OEMs around the world and is well insulated from the threat of electric vehicles (developing new products). The premium valuations are justified in our view due to the strong outlook and high quality earnings.
stove Kraft |BUY| CMP: Rs 644 | TP: Rs 1,050 | Upward: 63%
Stove Kraft Ltd (SKL) is engaged in the manufacture and sale of products for kitchens and home appliances such as pressure cookers, LPG cookers, non-stick cookware, etc. under the brand names ‘Pigeon’ and ‘Gilma’. In the pressure cooker and cookware segment, the company has outperformed the industry and its competitors over the past two years. Post-Covid, organized players gain market share from disorganized players, which would benefit the player like SKL. Going forward, we expect SKL to report healthy sales and profit growth thanks to new product launches, a strong brand name and a broad distribution network.
Sobha Limited |BUY| CMP: Rs 728 | TP: Rs 1.50 | Top: 44%
The company is engaged in residential and commercial real estate along with contractual activities. Businesses 70 percent of residential presale comes from the Bangalore market, one of the IT hubs in India. We expect new hires from the IT industry to increase the demand for housing in the South Indian market. We’ve seen strong consolidation among listed players in India, post-Demon, RERA, IL&FS crisis.
Listed players have gained market share in new launches over the past 2-3 years, we expect this to continue in the coming quarters. Ready to move stock and the stock levels under construction have dropped to their lowest levels. Customers now prefer the brand players such as Sobha Developers Company which is expected to launch 17 new projects/phases spanning 12.56 million square feet in various geographies. Most launches will come from existing land banks. Company with a land bank of approx 200mn Sqft salable area.
Ramkrishna Forgings |BUY| CMP: Rs 167 | TP: Rs 256 | Upward: 53%
Ramkrishna Forgings (RKFL), a leading forge player in India and a select few with heavy presses, will benefit in the near term from favorable demand prospects for the medium and heavy duty vehicle (M&HCV) industry in the domestic and export markets. The company has been phasing out its CAPEX in recent years, during which time it was impacted by an industry slowdown. With the end of the CAPEX cycle, the favorable medium-term outlook and sufficient capacity, we believe RKFL volumes can post a volume CAGR of 29 percent over FY21-23E. RKFL has been able to add new products with a higher added value. Improved mix and operating leverage is expected to result in an improvement in the EBITDA margin of ~550 bp year-over-year in FY22E. Aided by strong volumes and profitability, as well as deleveraging on the balance sheet, we expect RKFL earnings to rise 10-12x in FY23E-24E from FY21 levels.
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