Brokerage house Antique Stock Broking believes that the mid-cap space will continue to offer wealth creating opportunities to investors, citing the ongoing economic recovery. However, it added that there is a need to stay selective due to rich valuations.
Of late, the BSE Midcap index advanced 39 per cent in 2021. On the other hand, the benchmark BSE Sensex gained 22 per cent during the year. Going ahead, Antique Stock Broking thinks that at least 16 stocks from sectors including chemicals, logistics, real estate and textiles have the potential to multiply investors’ wealth in the next few years.
In a report on January 4, the brokerage said, “We have identified 16 ideas which have a significant economic moat, good earnings visibility, and sufficient margin of safety - with the potential to double in next 3-4 years.”
The list included stocks like Laurus Lab, Crompton Greaves Consumer Electricals, APL Apollo Tubes, Linde India, Sumitomo Chemicals, Blue Dart, Brigade Enterprise, Century Textiles, KNR Construction, Can Fin Homes, JK Lakshmi Cement, Mazagaon Dock Shipbuilder, Somany Ceramics, IOL Chemicals, Kirloskar Pneumatic and Apollo Pipes.
Barring IOL Chemicals (down 35 per cent), shares of the other 15 companies in the list advanced up to 160 per cent in 2021.
While commenting on the broader space, Amit Gupta, fund manager-PMS, ICICI Securities said, “The earnings yield will again become attractive in H12022 which should drive the midcap space again. Some segments have not performed for the last 10-12 years and we may see a revival in earnings there. Midcaps from these spaces can perform better.”
On the other hand, Deepak Jasani, Head of retail research, HDFC Securities said, “In midcap and smallcap spaces, investors should follow a bottom-up approach as despite being in the same sectors, there may be wide differences in the potential of companies due to differences in size, moats, management quality, capital structure, product mix and customer mix. While the last year has seen a general rerating of such stocks, this process could continue going forward but among fewer stocks.”
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