Stocks to Buy: Mahindra CIE, PNC Infratech among top smallcap picks by Axis Securities with up to 28% upside
midcap and smallcap indices, outperformed largecaps by notable margins in the month of August 2023. During the month, sector rotation was visible in the market in which media, IT, and pharma indices delivered positive returns while banks, financial services, energy, commodities, and PSU banking indices witnessed weakness.
According to Axis Securities, the Indian stock market is likely to see a style and sector rotation from here. “With the strong catch-up by Midcaps and Smallcaps in the last couple of months, we believe that the margin of safety at current levels has reduced as compared to Largecaps.
Keeping this in view, the broader market may see some time correction in the near term while flows are likely to shift to Largecaps," Axis Securities said in a report. However, it believes the long-term story of the broader market continues to remain attractive.
Among smallcap stocks, the brokerage’s top picks include Kirloskar Brothers, JTL Industries, Mahindra CIE Automotive, Praj Industries, CCL Products (India), CreditAccess Grameen and PNC Infratech. Let us take a detailed look at the top smallcap stock picks by Axis Securities: Axis Securities believes its recommendation is supported by robust improvement in the company’s order book, increasing revenue contribution from the Services segment, restructuring of business activities resulting in improving ROE and ROCE and operating margins.
In view of the above-mentioned growth drivers, the brokerage firm values the company at a revised 19x on FY25 earnings to arrive at an upgraded Target Price of ₹975 per share, implying an upside of 17% from the current levels backed by consistent business performance in the last couple of quarters. Also Read: Stocks to Buy: ICICI Bank,
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