Smallcap focus: Mahindra CIE, PNC Infratech among top picks by Axis Securities

The broader markets, midcap and smallcap indices, outperformed largecaps by notable margins in the month of August 2023. Let us take a detailed look at the top smallcap stock picks by Axis Securities: Kirloskar Brothers | Buy | TP: ₹ 975 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. Based on strong fundamentals and ability to generate FCFs, we value the company at a 1-year Forward PE multiple of 24x in Indian operations and 10x on moderate European operational earningsJun’25 EPS, thereby arriving at our SOTP-based TP of ₹585 per share, Axis Securities said. Praj Industries | Buy | TP: ₹ 550 Domestic business augurs well as Ethnaol Blending continues with strong traction in FY23 and mostly like preponing its target, the overall demand-supply gap of Ethanol, increased interest in grain based distilleries and decarbonization impetus is auguring well for Praj along with development in other key verticals such as CPS, ZLD & High Purity gaining traction, according to Axis Securities. Considering strong and diversified order book position, healthy bidding pipeline, new order inflows, emerging opportunities in the construction space, the company’s efficient and timely execution and strong financial credence, Axis Securities expects PNC Infratech to report Revenue, EBITDA and APAT CAGR of 12%, 11% and 13% respectively over FY23-FY25E.