Breaking News

Top 10 Midcap Picks For India 2020


While investors have mostly focused on buying bluechips in the recent fall, some foreign funds are focusing on midcaps as valuations are mouth-watering. The big stocks became bigger in last 2 years while those in the small and midcap space shrank in the negative. After two years of lull in midcaps the valuation gap is now narrowing and I feel there are good quality midcaps, which are available at good valuations with good business dynamism. Nifty Midcap 100 index is still 42% down from lifetime high which made in Jan 2018. But not all midcaps are bad investments companies with quality management and a unique product profile can still be consider investing into.

1.Jubilant Foodworks Ltd : (CMP: 1478, 52 Week High/Low: 1973/1077)

• Jubilant Foodworks (Dominos) are delivering pizza to their customers in this pandemic time as well, so less affected with this pandemic.
• Tie-up with IRCTC for Delivery on train will be game changer for Jubilant Foodworks as less competition space.
• Changing lifestyle and work from home culture is biggest positives for Jubilant Foodworks.
• Jubilant Foodworks the master franchise for Domino’s Pizza in India (Nepal, Sri Lanka and Bangladesh) can be benefitted with corporate tax cut and it can boost profit by 15-20% this additional can be used to boost business.

2.Bata India Ltd : (CMP: 1239, 52 Week High/Low: 1895/1000

• Over the years, Bata India has gradually shifted its focus to tap the fashion-conscious youth, working women and children through the introduction of latest and trendier styles of footwear.
• Bata has constantly undertaken various efforts to improve the retail experience and curtailed unwanted retail space to rationalise its rental cost and enhance revenue per sq.ft of a store.
• India’s increase of custom duty to boost local manufacturing of footwear, Bata will be biggest beneficiary as India’s biggest footwear producer.
• Bata will strengthen its presence in the domestic market by adding 500 stores in the next five years on franchise model, focusing mainly on smaller markets.

3.Tata Consumer Products Ltd : (CMP: 326, 52 Week High/Low: 408/195)

• Strong branded portfolio of products, improving distribution and reach and restructuring initiatives are positives for the stock.
• Tata Consumer is on its way to becoming a diversified FMCG company with the addition of strong foods portfolio from Tata Chemicals (salt, pulses, spices) to its already strong tea, coffee and water portfolio both in India and internationally.
• The India tea business is growing steadily retaining its strong No.2 position, the Tetley international business is undergoing a successful restructuring, the coffee export business is seeing capacity expansion-led growth and the Starbucks JV is ramping up well given limited competition.

4.Manappuram Finance Ltd : (CMP: 107, 52 Week High/Low: 194/74)

• Manappuram Finance is a gold lending NBFC with a consolidated asset under management (AUM) of Rs 24,100 crore, diversified across gold loan (67%), microfinance (21%), and rest in housing, vehicle and other loans.
• There is minimal asset quality risk in Manappuram’s business as gold loan has a huge share in the total loan portfolio.
• It is quite attractive considering its healthy capital and comfortable liquidly position coupled with high share of secured lending.
• In the NBFC space Manappuram Finance looks attractive as much stable asset quality.

5.Quess Corp Ltd :(CMP: 204, 52 Week High/Low: 722/200)

• Quess Corp is India’s largest private sector employer, staffing solutions company has 3.85 lakh employees on its roster of employees and associates.
• In India the software major has about 3.6 lakh staff and Quess Corp has a staff of around 5,000 in overseas offices such as Singapore, Quess Corp’s staff has been growing 38% annually since 2016.
• Quess Corp has over 2,000 clients, including Samsung, Amazon, Vodafone India and Bajaj Finance.
• The company which has a consistent profit growth of 71.81% over five years, is currently trading at a PE of 12 which is very reasonable in terms of valuation.
• The current pandemic situation provides a long-term opportunity for the Quess Corp as the sector will be formalised further as blue-collar workers will look for security net by working for companies like Quess Corp and companies too would outsource more.

6.Havells India Ltd : (CMP: 525, 52 Week High/Low: 806/458)

• A diversified product mix and market leadership could help the electrical appliance maker and has a Buy. Havells product portfolio includes industrial (wire & cable and switchgear) and consumer segments (home appliances).
• Havells is a strong consumer brand with over 8,000-dealer network across India.
• The company is well-placed to recoup lost sales and stage a recovery in demand of industrial products whenever normalcy returns. Havells will also benefit from its backward integration (strong supply chain) and strong balance sheet position.
• Havells aggressive efforts on improving penetration in rural and semi-urban towns can help offset some moderation seen in core categories.

7.Glenmark :(CMP: 344, 52 Week High/Low: 654/161)

• Glenmark’s current portfolio consists of 165 products authorised for distribution in the US marketplace and 45 abbreviated new drug applications pending approval with the USFDA.
• Glenmark may become the first Indian company to develop an anti-retroviral (ARV) used for the treatment for coronavirus.
• Glenmark’s recent steps to address leverage and alleviate the R&D burden have rekindled investor interest.
• Recent investor interest in the pharmaceutical sector has also rubbed off on the Glenmark Pharma’s stock as it is amongst the cheapest stock in pharma sector.

8.UPL : (CMP: 335, 52 Week High/Low: 709/240)

• UPL is a leading producer of agrochemicals, specialty and industrial chemicals. It primarily deals in agricultural products (91% of the portfolio), which includes seeds, crop protection, pest control and soil fumigants. The second segment the company deals in is industrial chemicals and specialty products (9%).
• Govt’s priority to double farmer’s income by 2022 can help UPL to boost their volumes by more spending on agrochemicals in coming time.
• After back-to back weak quarters the agrochemical major is now showing signs of recovery despite challenges of a big acquisition and adverse macro and weather conditions.
• UPL completed its acquisition of the US-based Arysta Lifescience from Platform Specialty Products for $4.2 billion, Post the Arysta takeover the company has a better product basket on the back of a larger distribution network and access to more advanced technologies.

8. AMC : (CMP: 216, 52 Week High/Low: 452/185)

• Nippon Life Insurance Japan has completed acquisition of a 75% stake in the company from Reliance Capital so now has a very strong and growing SIP book of over Rs 10,000 crore per year.
• The company is one of the largest asset management companies in India which manages funds for provident fund bodies and government-managed pension Funds schemes.
• The resultant acquisition would add significant value as Nippon AMC would now be a fully MNC player. Given an opportunity, the company is open to inorganic growth.
• Growing consumer traction towards investment in financial assets, limited players, low penetration, huge market potential and considering higher valuation, the stock could lead to higher levels making it a multibagger.

9.M&M Financial Services : (CMP: 140, 52 Week High/Low: 442/128)

• Rural India is relatively less impacted by Covid-19, recovery would be faster for rural agri/ farm related activities. Growth in the short term will be driven by tractors on expectations of good harvest and used vehicles so we may see good growth potential in M&M Financial Services.
• Over the medium-long term M&M Financial remains best placed to play rural growth given its strong parentage and long track-record, deep penetration and larger presence across OEMs, low overlap with banks and pricing power, and increase in rural spending by government.
• M&M Financial has strong liquidity on its balance sheet with which it can comfortably discharge its liabilities and fixed cost obligations for the next six months.
• Liquidity position of M&M Financial remains very comfortable and company disclosed that it has Rs 40 billion in liquid investments and another Rs15 billion in sanctioned and undrawn lines.

Gaurav Bora
(Market Expert)

Check Also


Share Seven (7) Lady Sub Inspectors out of 164 women sub-Inspectors cadets who have passed …

Leave a Reply

Your email address will not be published. Required fields are marked *