Invest In 2 Smallcap Stocks For Upto 40% Upside, Sharekhan Remains 'Positive',Stock Price Gain Upto 28% In 1Yr

Stock Recommendations By Sharekhan and Company Performances

Sharekhan, a renowned brokerage firm remains positive about the stocks of Arihant Superstructures Ltd. (ASL), and VST Tillers and Tractors Ltd.

In Q4FY22, the financial results of Arihant Superstructures Ltd. have lagged expectations on a higher base contributed by land sales. Its sales booking and collections in the FY2022 have increased by 74% y-o-y and 45% y-o-y, respectively. OPM at 23.4% surprised positively led by an increase in work-in-progress signaling the gathering pace of construction. Now, the company is looking forward to pre-sales of Rs. 1500 crore in FY2023 with a strong launch pipeline of over Rs. 3000 crore. It has raised funds through NCDs, and its surplus cash generation is expected to aid new project developments.

In Q4FY22, the financial results of VST Tillers and Tractors Ltd. have beaten expectations. Its operational performances have improved significantly, despite the cost pressure on raw materials. Revenue, EBITDA, and PAT grew by 12.1% y-o-y, 41.4% y-o-y, and 70.9% y-o-y respectively in Q4FY22. The market capitalization of this small-cap company is around Rs. 2,293 crore. The company is fetching a dividend yield of 0.79%.

 

Return comparison of stocks and past performances on NSE

In this table, the Current Market Price (CMP) and the Target Price (TP) of the recommended stocks have been mentioned.

The current market price of Arihant Superstructures Ltd. is Rs. 143, and the brokerage firm has estimated a target price of Rs. 200, with a potential upside of 40% in 1 year. In the past 1 year, its stock price has surged by 28.94%, but in the past 6 months, the stock price has fallen by 28.46%. In the past 1 month, the share price has fallen by 9.41%.

The current market price of VST Tillers and Tractors Ltd. is Rs. 2654, and the brokerage firm has estimated a target price at Rs. 3238, with a potential upside of 22% in 1 year. In the past 1 year, its stock price has gained by 27.59%, in the past 6 months, the stock price has fallen by 6.27%, while in the past 1 month the share price has fallen only by 1.04%.

Viewpoint: Sharekhan

About the stocks of Arihant Superstructures Ltd., the brokerage firm said, "ASL is scaling up its size through aggressive launch pipeline over the next 3 to 5 years. Almost fully paid-up land bank, ready-to-launch project portfolio, in-house critical operations, and presence in key regions in the right category place ASL in a sweet spot. The company is currently trading at P/B of 2x on FY2024 earnings, which we believe does not factor in the expected scale-up of operations." However, the key risk will be a slowdown in real estate demand, especially in the MMR region.

Sharekhan thinks about VST Tillers and Tractors Ltd., "The company is well-placed to benefit from a strong rural economy and increase in farm mechanization; earnings to growth robust at 23.5% CAGR during FY22-FY24E. Market share gains are driven by new product launches across brands. The stock is trading below its historical average at P/E multiple of 15.1x and EV/EBITDA of 12.4x on its FY24E estimates. We believe that current valuations offer investors a good entry point, given a strong brand recall, extensive network, strong balance sheet, and superior return ratio profile. But rising commodity prices and pricing pressures from automotive OEM customers can impact its profitability."

Disclaimer

The above stocks were picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article