Sharekhan Bullish On 3 Largecap & Smallcap Stocks: Upto 36% PAT Growth, Above-Estimated Results

Indian stock markets are traded mostly flat today. Sharekhan gives Buy ratings to these 3 quality small-cap and large-cap stocks, from various sectors. Large-cap stocks are known to be more stable and give better returns in the long term, while small-cap stocks can give higher returns in the short term, but poses a bit more risks than large-cap stocks.

Greenlam Industries Ltd.

The Current Market Price (CMP) of the small-cap stock Greenlam Industries Ltd. is around Rs. 322. Sharekhan has estimated a Target Price for the stock at Rs. 420. Sharekhan said, "We retain Buy considering its strong growth outlook over FY2022-FY2025E. For Q2FY23, Consolidated revenues beat estimates led by strong realization growth in laminates while OPM lagged on account of continued raw material cost pressures. The company reduced its net debt to Rs. 75.5 crore led by Rs. 195 crore preferential issue." The company reported higher-than-estimated consolidated revenues at Rs. 518 crores, up 14% y-o-y led by 27% y-o-y rise in laminate average realizations. Greenlam is among the world's top 3, Asia's largest, and India's No. 1 surfacing solutions brand.

Biocon Ltd.

The Current Market Price (CMP) of the large-cap Pharmaceuticals stock Biocon Ltd. is around Rs. 284. Sharekhan has estimated a Target Price for the stock at Rs. 340. According to Sharekhan, "Biocon registered mixed operating performance in Q2 with revenue growing in strong double digits, while higher cost pressures led to a decline in PAT. Revenue grew by 26% y-o-y to Rs. 2,319.7 crore, driven by strong 34% y-o-y growth in the biologics segment, 25.9% y-o-y growth in the research services segment, and 17.5% y-o-y growth in the generic segment. Consolidation of Viatris and the strategic vaccines alliance with Serum Institute will add to growth of the Biosimilars business in H2FY2023. Margins might remain lower due to higher R&D cost. The stock is currently trading at 32.9/21.6x its FY2023/FY2024E earnings."

Gabriel India Ltd

The Current Market Price (CMP) of the small-cap stock Gabriel India Ltd. is around Rs. 177. Sharekhan has estimated a Target Price for the stock at Rs. 217. According to the brokerage firm, "We maintain Buy factoring in robust automotive demand, its preparedness to benefit from the adoption of EVs in India, and rolling forward target multiple to December 2024E EPS. Its Revenue, EBITDA, and PAT grew by 36.1% y-o-y, 37.4% y-o-y, and 46.7% y-o-y, respectively. Faster adoption of EVs in India would be the key growth driver for Gabriel. Gabriel's earnings are set to report a 42.8% CAGR over FY2022E-FY2024E, driven by an 18.3% revenue CAGR and a 220-bps expansion in EBITDA margin to 8.5% in FY2024E from 6.3% in FY2022. The stock trades at attractive valuations of 13.9x P/E multiple and 8.3x EV/EBITDA multiple its FY2024E estimates."

Disclaimer

The above stocks were picked from the brokerage reports by Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.