3 Best Small Cap Stocks To Buy For 2023 And Beyond

Buy Affle India stock, says Sharekhan

The brokerage is bullish on the stock of Affle and sees good potential going forward. "Affle India (Affle) is expected to largely benefit from the trends seen in advertising. Top media agencies forecast growth in Indian advertising expenditure for the calendar year 2023 to remain buoyant. The agencies are projecting digital advertising to be larger than television advertising due to larger adoption of connected devices leading to massive shift of advertiser's budgets to at least 50% on digital and mobiles, from 30% currently. Further, the easing of lockdown restrictions has opened categories such as Travel & Hospitality. The pandemic has added a new layer of mobile users who took to mobile apps for the first time and are now active users. So, the next 100 million shoppers in India are expected to come from these audiences with an affinity towards regional languages," the brokerage has said.

Price target of Rs 1400 on the stock of Affle India

Sharekhan has set a price target of Rs 1,400 on the stock of Affle India. "Given the strong sector outlook, strong presence in high-growth verticals and shift of advertising budgets towards mobiles we expect Affle's revenue to clock an impressive 32% revenue CAGR over FY22-25E. Affle is currently trading at 57.8x/40.1x/30.3x its FY2023E/FY2024E/FY2025E EPS. We maintain a Buy recommendation on the stock with a revised PT of Rs. 1400 over the next 12 months," the brokerage has said. According to Sharekhan, the Entry of a large technology player in this space, inability to generate relevant data for targeted advertisers; and Government regulations related to management of consumer data and respect for privacy remain key risks for the company.

Buy Greaves Cotton, says Sharekhan

According to Sharekhan, under the refocus strategy, the company has transformed is businesses to expand its markets from 3W diesel engines to last-mile mobility, move beyond one product/application/fuel with focus on clean tech, increasing value to customers through B2C, expand products to solutions, and leverage the company's brand and penetration. Persistent efforts from the management paved a profitable growth path for the company. "Greaves Electric Mobility (GEML), the e-mobility arm of Greaves, is value accumulator for the company. GEML has lately received an investment of US$150mn in GEML at a post valuation money of US$419mn, by a family-owned global investor, Abdul Latif Jameel, for a 35.8% stake in the GEML. Going forward, the company is open for new strategic partnership, which can lead to value unlocking. The company has consolidated net cash of Rs 1,400 crore (Rs 61/share), which will be utilised for new product and technology (~35%), new opportunities (~25%), capacity expansion (~20%) and brand building (10%)," Sharekhan has said.

Buy Greaves Cotton stock for a price target of Rs 183

Sharekhan expects the financial performance of the e-mobility business to strengthen going forward, driven by increasing contribution of high-speed e-2Ws, increasing retail penetration, and new launches. "The stock trades at a P/E multiple of 21.2x and EV/EBITDA multiple of 9.1x its FY2024E estimates. Thus, we reiterate our Buy rating on the stock of Greaves Cotton with a 12-month price target of Rs. 183," the brokerage has said.

Buy Lemon Tree Hotels Stock

This is another stock where Sharekhan has a "buy" call on. "The consistent improvement in profitability will drive cash flows, which will help in strengthening balance sheet and return profile in the coming years. The stock has corrected by 20% from its recent high and is trading at 15x/11.6x/9.6x its FY2023E/24E/25E EV/EBIDTA, which provides strong opportunity to enter emerging hospitality play. Hence we initiate viewpoint on Lemon Tree Hotels with a Positive view and expect a potential upside of 30% from current levels," the brokerage has said. The stock of Lemon Tree Hotels was last trading at Rs 85.70.