2 Small Cap Multibagger Stocks To Buy As Suggested By IIFL Securities

In the small-cap space, Deepak Fertilisers and Petrochemicals Corporation Limited and CG Power and Industrial Solutions Ltd have delivered multibagger returns in the last year. Deepak Fertilisers' stock has risen from Rs 203.50 on March 8, 2021 to Rs 601.50 on March 4, 2022, 3:30 p.m. IST, a gain of +398.00 (195.58 percent) in one year. CG Power's stock has risen from Rs 62.15 on March 8, 2021 to Rs 169.30 on March 4, 2022, 3:30 p.m. IST, marking a return of +107.15 (172.41%) in a year. The brokerage firm IIFL Securities has given both stocks a buy call rating, with Deepak Fertilizers having a target price of Rs 700 in 1 year and CG Power having a target price of Rs 250.

Buy Deepak Fertilisers For A Target Price of Rs 700

The brokerage has said "Deepak Fertilizers' better than expected result was primarily driven by the strength in the Technical Amonium Nitrate and Nitric Acid business which seems sustainable for the near future, as both markets are tight. Although margins were under pressure in the fertiliser and IPA businesses due to input cost pressures, this was more than offset by the robust performance from TAN and nitric acid."

IIFL Securities has claimed that "At just 12x FY22ii P/E, we continue to find the stock undervalued. Strong earnings should drive upside near-term, while commissioning of the ammonia project in early-FY24 should be the next trigger."

Buy CG Power For A Target Price of Rs. 250

The brokerage has highlighted that "Buoyant end-market outlook and swift recovery in business operations have fast-tracked CG Power's performance ramp-up to Rs50bn sales and Rs5bn PBT within a year vs 3 years targeted initially. After having broadly fixed the legacy issues, management with the help of a consultant will drive operational efficiency initiatives, which will not only improve OPMs and RoCE from FY23, but step-up cashflows for investing back in R&D, technology upgrade and expansion."

"To further its long term aspiration and build a consumer portfolio of similar size as CG, it will launch fans portfolio in FY22 using its existing distribution & reach. Pace of growth and penetration in our view will take longer and depend on building a credible consumer centric team. We believe CG Power is in a sweet spot, at the cusp of a capex recovery under a dynamic leadership, but requires close focus on building technological competencies and sustaining its leadership stature over the longer term," IIFL Securities further noted.

Disclaimer

The stocks have been picked from the brokerage report of IIFL Securities. Investing in equities poses a risk of financial losses. 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.