Why Bell Potter is tipping 30%+ returns from these small-cap ASX tech shares

If you have a higher-than-average tolerance for risk, then it could be worth checking out the two small-cap ASX tech shares that Bell Potter rates as buys for the new financial year.

Here’s what the broker is saying about these tech shares:

Catapult Group International Ltd (ASX: CAT)

This sports technology company’s shares could be a buy according to Bell Potter. Particularly given how it is expected to be cash flow positive in FY 2024.

Bell Potter has a buy rating and a $1.20 price target on its shares. This implies a 33% upside for investors from current levels. It comments:

Catapult develops and sells wearable tracking and analytics solutions to sporting teams and athletes globally. Importantly the company has just turned EBITDA positive and said it will be free cash flow positive in FY24 (thus reducing or eliminating the need for an equity raise). We expect continued strong revenue growth in the core Wearables business in FY24 and also expect growth in the previously lagging Video business to significantly improve this year. This suggests or implies a return to double digit revenue growth in FY24 and with a relatively stable fixed cost base, a reasonable portion of the additional revenue is expected to fall through to earnings.

Ikegps Group Ltd (ASX: IKE)

Another small-cap ASX tech share that could be a buy according to Bell Potter is IkeGPS. It is a software solutions company with a focus on the utilities and communications sectors. As with Catapult, the broker believes that the company is heading towards positive cash flow. It also highlights the company’s massive opportunity in North America.

Bell Potter currently has a speculative buy rating and a $1.18 price target on its shares. This implies a potential upside of 81% for investors from current levels. The broker explains:

IKE’s growth is underpinned by the $410 billion fibre, 5G, and rural broadband rollout in North America, which offers IKE the opportunity to embed its solutions within clients. IKE is planning to release its Next Gen PoleForman product in 2HCY23, which has already displaced a competing product from a 20-year account prior to hard launch, and is currently in the development phase of a pole-specific AI automation project with “one of the world’s largest digital data collection businesses for global infrastructure”. Although we anticipate a soft June quarter, we currently forecast positive full year EBITDA and operating cash flows for FY24e.