Stock to buy: Anand Rathi sees 30% upside in this beaten-down small-cap stock. Do you own?

Protean eGov Technologies shares have received a ‘Buy’ call from brokerage firm Anand Rathi on the back of expectations of strong growth potential. The beaten down small-cap stock declined as much as 5.5% on Monday.

Anand Rathi initiated its coverage on Protean eGov Technologies stock with a ‘Buy’ rating and a 12-month target price of ₹1,665 apiece, based on 45x FY27 estimates. Protean eGov Technologies share price target implies an upside potential of around 30% from current market price.

The brokerage firm expects the company’s earnings to compound at 22% CAGR over FY25-27e. It pencils in a sturdy 15% revenue CAGR over FY25-27e, driving consistent revenue growth.

Protean eGov Technologies operates primarily in three key business verticals: tax services, pension services and identity services. It has a leading, 64%, market share in tax services and 92% in pension services, including NPS and APY.

“Supported by favorable demographics, these categories have turned into cash cows for the company. As the exclusive provider of all four major digital identity services (e-sign, eKYC, Aadhaar authentication, and online PAN verification), it is well-positioned to capitalise on the high growth in the above (11% CAGR over FY22-24),” Anand Rathi said in a report.

The company is now advancing further by taking on more impactful projects. After having developed modern tax infrastructure, supported social welfare programs and streamlined identity services, it is building Open Digital Ecosystems (ODEs) to enable India’s data-rich economy, while integrating cyber security and cloud services to strengthen the nation’s DPI, the report added.

Moreover, the company’s focus on developing markets, and its asset-light strategy and profitable business model provide a solid foundation for growth and sustained profitability, said the brokerage report.

It expects the revenue growth in the core businesses to be healthy & steady but largely driven by new businesses and international businesses in coming years.

According to Anand Rathi, key risks which may impact Protean’s operations and reputation include changes or non-compliance with government regulations and potential risks to system integrity and client data security.

Protean eGov Technologies Stock Price History

Protean eGov Technologies share price has fallen over 7% on a year-to-date (YTD) basis. The small-cap stock has dropped 28% in three months and more than 37% in the past six months. However, Protean eGov Technologies shares have risen 11.6% in the one-year period. 

At 2:15 PM, Protean eGov shares were trading 2.27% lower at ₹1,289.95 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.