Buy These 4 Small-Cap Stocks To Get Up To 83% Returns Amid Rising Inflation

After an extreme bearish tone last week, the Indian market is once again set to begin a roller coaster ride this week. Benchmarks Sensex and Nifty 50 have taken a massive hit due to the depreciating rupee, interest rate hikes, mounting inflation, huge FPI outflows, and weak cues. Sensex and Nifty 50 dropped by nearly 4 per cent last week (May 9 to May 13). Although, the last two trading sessions were mildly red and almost tilting towards a flatter stick. In the upcoming week too, market experts believe that the markets will remain volatile. So, amid an uncertain market, here are four stock recommendations that will help you get two-digit returns.

Yash Gupta, equity research analyst, Angel One Ltd. recommends these 4 long-term stocks as lingering concerns over the weakening rupee, global interest rate hikes, elevated inflation numbers, and lockdowns in China are expected to keep investors on the edge in the week ahead.

Suprajit Engg.

Rating Buy |CMP Rs 308 |Target Price Rs 485 |Upside 57 per cent 

Suprajit Engineering (SEL), is the largest supplier of automotive cables to the domestic OEMS with presence across both 2Ws and PVs. SEL over the years has evolved from a single product/client company in India to having a diversified exposure which coupled with its proposition of low-cost player has enabled it to gain market share and more business from existing customers. SEL has outperformed the Indian Auto industry in recent years (posting positive growth vs low double-digit declines for the domestic 2W and PV industry in FY21). The company believes that consolidation of vendors and new client additions would help in maintaining the trend of market/wallet share gains. SEL has grown profitably over the years and as a result, boast a strong balance sheet (net cash). We believe SEL is prime beneficiary of a ramp-up in production by OEMs across the globe and is well insulated from the threat of EV (is developing new products). Its premium valuations are justified in our opinion owing to its strong outlook and top-grade quality of earnings.

Sobha Limited

Rating Buy |CMP Rs 506|Target Price Rs 750 |Upside 48 per cent 

The company operates in Residential & Commercial real-estate along with Contractual business. Companies 70 per cent of residential pre-sales come from the Bangalore market which is one of the IT hubs in India, we expect new hiring by the IT industry will increase residential demand in the South India market. We have seen a strong consolidation among listed players in India, post Demon, RERA, and IL&FS crisis. Listed players have gained market share in new launches in the last 2-3 years, we expect this to continue in coming quarters. Ready to move inventory and under construction inventory levels have moved down to its lowest levels. Customers are now having a preference towards the branded players like Sobha Developers Company expected to launch 17 new projects/phase spread over 12.56mn sqft across various geographies. The majority of launches will be coming from existing land banks. The company having a land bank of approx. 200mn Sqft of salable area.

Ramkrishna Forg.

Rating Buy |CMP Rs 158|Target Price Rs 256 |Upside 62 per cent 

Ramkrishna Forgings (RKFL), a leading forging player in India and among a select few having heavy press stands to benefit from a favorable demand outlook for the Medium & Heavy Commercial Vehicle (M&HCV) industry in domestic and export markets in the near term. The company has phased out its CAPEX over the past few years during which it was impacted by industry slowdown in certain periods. With the end to the CAPEX cycle, the favorable outlook in the medium term, and sufficient capacity in place, we believe RKFL volumes would be able to post volume CAGR of 29 per cent over FY21-23E. RKFL has been able to add new products which have higher value addition. Better mix along with operating leverage is expected to result in ~550 YoY bps EBITDA margin improvement in FY22E. Aided by strong volumes and profitability as well as balance sheet deleveraging, we expect the RKFL’s earnings to jump 10-12x in FY23E-24E from FY21 levels.

Stove Kraft

Rating Buy |CMP Rs 574 |Target Price Rs 1050 |Upside 83 per cent 

Stove Kraft Ltd (SKL) is engaged in the business of manufacturing & selling Kitchen & Home appliances products like pressure cookers, LPG stoves, non-stick cookware, etc. under the brand name ‘Pigeon’ and ‘Gilma’. In the Pressure Cookers and Cookware segment, over the last two years, the company has outperformed Industry and its peers. Post-Covid, organized players are gaining market share from unorganized players which would benefit the player like SKL. Going forward, we expect SKL to report healthy top-line & bottom-line growth on the back of new product launches, a strong brand name, and a wide distribution network.

Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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