If you would like some exposure to the small side of the market, then IPD Group Ltd (ASX: IPG) shares could be worth considering.
That's because analysts at Bell Potter believe this small cap ASX share could rise over 30% from current levels.
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What is the broker saying about this small cap ASX share?
Bell Potter was pleased with the electrical solutions provider's trading update at its annual general meeting. It notes that its guidance for the first half was ahead of the market's expectations. It said:
IPG has provided 1H FY26 EBITDA and EBIT guidance based on its unaudited accounts for the first 4 months of FY26 and management expectations for November and December, and commentary on CMI.
1H FY26 earnings guidance: EBITDA to be within the range of $24.8-25.3m (+6.1% YoY growth at the mid-point; BPe $24.9m; VA $24.4m). EBIT to be within the range of $21.1-21.6m (+5.7% YoY growth at the mid-point; BPe $21.2m; VA $20.6m).
Another positive was that management spoke positively about current trading conditions, which Bell Potter believes will be supportive of growth in FY 2026. It adds:
IPG is observing strong demand for its integrated electrical solutions across Commercial, Industrial, Infrastructure and Data Centre construction markets. In FY26, we are forecasting revenue growth of +5.7% for Commercial (-12.5% in FY25) and +15.0% for Data Centres (+35.0% in FY25).
Big potential returns
According to the note, the broker has reaffirmed its buy rating and $5.00 price target on the small cap ASX share.
Based on its current share price of $3.68, this implies potential upside of 36% for investors over the next 12 months.
But the returns won't stop there. Bell Potter is expecting a fully franked dividend of 14.7 cents per share in FY 2026. This equates to a 4% dividend yield, which boosts the total potential return to approximately 40%.
Commenting on the update and its buy recommendation, the broker said:
IPG's AGM Trading Update outlined operating resilience, with 1H FY26 EBITDA and EBIT guidance exceeding consensus expectations. Pleasingly, following a weak FY25, CMI financials appear to be recovering, with an expanding orderbook and opportunity pipeline indicating growth over FY26.
IPG is well positioned to capitalise on the Commercial construction market recovery currently underway as well as continued strong momentum in Data Centre and Infrastructure construction activity. IPG represents a relatively undervalued Industrials business compared with the ASX300 Industrials index with strong re-rate potential, in our view.
