2 Small & Midcap Stocks To Buy With Solid Potential, Could They Be Multibaggers?

Markets have gained momentum in the last few days. Here are a few stocks to buy that can be held for long-term. Some of these stocks can give good returns if held for the longer term.

KNR Construction: Buy the stock for a price target of Rs 334

According to Anand Rathi, KNR's FY22 performance checks all boxes: good project execution, consistent operating profitability, sturdy balance sheet. "The missed orders was due to unwillingness to compromise on margins/returns profile (in a keenly contested FY22) only to increase assurance. It hopes to add enough in FY23 to keep growth going. With progress at irrigation orders likely to follow payment cycles (discomfiting state finances), it forecasts modest FY23 revenue growth, and cautious margin guidance takes into account inflation. Near-term challenges appear to be fairly priced and, with the potential on offer, we upgrade our rating to a Buy with a target price of Rs 334," Anand Rathi has said.

KNR Construction: Dull FY22 inflows, assurance comforting for now

According to Anand Rathi, not withstanding the year-end surge in awarding, continued keener competition meant KNR failed to find success for a second straight quarter. "Management looks to change this, and targets Rs 40 bn-50 bn of orders in FY23. An ample prospect pipeline and expected moderation in competition keeps it sanguine. Though contracted q/q,the year-end order book (at Rs 97 billion, inclusive yet-to-be appointed Rs 7.7 bn), the year's order is good for the immediate future; growth beyond would need more

Techno Electric and Engineering - Strong order inflows, appealing valuation

Another stock that Anand Rathi has suggested a buy is the stock of Techno Electric. "Though its profitability was affected by inflationary pressures, Techno's Q4 execution was ahead of ARe. Its EPC revenue was 43% higher y/y to Rs3bn (ARe: Rs2.7bn). In FY22, it bagged orders of Rs 8 bn, less than expected, as orders of Rs 20.45 billion were not finalised and were received in Q1 FY23. Hence, the ytd order backlog is a strong Rs 35 billion and L1 of Rs 10 billion. Management expects good orders in FGD, the green energy corridor, smart meters and data centres. Cash & investments were Rs11 bn (35% of M.Cap). Based on the current order backlog, FY22 performance and management outlook, we have tweaked our figures. We retain our Buy rating with a target price of Rs 333 (12x FY24e EPS), earlier Rs 338," the brokerage has said.

Bullish on government FGD, “smart” metering plans

The government's push to install 200m smart/prepaid meters by Mar'24 to curb discom losses would benefit the company in the near to medium term. For FGD, too, the government expects full implementation of 125GW by 2024. "The bid pipeline of FGD orders would lead to good orders for the company. To benefit from the swelling opportunity in data centres in India, the company is setting up a 24MW data centre at Chennai, to be increased to 250MW by FY23 at several locations. It will also be building energy storage systems," Anand Rathi has said. It's hard to say whether these stocks could be potential multibaggers, but, they could give good returns.

Disclaimer

The above stock is picked from the brokerage report of Anand Rathi. Investors are advised caution as the markets have become exceedingly volatile. Neither Greynium Information Technologies, nor the author, nor the brokerage house would be responsible for any losses based on a decision reading the above article. Every effort has been made to provide accurate information and readers should understand the inherent risks before investing in the markets. The author and his family do not own shares of the above company.