Looking to add midcap, smallcap stocks to your portfolio? Here are Prabhudas Lilladher's high conviction picks

Ashok Leyland: The brokerage sees a 19.6 percent upside in the stock to ₹177 per share. As per PL, medium and heavy commercial vehicle demand is likely to remain supported by infrastructural, mining, and road-building activities. Large commercial vehicle demand was impacted by semiconductor shortage, however, the segment will benefit from LMDs and e-commerce. It added that margins should improve going ahead owing to commodity cost softening, price hikes and cost control measures. The company targets an EBITDA of over 10 percent through internal efficiencies, noted PL.

Crompton Greaves: Prabhudas Lilladher expects the stock to jump 27.7 percent to ₹505 in the next 12 months. Margin improvement will happen from Q2 onwards, the brokerage believes. It said that higher A&P spending adversely impacted the margin, which but it should normalize going forward. Built-in-Kitchen appliance is a potential growth area and the management said that chimney and hobs market is worth ₹2500 crore. Crompton is targeting to become under top 3 players in chimney and hobs market with almost 10 percent market share, noted PL. Fan's market share is 28 percent and it has consistently gained market share in this category in since last 2 years, added PL.

Westlife Development: PL expects this smallcap scrip to jump 27.7 percent to ₹781 in 12 months. The brokerage noted that the company's same-store sales growth is at 97 percent. Management guidance on Royalty rates for FY23/24/25-26 will be 4 percent/4.5 percent/5 percent, respectively. The firm is likely to add 35-40 stores in FY23 and 200 stores over the next 3-4 years, it added.

VIP Industries: This luggage stock is expected to rise 45.3 percent tp ₹857 in the next 1 year. As per PL, the company's revenue breached the pre-pandemic levels by 4.7 percent for the first time led by volume/value growth of 8 percent/5 percent respectively over Q1FY20. In the quarter there were 38 new launches in the luggage and 127 in the backpacks category, it noted. A sum of ₹50 crore is earmarked for capex in FY23E, added PL.

Inox Leisure: This smallcap theatre stock may surge 41.8 percent to ₹699, as per PL. The brokerage noted that the firm's advertising revenue was 36 percent lower than the pre-pandemic base and is expected to breach the same in the H2FY23. Currently, the premium screen count is 12 percent and capex incurred for a premium screen is ₹3.5-4 crore, while for an average screen it is ₹2.75-3 crore, noted PL. Management stated that the employee cost could see a maximum decline of 7-8 percent over pre-pandemic levels, added the brokerage.

Navneet Education: The brokerage sees this stock rising 25.9 percent to ₹163 going ahead. As per PL, the top-line growth for the firm is likely to surpass pre-pandemic base, while standalone EBITDA margin will be maintained at 21-22 percent in FY23E. Publishing revenue is expected to reach FY20 levels with 33-35 percent EBITDA margins in FY23E, it added. Similarly, stationery segment is expected to grow 12 percent over FY20 in FY23E and then at the rate of 18-20 percent from FY24E with 12-13 percent margins, pointed out PL.

Nazara Tech: PL says this stock may rise to ₹911, implying a 39.1 percent potential upside. In order to stabilize unit economics in Kiddopia, the company undertook a price hike of 13 percent in June, noted PL. Nazara's target to achieve over 50 percent top-line growth with an EBITDA margin of 12-13 percent in FY23E remains intact, highlighted PL.