Smallcap stocks to buy this Diwali! 5 stocks with upside potential of up
Written by Veer Sharma, ETMarkets.com|Nov 03, 2026, 10:35:56 AM IST1/6Festive PicksMirae Asset Sharekhan says the correction has improved risk-reward materially but valuations are not uniformly inexpensive and there are…
Festive Picks
Mirae Asset Sharekhan says the correction has improved risk-reward materially but valuations are not uniformly inexpensive and there are pockets where valuations have corrected much more than the earnings outlook suggests. The Nifty 50’s one-year forward multiple at ~17x is lower than the 10-year average. This makes the next year a stock-picker’s market, where businesses with strong fundamentals, earnings visibility and reasonable valuations should be better-placed to generate returns. Here are 5 smallcap stocks the brokerage is bullish on?
DEE Development
With a target price of Rs 750 per share, the brokerage implies an upside potential of 37% from current levels. Analysts say the company is rapidly emerging as a highly specialized and critical energy infra provider and is enjoying sector tailwinds in HRSG, thermal and oil & gas-based solutions. The company highlighted strong demand visibility from GE Vernova, Nooter/Eriksen, Siemens, and other global OEMs linked to rising gas turbine and power infrastructure demand driven by AI data centers and global electricity shortages.
Karnataka Bank
The private lender has a target price of Rs 415, an upside of 33% from current market levels. Analysts note that the stock is trading at around 0.7 times its FY28E price-to-book value (P/BV), making it the cheapest among old private-sector and mid-cap peers, which trade at an average of around 1.4 times. This valuation discount is largely attributed to its historically sub-1% return on assets (RoA).
Lumax Auto Technologies
With a target price of Rs 2,490, the brokerage implies an upside of 22% from current market levels. Lumax is confident of outperforming the industry despite inflationary headwinds as an increase in content per vehicle drives up market share. Revenue guidance raised to ~Rs. 6,000 crore and margins are expected to sustain in FY27 while long-term target of achieving a 20% revenue CAGR and 20% EBITDA margins by FY31 remain intact.
Sagility
The brokerage has pegged the target price at Rs 53, an upside of 17% from current market levels. While the provider business currently contributes only ~10% of revenue, the management is accelerating investments in this vertical through a dedicated GTM strategy and the acquisition of Chirok Health. Chirok adds $13mn in TTM revenue, 35.8% adjusted EBITDA margins, 115% net revenue retention, and strengthens Sagility’s end-to-end RCM capabilities, creating significant cross-selling opportunities.
VA Tech Wabag
With a price target of Rs 2,400, the brokerage forecasts an upside potential of 33% from current levels. New age segments include ultra-pure water for semiconductors, data centers, solar PV manufacturing, and green hydrogen production and are considered decadal opportunities, expected to become meaningful over 3-5 years. WABAG has already started winning in this space, with a roughly ₹465 million order for a RenewSys solar cell facility covering ultra-pure water, effluent treatment and zero liquid discharge.
Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here
Figures reflect the source report and its stated period. This article is for information and is not investment advice.
