2 Small Cap Stocks To Buy For Gains Of Up To 25% In The Short To Medium Term

1. Grindwell Norton:

HDFC Securities has given a 'Buy' on grinding wheel manufacturing company. The brokerage has set out a target price of Rs. 1600, while the stock's last closing price has been Rs. 1370.8, implying gains of 16.72 percent.

Technicals as observed by HDFC Securities:

Stock price is forming bullish higher top higher bottom formation on the weekly chart. As per the brokerage:

➢ Short term trend of the Stock is positive where it is trading above its 5,20 and 50-day EMA
➢ Oscillators like RSI and MFI is placed above 60 and rising upwards, Indicating strength in the current uptrend
➢ Plus, DI is trading above -DI while ADX line has started slopping upwards, Indicating stock is likely to gather momentum in the coming days.
➢ Considering the Technical evidences discussed above, we recommend buying Grindwell Norton at CMP of 1348 and average at 1260 for the upside targets of 1485 and 1600, keeping a stop-loss at 1215

Note the target price is set to be achieved in 3 months time.

2. Easy Trip Planners:

Easy Trip Planners of EaseMyTrip.com has been given a 'Buy' by ICICI Direct for gains of 25%. The suggestion on the scrip is for a timeframe is 12-18 months.

About Easy Trip Planners:Easy Trip Planners or EaseMyTrip.com (EMT) is the fastest growing and only profitable company in the online travel portal in India. It was founded as a B2B2C portal in 2008, providing travel agents access to its website to book domestic travel airline tickets. Subsequently, the company diversified into the business to customer (B2C) distribution channel in 2011. The company now offers a comprehensive range of travel-related products and services for end-to-end travel solutions, including airline tickets, hotels and holiday packages, rail tickets and bus tickets. As of FY20, airline tickets accounted for 94.0% of revenues while hotels and other services contributed 5.4% and 0.6% of revenues, respectively.

Triggers for future price performance:

1) Increased adoption of internet platforms in under-penetrated segments such as hotels, international travel and bus

(2) elevated growth in underlying demand in air and hotel segments due to rising income levels and

(3) deeper penetration of travel into lower tier towns.

Ministry of Civil Aviation has increased capacity given the expectation of recovery

The demand is set to improve given the improved conditions post the second wave and amid it the Ministry of Civil Aviation has already increased the capacity. Also, accordingly 90% of the chain hotels and top independent hotels are open for bookings.

"Easy Trip Planners (EMT) is the fastest growing and profitable company in• OTA space in India and is ranked second in the domestic air ticketing space "Lean cost model" and "No convenience fee strategy" remain key pillars• supporting such rapid, profitable growth. This has also led to stickiness by customers with healthy repeat transaction rate of ~86% in the B2C channel Further benefits would accrue from segments like international air, hotels and bus booking over the next three to four years, which are high margin business but currently having online penetration below 20% levels", said the brokerage report.

"We like EMT for its user friendly platform, unique travel offerings, low cost business model and healthy financial position. Considering strong growth potential of this technology platform in travel, we initiate coverage under Stock Tales format with a BUY recommendation Target Price and Valuation: We value EMT at Rs. 600, valuing at 45x FY24E EPS (ie.key implied ratio of 1.3x).

Disclaimer:

Stocks mentioned here are taken from brokerage reports and need not be construed as investment advice. At best the report is compiled for informational use only.

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