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.

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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