Watch out for this micro-cap stock today that stands to benefit from the DoT mandate!

5paisa Research Team

Last Updated: 11th December 2022 - 10:00 am

Jumping from Rs 168 per share to Rs 252 per share, the stock of Frog Cellsat has caught investors' attention in the past 15 odd days.

Frog Cellsat is engaged in the manufacturing of telecom equipment used by telecom operators, especially in Telecom Towers. The company has two production units, one located in Noida and the second one is located in Dehradun.

The company is slated to start to set up its new plant in Noida with an estimated cost of Rs 39 crore by FY23 and FY24. The IPO proceeds and the internal accruals will be used for expansion purposes. The new facility is expected to focus on new products such as Repeaters- Active & Passive product range, Active Das, Jumper RF feeder and Interference Mitigation.

The company has low borrowings as of now and reflects healthy operational cash flow. The EBITDA margins remained at 9% in FY21 and 15% in FY22 with a high promoter holding of 73.49% post-IPO.

In a recent move by the DoT, it has mandated the local purchase of telecom equipment. Such a policy decision augurs well for companies like Frog Cellsat.

Frog Cellsat is a recently listed SME IPO and has caught investors' attention after it hit back-to-back upper circuits in the previous week. The upper circuit limit will be revised on Monday to 10% from 5%. Looking at the expansion plans and the current low-capacity utilisation the room for growth remains attractive for Frog Cellsat.

We have seen several stocks from the SME space outperforming the markets in the past few years with some of them turning out to be multibaggers. Kotyark Industries, Gensol Engineering, Inflame Appliances, Advait Infratech and Jayant Infra are just some of the buzzing SME stocks that have done exceedingly well in the past one year.

Long-term investors with a higher risk appetite can keep Frog Cellsat on the watchlist.

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