Brokerage firm Antique Stock Broking believes that the mid-cap sector will continue to offer wealth-building opportunities to investors, citing the ongoing economic recovery. However, he added that it is necessary to remain selective due to the rich valuations.
Lately, the BSE Midcap index has gained 39% in 2021. On the other hand, the benchmark BSE Sensex has gained 22% during the year. Looking ahead, Antique Stock Broking believes at least 16 stocks from sectors such as chemicals, logistics, real estate and textiles have the potential to multiply investor wealth over the next several years.
In a Jan. 4 report, the brokerage said: âWe have identified 16 ideas that have a significant economic gap, good profit visibility and sufficient safety margin – with the potential to double over the 3- Next 4 years. “
The list included stocks such as 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.
With the exception of IOL Chemicals (down 35%), shares of the other 15 companies on the list rose 160% in 2021.
Commenting on the larger space, Amit Gupta, Fund Manager-PMS, ICICI Securities said, âEarnings performance will become attractive again in H12022, which should revive the mid-cap space. Some segments have not performed in the last 10 to 12 years and we could see a recovery in profits. The midcaps of these spaces can be more efficient.
On the other hand, Deepak Jasani, Head of Retail Research, HDFC Securities, said: âIn mid and small cap spaces, investors should take a bottom-up approach because, although they are in the same sectors, there can be big differences in the potential of companies. due to differences in size, moat, quality of management, capital structure, product mix and customer mix. While the past year has seen a general revaluation of these stocks, this process could continue but among fewer stocks. “