Small-cap stock rallies 70% in a year: Motilal Oswal sees another 47% upside | Should you buy? Check target price

GNG Electronics shares rose 0.91% to ₹577.10 on Friday after early-week losses. Motilal Oswal maintained a Buy rating and ₹840 target, citing the company's distribution scale, expanding network and demand for affordable refurbished computers.

Shares of small cap stock GNG Electronics ended marginally higher on Friday, November 13, reversing its losses made in the first half of the week. While the stock witnessed range-bound movement over the past few trading sessions, its share price value has delivered strong returns over the past six months.

GNG Electronics share price recommendation

GNG Electronics growth is likely to remain resilient even if memory prices ease. The underlying demand for affordable refurbished PCs and its expanding distribution network extend beyond the shortage-led demand acceleration.

"We estimate a CAGR of 34%/47%/49% revenue/EBITDA/PAT over FY26-29 and ~350bp gross-margin expansion in FY27E, which is estimated to be largely sustained thereafter," read Motilal Oswal report.

Volume-led distribution build-out extends growth

The memory shortage has lifted mainstream laptop prices in India by nearly 80% on an annual basis. The company has prioritised volume over pricing, raising ASPs only 10% and maintained refurbished laptop prices at nearly 30%-35% of new device prices.

GNG has expanded to 55 countries (vs. 38 as of FY25 end), 5,542 channel touchpoints (vs. 4,154) and 820 procurement partners (vs. 557). The company is likely to benefit from inventory rotation due to scale across sourcing and distribution.

"We reiterate BUY with a TP of INR840, based on ~30x FY28E EPS. Elevated inventory and channel credit will keep working capital high, with net debt expected to peak at ~INR5.3b in FY28E before declining," read the brokerage report.