Small Cap Stock Under Rs 100 Rallied 4.20%, Buy For 30% Gains: LKP Securities

LKP Securities has assigned a "Buy" on Electronics Mart India Ltd. (EMIL) with a target price of Rs 86 apiece. According to the given target price, if you buy the stock at the current market price, it can fetch gains up to 30%. EMIL is the 4th largest electronic retailer with a diversified product offering (6000 SKUs across product categories from more than 70 consumer durable and electronics brand) and is strongly placed in the southern region (AP and Telangana). With a market capitalisation of Rs 2,579.74 crore, it is a small-cap stock.

Stock Performance Over The Past 5 Years

EMIL's stock rallied 4.20% on Wednesday, last traded at Rs 67.05 apiece. The stock hit the 52 week low on 28 March 2023 at Rs 61.60 apiece, and 52 week high on 20 October 2022 at Rs 103.65 apiece. It was listed on exchange on 17 October 2022.

Since the date of listing, it declined by 20.65%. The stock gained 0.75% in the past 1 week. However, it declined by 4.49% in 1 month and 21.49% in 3 months, respectively.

Among leading players with consistent track record of growth and profitability

LKP Securities said, "EMIL enjoys superior store metrics than peers, led by higher realisations, higher bill sizes and superior product mix which drive higher store throughputs. Considering the emerging demographics in India backed with rising per capita income, improving power situation, multiple financing options we believe there is big scope for organized electronic retail segment to grow."

It added, "EMIL performance in 9MFY23 has been strong wherein revenue grew 32% YoY to ₹41,179mn and EBITDA margin at 6.0% and EBITDA grew 21% YoY while PAT was up 26% YoY to ₹867mn. EMIL has strong growth visibility ahead with stable margins and return ratios. EMIL's cluster-focused expansion strategy will help to build depth and scale in its targeted geographies. EMIL's plan to build its presence in the NCR region will provide diversification benefits from its current concentrated presence in South-India."

It further added, "We expect Revenues/EBITDA/PAT to grow at a CAGR of 30%/27%/23% over FY22-25E. Valuations are reasonable compared to competition and currently trades at 15.5x FY25 PE and 6.8x EV/ EBITDA. We Initiate with a Buy rating and PT of ₹86."

Disclaimer - The stock has been picked from the brokerage report of LKP Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.