3 Small Cap Stocks That Sharekhan Has Given A Neutral, Hold And Buy Suggestion

Sharekhan, a leading stock broking firm has given a neutral view on Globus Spirits, Hold suggestion on Ipca Laboratories and recommended buying Lumax Auto Technologies Limited. Check the details here. Based on the quarter 3 numbers of the three small cap companies, the analyst of Sharekhan shared the view and estimates in the individual brokerage reports.

A neutral view on stock of Globus Spirits Limited

In the brokerage report on Globus Spririts Limited, the analyst has mentioned that there is a potential upside of 10% on the stock price, based on the estimates, but has given a neutral view. "Globus Spirit Limited's manufacturing business segment contributes ~59% to revenue and comprises bulk spirits, franchisee bottling, and by-products, whereas the consumer business segment contributes ~41% to revenue and comprises the value segment and premium segment."

The small cap company, Globus spirits, is one of the leading players in alcohol industry to manufacture, marketing and sale of it. Only company in India's alcohol industry that has a balanced business model which includes all segments of the spirits value chain, right from the manufacturing of alcohol to a diverse consumer portfolio. GSL's manufacturing business segment contributes ~59% to revenue and comprises bulk spirits, franchisee bottling, and by-products, whereas the consumer business segment contributes ~41% to revenue and comprises the value segment and premium segment. Its current market capitalisation is Rs 2,269.66 crore.

Hold shares of Ipca Laboratories Limited

Ipca Laboratories Limited reported a disappointing December quarter and numbers were below the estimates of analyst of Sharekhan. Only key positive aspect was that the API sales improved 4.2% y-o-y and 4.9% q-o-q in Q3FY2023 vs. 7% y-o-y decline seen in it in 9MFY2023. Based on the Q3 numbers valuation was changed, revision was done in estimates. "Ipca reported disappointing results for Q3 and numbers were below estimates. The guidance points at implied margins to be improving in the subsequent quarters. Factoring this, we have fine-tuned our earnings estimates for FY2023E and FY2024E and have introduced FY2025E and rolled forward the valuation basis to FY2025E. Operating leverage will be delayed owing to slower revenue growth and margins will be under pressure. The stock is trading at rich valuation levels of 27.1x/21.0x its revised FY2024/FY2025 EPS estimates, where earnings CAGR over FY2022-FY2025E is muted. Hence, we retain our Hold rating on the stock with a revised price target of Rs 909 per share."

Ipca is a fully integrated Indian pharmaceutical company manufacturing more than 350 formulations and 80 APIs for various therapeutic segments over 120 countries across the 6 continents. Ipca is a therapy leader in India for anti-malaria with a market share of over 34% and a fast-growing presence in the international market as well. Its current market capitalisation is Rs 21,015.50 crore.

Buy shares of Lumax Auto Technologies Ltd

Despite the muted performance of Lumax Auto Technologies, the analyst has suggested investors to buy the shares of this small cap company. Lumax Auto Technologies weak numbers were due to muted as key customers (HMSI, Bajaj Auto and Maruti Suzuki) registered a sequential decline in production. "While the company has reported weak set of numbers in Q3FY23 due to a sequential decline in vehicle production. However, going forward, the management is looking for a strong double-digit growth in revenues in FY24, on the back of a revival in overall automobile industry. Lumax Auto Technologies Ltd has been a predominantly two and three-wheeler focused company but going forward it expects significant shift in its revenue mix. However, the company is aiming to de-risk its business model and aiming to increase revenue from four-wheeler segment. The PV business has contributed 25% to topline in 9MFy23 and the company is expecting going 1/3rd of its revenue from 4w business, 1/3rd from 2- and 3-wheelers and the remaining from aftermarket and CVs. Beyond organic growth the company has been continuously looking for an inorganic growth. We maintain our Buy rating on the stock with revised price target of Rs 288. The stock trades at P/E multiple of 10.8x and EV/EBITDA multiple of 5.5x its FY25 estimates.

Lumax Auto technologies is part of Lumax - D. K. Jain Group, is a leading auto component manufacturer with a well-diversified product portfolio. It has over 3 decades of experience in supplying automotive components for original equipment manufacturers (OEMS). It supplies to most of the leading 2W OEMs in the country and is present in the 2W and 3W segments (45% of FY2021 sales), passenger cars (18% of FY2021 sales), and aftermarkets (20% of FY2022 sales).

Share price details of the companies

Company Name	Current market price (rs/share)	52-Week high (Rs /share)	52-Week low (Rs /share)	1-year movement (%)	3-year movement (%)
Globus Spirits Limited	792.10 (2.31% up on intraday basis)	1,640	700	Declined by 35.92%	Surged by 449.69%
Ipca Laboratories Limited	828.50 (0.03% down on intraday basis)	1,089	815.2	Declined by 13.94%	Surged by 13.79%
Lumax Auto Technologies Ltd	244.65 (10.75% up on intraday basis)	312	141.35	Surged by 39.16%	Declined by -1.19%

Disclaimer

The stocks have been picked from the brokerage reports of Sharekhan. Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.