2 small cap stocks likely to fly high
and are trading at their all-time highs. Nifty saw a new lifetime intraday high of 16,146.90, while for Sensex the all-time intraday high was 53,887.98. The corporate earnings season has started and so far has been in line with market expectations. Apart from that, easing restrictions across the country except for covid-19 hot spots improves overall economic activities. The RBI is also expected to keep key rates unchanged in its August 6 monetary policy review. The June 2021 figure for vital macroeconomic indicators is raising optimism in the environment. All of this bodes well for the stock markets. In line with the benchmarks, the mid cap and small cap indices are also at record levels. The NIFTY Smallcap 100 index is up 49.4% since August 3. The index is in green for one week, one month, three months, six months and one year. Real estate stocks have performed well in the recent past, benefiting from prevailing sentiment. We bought a real estate stock and a construction engineering company in the small cap segment, which should take off in the short to medium term.
1. Kolte Patil Developers Ltd (NS 🙂
Founded in 1991, Kolte Patil Developers is a real estate company with a strong presence in the residential market of Pune, Maharashtra. The company has built and developed more than 50 projects, including residential complexes, commercial complexes and IT parks in Pune, Mumbai and Bangalore. Kolte Patil Family Office and Cerestra Ventures, a real estate private equity fund, have signed a pact to invest through Winvest, a PropTech construction platform. Eligible investors will likely benefit from a separate asset portfolio and hassle-free exit opportunities thanks to the condominium model through this platform. The Pune-based real estate company has signed an agreement with Planet Smart City to form a joint venture to develop 15,000 homes. The joint venture will be involved in the development of ambitious housing projects in Bengaluru, Mumbai and Pune. Bengaluru and Pune are major computer centers in India. IT companies have so far remained immune to the economic problems associated with the pandemic. Kolte Patil’s turnover is expected to grow at a higher rate as a listed real estate player with a dominant presence in these areas.
Kolte-Patil Developers net profit was Rs 21.80 crore in Q4FY2021, compared to a net loss of Rs 2.18 crore in T4FY2020. Its net sales jumped 33.5% to Rs 296.1 crore as of Q4FY2021 from Rs 221.74 crore during the comparison period. The script generated 86.8% returns in one year, 4.9% negative returns in six months, 18% in one month, and 5.8% in the last five days. Currently, it is trading at a discount of 8.4% from its 52 week high of Rs 285.6.
2. Gayatri Projects Ltd (NS 🙂
Gayatri Projects Ltd is a flagship company of the Gayatri group. The group’s interests cover infrastructure, electricity, hotels, real estate and industry. Founded in 1963, the company is an infrastructure company with expertise in the construction and ownership of infrastructure assets. Gayatri Projects is present in the construction of engineering and construction projects (or EPC) of roads, irrigation and industrial projects across India. The company reduced its long-term debt by 25% in fiscal 2021 to Rs 519.2 crore, from Rs 689.6 crore the previous year. It also plans to raise funds by issuing stocks and convertible debentures to further reduce its debt. Gayatri Projects mentioned their conference call for the fourth quarter of fiscal 2021 regarding the tight liquidity situation and cash flow mismatch due to late payments from state governments. However, as the covid-19 situation improves, she is expected to see more cash flow in the future. The Purvanchal Highway is nearing completion among the key projects, while the pace of execution of the Mumbai Nagpur Highway project is maintained. Its projects at UP are on track and revenue accounting has started in some districts of the UP Jal Jeevan Mission project.
In Q4FY2021, its income jumped 49% yoy to Rs 1,360 crore, EBITDA by 105% to Rs 110.9 crore and profit after tax from Rs 55.6 crore loss Q4FY2020 to Rs 25.1 crore of profit in the corresponding quarter of fiscal 2021. The stock gained 222.6% in one year, 6.8% in six months, 65.5% in one month and 12% in the five last days. Currently, it is trading very close to its 52 week high.