Sharekhan Suggests 2 Smallcap Stocks To Buy, Upto 40% Return, Fall Upto 62% In 1 Year

Both Nifty and Sensex are bearish today in the Indian markets. The recent repo rate hike by the RBI and interest rate hike by the US Federal Reserve have impacted largely on this. Nifty stood at 15,375.25 points, falling by 2.02% today, 3.12pm. Here, two stocks have been mentioned, those were recommended by the reputed brokerage firm Sharekhan for good returns.

Stock recommendations and performances

Sharekhan, the reputed brokerage firm recommended investors to buy the stocks of Strides Pharma Sciences, and Va Tech Wabag for aggressive near-term returns.

In Q4FY22, Va Tech Wabag's revenue was below estimate, while OPM surprised positively. Net profit remained flat y-o-y. Order inflows in FY22 were robust at Rs. 3,648 crore. Order book at Rs. 10,107 crore is around 3.4x its FY22 revenue, providing healthy revenue visibility. Domestic and overseas order pipeline remained buoyant.

Strides' Q4FY22 performance improved as the company reported operating profits for the second consecutive quarter while adjusting for one-offs, there was a net profit as compared to a loss in the previous quarters. The results are better than estimates. Going ahead, the US business' performance is expected to stage a marked improved with the green shoots of revival visible. The stock is offering a dividend yield of 0.84%.

Comparison of stock prices & NSE market tracker

In this table the Current Market Price (CMP) and the Target Price (TP) of the recommended stocks have been mentioned.

Company	CMP	TP	1 Year Expected Return
Va Tech Wabag	Rs. 244	Rs. 333	36.47%
Strides Pharma Sciences	Rs. 322	Rs. 450	39.75%

For Va Tech Wabag, the 52 week high level is Rs. 404.00, and the 52 week low level of the stock is Rs. 223.65. The market capitalization of the said company is Rs. 1,403 crore (small cap). In the past 1 year the share price has fallen by 38.58%, but in the past one month the share price has fallen only by 9.10%, when the market has been more bearish for other stocks, showing good potential in the long term.

For Strides Pharma Sciences, the 52 week high level is Rs. 820.50, and the 52 week low level of the stock is Rs. 263.35. The market capitalization of the said company is Rs. 2,652 crore (small cap). Similarly, in the past 1 year the share price has fallen by 62.43%, but in the past one month the share price has fallen only by 2.22%. So, this stock is expected to offer you good returns.

Comments By Sharekhan

About the stocks of Va Tech Wabag Sharekhan stated, "We maintain a Buy on Va Tech Wabag with a revised target price of Rs. 333, considering attractive valuation and improving earnings outlook. The company is focusing on technological projects which are backed by multi-lateral funding agencies or central government. This would provide better margins and ensure timely and better cash flows."

On the other hand, commenting on the stocks of Strides Pharma Sciences Sharekhan said, "Management has guided for a $250 mn revenues from the US For FY23. Which translates into a strong growth. The other regulated markets are expected to sustain their strong growth momentum. Valuations now appear reasonable post the stock price correction and provide a good opportunity for investors. Basis this and an encouraging outlook for the US business, we upgrade our recommendation on the stock to Buy from Hold with an unchanged target price of Rs. 450."

Disclaimer

The above stocks were picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. 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.