2 Stocks To Buy With Likely Potential To Become Multibaggers

Indices are broadly trading in a range in and around that 60,000 mark. It's time to look at small cap stocks with a potential to make money. Here are 2 stocks with a potential to make money in the long-term.

IOL Chemicals and Pharma

IOL Chemicals and Pharma is the largest producer of Ibuprofen and the only company worldwide being backward integrated with 35% global share. It is also the largest producer of Ethyl Acetate at single location in India. Over the next few years, the company's focus will be on diversifying into other speciality chemical products and increase the share of non-Ibuprofen business. The investment planned in setting up a new plant will aid the Company in strengthening its position in western markets and cater to its global customers, thereby helping in improving our market share.

IOL Chemicals: Margin pressures may ease

The stock of IOCL has dropped from levels of Rs 625 to Rs 360 as margins remained under pressure for the quarter ending June 30, 2022. The company saw its net profits dropping from Rs 67 crores in the first quarter of FY 2022 to Rs 37 crores in the first quarter of FY 2022-23.

Various business challenges of softening demand, rising inputs costs and volatility in chemical prices are slowly getting normalized as can be seen from recovery in EBITDA margins. The robust global demand on specialty chemicals front owing to shift in market share from China would benefit the sector over next few years. We believe that with the diversification, robust demand and easing pricing pressures, the company should give investors multibagger returns in the next 2-3 years. The stock currently trades with a trailing p/e of 15 times, which leaves good room for upside in the short to medium term.

Indiabulls Real Estate

The company is seeing a sharp upside in the last few trading sessions, as the date for getting the final approval for the merger with the Embassy Group draws near.

The NCLT Chandigarh meeting of secured & unsecured creditors and directions for convening meeting of India Bulls Real Estate shareholders is over and the final hearing is now scheduled for Sept 7, 2022. The merger going through could be a big trigger for the stock. We believe that should not be a hindrance. The other reason why we believe that the shares could be a multibagger is the fact that the company has taken a debt reduction exercise. Net debt was bought down to Rs 464 crores from Rs 1005 crores as on June 30, 2022.

Massive landbank in company's possession

IndiaBulls Real Estate has a massive 3,280 acres, near major metropolitans, the largest among all listed players. This provides adequate cushion and buffer for the company going forward. We believe that it would also help the company given that land prices have increased significantly over the last few years and also the fact that property prices in the high end category, where IndiaBulls Real Estate caters to. The shares of the company have fallen from levels of Rs 195 to Rs 89. At these levels the risk is minimal. The stock of the company has the potential to offer multibagger returns in the short to medium term.

Disclaimer

Investing in stocks is risky and neither the author nor Greynium Information Technologies would be responsible for losses incurred based on a decision in the article. The author owns shares in IndiaBulls Real Estate and IOL Chemicals and Pharma.