Stocks to buy: Vikas Sethi is bullish on 2 smallcap stocks for short term; here is why

2 Small-cap Stocks to Buy: With the Nifty Smallcap 100 having retreated some five per cent from its all-time high of May 3, many investors are on the lookout for buying opportunities in the segment. Vikas Sethi of Sethi Finmart has handpicked two smallcap stocks from a short-term perspective with targets that suggest an upside potential of as much as nine per cent.

Ashoka Buildcon and Zaggle Prepaid Ocean Services are the two stocks Sethi is bullish on at the current juncture. He has placed his short-term targets for the stocks at Rs 185 and Rs 315, as against their May 8 closing prices of Rs 170.2 and Rs 292.5, respectively.

Buy Ashoka Buildcon shares for short term, says Vikas Sethi

• Recommendation: Buy
• Short-Term Target: 185
• Stop Loss: Rs 160

Rationale:

• Ashoka Buildcon is a leading infrastructure and construction company in India
• It has a strong order book of more than Rs 14,000 crore
• It has a diversified business with a focus on roads, railways, power and water EPC projects
• It recently secured a large water treatment order from the Mumbai Municipal Corporation
• The company is monetising its assets to improve balance sheet; it has sold a 51 per cent stake in its city gas distribution business to Mahanagar Gas Ltd (MGL) for Rs 562 crore
• It has entered a deal with Edelweiss Infra Fund Secura for the monetisation of 11 road projects, a move expected to generate Rs 2,300 crore
• Ashoka Buildcon is a fundamentally strong company with a healthy operating profit margin of 22 per cent
• It is supported by strong FII and domestic institutional investor holdings

Buy Zaggle Prepaid Ocean shares for short term, says Vikas Sethi

• Recommendation: Buy
• Short-Term Target: Rs 315
• Stop loss: Rs 280

Rationale:

• The company has more than 3,000 corporate clients, including Tata Capital, PVR INOX, NSDL, and Greenply
• It is in partnership with Visa for branded prepaid forex cards
• It has signed a Rs 200-crore deal with Torrent Gas Private Limited for its card-based loyalty program
• The company signed an agreement with Yokohama India in April
• It has a strong government focus on digitalisation
• Reducing cash usage presents a significant opportunity for the company
• The company has good financials with a return on equity (RoE) of 45 per cent
• Zaggle Prepaid Ocean Services staged a strong financial performance for the December quarter; quarterly PAT surged to Rs 15 crore vs to Rs 1 crore a year ago