Investors are buzzing about Baazar Style Retail as its share price experienced a notable surge of 5% during Wednesday’s trading session, despite the fact that prominent investor Rekha Jhunjhunwala has reduced her stake in this small-cap company. Jhunjhunwala, known for her savvy investment choices, trimmed her holdings by 26 basis points in the March quarter, bringing her ownership down to 3.39% from 3.65% in December. This move has sparked interest among market watchers, especially since her portfolio boasts a total net worth exceeding ₹18,033 crore across 21 stocks.

Baazar Style Retail: A Rollercoaster Journey

Since its debut in September of last year, Baazar Style Retail has shown significant volatility. Over the past year, the stock has experienced a decline of more than 23%, yet it has recently rebounded with an impressive gain of nearly 29% in just one month. This dual trend raises the critical question for investors: should they buy or sell?

Expert Recommendations: Buy or Sell?

JM Financial has stepped into the spotlight by initiating coverage on Baazar Style Retail, issuing a ‘buy’ recommendation with an ambitious target price of ₹400. This forecast indicates a potential upside of over 71% from the stock’s current value. According to their projections, the company is expected to demonstrate robust growth between FY24-27E, with compound annual growth rates (CAGRs) of 30% in revenue, 36% in EBITDA, and an impressive 50% in profit after tax (PAT).

• Projected Growth Rates:
  • Revenue CAGR: 30%
  • EBITDA CAGR: 36%
  • PAT CAGR: 50%

Future Financial Performance and Valuations

JM Financial also highlights that Baazar Style Retail’s Return on Equity (RoE) and Return on Invested Capital (RoIC) are projected to rise to 22% and 19%, respectively, by FY27. This growth is anticipated to be fueled by stronger profitability and enhanced efficiency in working capital management.

The brokerage noted, "This discrepancy in valuations is likely a key factor in Baazar Style’s current market position. While reported figures may appear weak, they are considerably stronger when viewed on a Pre Ind AS basis." This insight reinforces JM Financial’s position that consistent execution and improved financial metrics could lead to a significant re-rating of the stock.

Conclusion

As Baazar Style Retail navigates through the complexities of the market, it’s essential for investors to weigh expert opinions and market trends carefully. With a strong recommendation from JM Financial and promising growth projections, this small-cap stock may be worth a closer look for those considering their investment options.

For more insights on Baazar Style Retail and other investment opportunities, stay tuned to our updates and analysis.