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Accumulate These 2 Small Cap Stocks Including 1 Multibagger Stock For Robust Returns: Geojit

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Leading Brokerage firm Geojit has maintained positive outlook on two Small cap stocks with an "Accumulate" rating. These two stocks are TTK Prestige Ltd, and Granules India Ltd. TTK Prestige is a Kitchen Appliances company, whereas Granules India is a pharmaceutical company. According to the brokerage's given target price, both stocks are likely to give a potential return of up to 16% on the investments if the stocks are purchased at the current market price. Here are the key takeaways from the report:

 

TTK Prestige Ltd

TTK Prestige Ltd

TTK Prestige Ltd (TTK), the flagship company of the TTK group, mainly focuses on the kitchen appliances segment. The company has five manufacturing plants and strong distribution networks. It is a small-cap Kitchen appliances company having a market cap of Rs 12,320.71 crore.

Geojit has assigned an "Accumulate" on TTK Prestige stock with a target price of Rs 1,025 per share. If we consider the given target price, the stock is likely to give a return of up to 16% if you buy the stock at the current market price. The stock's current market price is Rs 888.85 per share.

On 14 December 2021, the stock recorded its 52 week high at Rs 1,264.65, and on 17 June 2022, the stock recorded its 52 week low at Rs 744.70, respectively.

The stock has given 2.39% positive returns in 1 week. In 1 and 3 months, it has fallen, giving 6.63% and 2.07% negative returns. In 1 year, the stock has given 15.44% negative returns. It has given 46.24% in 3 years, whereas, in 5 years, it gave 59.49% positive returns on investments.

TTK - Healthy revenue growth in the first half
 

TTK - Healthy revenue growth in the first half

For Q2FY23, consolidated revenue declined by 2%YoY (+17%YoY in H1FY23) due to a high base (+35%YoY in Q2FY22) and de-growth in export business (-28%YoY to Rs.17cr). The UK subsidiary (contributes ~4% to total revenue) reported revenue degrowth of 31% YoY due to current steep inflationary pressure. TTK has introduced 16 new SKUs during the quarter (25 QoQ) and has slated for the launch of ~32 new SKUs for Q3FY23. TTK targets Rs.50bn revenue by FY27 (from Rs. 27bn in FY22) through organic (Rs. 40bn including exports of Rs. 5bn) and inorganic (Rs. 10bn) routes. TTK has almost doubled its capacity in the cooker segment, along with significant expansion in distribution network in high growth areas. The company targets to add ~100 stores a year in the next 3 years (currently 665 stores in 376 towns). "All these initiatives will support market share gains. We believe the easing inflationary pressure will support demand going forward and expect revenue CAGR of ~11% over FY22-FY24E," the brokerage has said.

TTK - Brokerage's comments

TTK - Brokerage's comments

According to the brokerage, barring short-term pressure on demand and margins due to high inflation, the long-term outlook is positive given rising middle-income households, improvement in the real estate sector, and easing input prices, along with TTK's strong brand recall. "The stock currently trades at ~37x 1Yr Fwd P/E. We value TTK at 41x FY24E EPS to arrive at a revised target of Rs. 1,025, and maintain Accumulate rating," the brokerage has said.

Granules India Ltd.

Granules India Ltd.

Granules India Ltd. (Inc) is a vertically integrated, high-growth pharmaceutical company headquartered in Hyderabad, India. The company manufactures Active Pharmaceutical Ingredients (API), Pharmaceutical Formulation Intermediates (PFI) and Finished Dosages (FD). It is a small cap pharmaceuticals company having a market cap of Rs 8,854.12 crore.

The brokerage in its report suggests "Accumulate" the stock for an estimated target price of Rs 408 per share. According to the brokerage, the stock with the given target price could give up to 15% potential returns. The stock last traded on NSE at Rs 356.60 per share.

The stock recorded its 52-week high level on 4 November 2022 at Rs 381, and the 52 week low at Rs 226.95 on 20 June 2022, respectively.

It is a multibagger stock, with a maximum of 185.05% returns in 5 years, and a maximum of 171.59% returns in 3 years, respectively. In 1 month, it gave 16.42% and in 1 year, it gave 13.26% positive returns, respectively. However, in the past 1 week, it has fallen, giving 1.1% negative return.

Granules - Growth across all segments

Granules - Growth across all segments

Q2FY23 revenue was reported at Rs.1,150 cr (up 29% YoY, 13% QoQ) from Rs.888cr in Q2FY22 on account of increased business in the US, especially in the API segment. The share of API in revenue grew from 21% to 29% YoY. Revenue share from the US increased to 57.8% from 53.8% in Q2FY22, mainly due to higher paracetamol sales despite continued price erosion. EBITDA was reported at Rs. 243cr up 61% YoY, with EBITDA margin expanding to 410bps YoY. Adj PAT was reported at Rs.145 cr (80% YoY, 14% QoQ). Softening raw material prices and freight cost boded well for the company. During the quarter, Granules filed two ANDAs, two US DMFs, three CEPs and received two US ANDA approvals. The share of paracetamol increased to 46.8% from 33%, owing to higher availability of Key Starting Materials (KSMs)- PAP (Para Amino Phenol).

Granules - Brokerage's comments

Granules - Brokerage's comments

According to the brokerage, the continuous price erosion in the US is expected to be offset by higher sales in other geographies and greater focus on operational efficiencies. "We continue to remain optimistic about the company's long-term profitability and growth prospects owing to new launches, focus on backward integration, and increased market share in existing geographies. Hence, we reiterate our Accumulate rating with a target price of Rs.408 based on 15x FY24E EPS," the brokerage has said.

Disclaimer

Disclaimer

The stocks have been picked from the brokerage report of Geojit. Greynium Information Technologies, 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 check with certified experts before making any investment decision.

 

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