Australia's share market is home to many small but mighty businesses.
While investors often flock to established blue chips for stability, it is worth remembering that today's giants were once ambitious small caps.
And if you could have identified them when they were small and held onto them until today, the returns would have been mouth-watering.
With that in mind, let's take a look at a couple of small cap ASX shares that are showing the kind of growth potential and industry leadership that could one day land them a spot among the market's elite.
Here's they are and why analysts are tipping them as buys:
Gentrack Group Ltd (ASX: GTK)
Gentrack is a utilities and airports software company that is increasingly making waves with its cloud-native platform, g2.0.
This New Zealand-based company provides specialist billing, CRM, and analytics software to utility retailers and airport operators around the world. With the energy sector undergoing a rapid transformation — from decarbonisation to decentralised energy — demand for purpose-built digital infrastructure is surging.
Gentrack is stepping up to meet that challenge with its modernised platform, which replaces legacy systems with agile, cloud-native tools built for the complexity of modern utility grids.
While growth in the first half of FY 2025 was a touch softer than expected, management expects the second half to deliver strong levels of project revenue from both new and existing customers.
Analysts at Bell Potter remain bullish and is forecasting an earnings per share CAGR of 40% for FY 2024 to 2027. The broker currently has a buy rating and $13.20 price target on the small cap ASX share. It said:
We continue to be bullish on GTK's ability to maintain customer win momentum in Core and ROW markets, supporting high NRR revenues and flow on ARR; GTK anticipates a positive 2H25 for contract announcements and has been ramping up spend/headcount in sales, development and deployment roles, but likely won't impact until FY26.
Neuren Pharmaceuticals Ltd (ASX: NEU)
Another standout small cap with blue chip potential could be biotech company Neuren Pharmaceuticals.
The company's big breakthrough came with its drug DAYBUE — the first treatment approved in the United States for Rett syndrome. It is a rare and devastating neurodevelopmental disorder. Through its commercialisation deal with Acadia Pharmaceuticals (NASDAQ: ACAD), Neuren earns 10–15% royalties on DAYBUE sales in North America, as well as milestone payments — all without having to fund the commercial effort itself.
DAYBUE is off to a strong start, but this could be just the beginning. Acadia is now pushing for European approval, which could open up new royalty streams.
Meanwhile, Neuren's next-generation drug candidate, NNZ-2591, is advancing toward a phase three trial in the second half of 2025. If successful, it could unlock entirely new markets in other rare neurological disorders — with some indications representing patient populations five times larger than Rett syndrome.
It is for this reason that Macquarie recently initiated coverage on Neuren with an outperform rating and $18.60 price target. It said:
Current valuation offers favourable risk-reward. We believe DAYBUE in NA is driving most of current share price, with further upside from ROW/ pipeline. Its strong cash position enables pipeline acceleration, potentially providing significant long-term upside if approved.
