ICICI Securities Bullish On Two Small Cap Stocks, Recommends "Buy" For Gains Upto 116%

Leading brokerage firm ICICI Securities has picked ISGEC Heavy Engineering Ltd (ISGEC) and Repco Home Finance Ltd (Repco) to invest. The brokerage recommends "Buy" the stocks for robust gains up to 116% considering the current market price and the given target price. Here are the key takeaways from the stock about the stock:

Repco Home Finance (Repco)

The brokerage placed a "Buy" on the stock of Repco with a target price of 470/share. With the given target price, the stock is likely to surge up to 116% from the current market price. Its current market price is Rs 218.05/share on NSE, trading 1.84% up from the previous close. Its 52 week high is Rs 277.60/share and 52 week low is Rs 113.35/share, respectively.

It has fallen 8.3% in 1 week, 4.11% in 1 month, and 12.35% in 3 months, respectively. In 1 year it has fallen 5.95%, in 3 years it has fallen 27.45%, and in 5 years it has fallen 60.71%. The stock operates in the Financial Services sector as NBFC-Housing Finance. It has a market capitalisation of Rs 1,364.15 crore.

 

Repco - Buy for a target price of Rs 470/share

ICICI Securities said, "Repco Home Finance (Repco) reported PAT of Rs808mn in Q3FY23 - ahead of our expectations of Rs717mn. The beat resulted from annualised credit cost which was 70bps. However, PPoP was lower than our estimate due to higher than expected non-employee cost and lower spreads. Funding cost pressure outweighed yield expansion, thereby, pushing quarterly spreads lower (QoQ). On growth front, it's the second consecutive quarter of positive YoY growth, but it is still well below peers and hence catch up is yet to be seen. Asset quality has been improving with gross stage-3 as well as net stage-3 at 9-quarter low. Under the leadership of new MD & CEO, Mr. K. Swaminathan, who joined in February 2022, Repco's strategy on asset quality as well as growth front seems to be delivering the right results."

It added, "We believe company's business franchise is currently undervalued - the stock trades below its FY24E book."

 

ISGEC Heavy Engineering (ISGEC)

ICICI Securities has assigned a "Buy" on the stock of ISGEC with a target price of Rs 663/share, implying a potential upside of up to 45% from the current market price. The stock's current market price on NSE is Rs 459.25/share, 1% down as compared to its previous close. Its 52 week high is Rs 599/share and the 52-week low is Rs 425/share.

The stock has fallen 7.75% in 1 week, and 3.75% in 3 months, respectively. In 1 year it fell 19.07%, however, it gained 23.44% in 3 years. In 5 years, it fell 36.48%. It is an Engineering sector stock having a market capitalisation of Rs 3,383.46 crore.

 

ISGEC - Buy for a target price of Rs 663/share

ICICI Securities said, "ISGEC Heavy Engineering's (ISGEC) standalone revenue declined 1.5% YoY to Rs11bn (ISECe Rs12bn) in Q3FY23. Manufacturing segment revenue grew at 9%, whereas EPC declined 4% YoY. Improvement in the share of high margin manufacturing business led to marginal improvement in EBIDTA margin by 49bps YoY to 6.8%. We expect margins to see gradual improvement in coming quarters with lower commodity prices. Order intake of Rs13.8bn, increased 55% YoY on lower base led by conversion of healthy enquiry pipeline. Management indicated enquiry pipeline continues to remain robust in both domestic and international products. Execution of Cavite Biofuel plant in Philippines is on track and is expected to be operational by Aug-2023. Current consolidated orderbook stands at Rs77.5bn (1.7x TTM sales)."

It added, "We change our estimates for FY23E and FY24E marginally while factoring in lower execution and improved margin. We introduce our estimates for FY25E and accordingly roll forward our valuations. Maintain BUY rating on the stock with a revised target price of Rs663 (previously: Rs622)."

 

Disclaimer

The stocks have been picked from the brokerage reports of ICICI Securities. 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 consult with certified experts before making any investment decision.