5 midcap stocks that may give returns up to 15% even as Sensex, Nifty beat broader markets

So far in September, the 30-share Sensex has lost 1.8 per cent. The BSE SmallCap index has fallen 0.77 per cent

Broader market indices beat BSE Sensex and Nifty 50 in August, gaining up to 9 per cent. While headline indices added just 4.5 per cent last month. Market analysts believe that midcap and smallcap outperformance is likely to continue in the coming months. On the back of a rebound in COVID-19 cases globally and India-China border tension, markets are reeling under volatility. So far in September, the 30-share Sensex has lost 1.8 per cent. The BSE SmallCap index has fallen 0.77 per cent. The BSE MidCap index fell 2.6 per cent so far in September. Despite this, research and brokerage firm Motilal Oswal continues its focus on midcap space. 

The research firm has listed five high conviction mid-cap stock ideas across various sectors which it expects to perform well in the short to medium term. “One can buy this basket of 5 stocks with a potential upside of 10-15 per cent, with an equal weightage of 20 per cent each, over a time frame of 1-3 months,” said Motilal Oswal Financial Services in a report. Investors can keep a stop loss of 7 per cent on the overall basket.  

IPCA Laboratories: The pharmaceutical major delivered a phenomenal performance led by HCQS opportunity, improving outlook for Domestic Formulations (DF), and lower raw material cost. The brokerage firm expects an earnings CAGR of 31% (FY20–22), supported by a sales CAGR of 20% in International Generics and 22% in API, healthy outperformance by the DF segment, and 500bp margin expansion owing to a better product mix and operating leverage. The stocks were trading with half a per cent gain today. 

Exide Industries: The report noted that the auto parts and equipment company should improve its market share as economic recovery led demand would come in from Auto OEMs and the Industrial segment. The brokerage firm prefers Exide Industries as it offers superior risk-reward considering its market leadership, technology alliances, backward integration and better product mix. Exide Industries shares were trading 0.16 per cent up at Rs 156 apiece.

MCX: Due to a sharp rally in gold prices and the normalisation of margin requirements in the crude segment, the brokerage holds a positive view on MCX and believes that these should drive recovery. The report highlighted that the progress on other growth initiatives, such as Bullion/ Metal index futures, institutional participation, and spot exchanges are quite encouraging. Shares of MCX were trading 1.03 per cent higher at Rs 1543.80.

Teamlease Services: The brokerage noted that on the back of the unlock phase the company has already passed the peak of uncertainty. “Encouraging rebound in the unemployment situation and the hiring outlook corroborate our view,” it said. As both the central and state governments look forward to liberalising and formalising the labour markets, TeamLease should be among the biggest direct beneficiaries. Teamlease Services shares were up 0.41 per cent. 

AU Small Finance Bank: The bank reported healthy earnings led by robust treasury performance and controlled opex. It prudently made additional COVID-19 provisions. Motilal Oswal in its report said that steady decline in moratorium book, reduction in SMA numbers and improving collection trend has eased pressure on asset quality. 

(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)