In the year 2021, midcap stocks gave excellent returns, the midcap index increased by 44%. Experts believe that now in 2022, some such stocks can perform well, which have been underperforming till now.
UBS Top midcap stock picks for 2022: The year 2021 has been one of great returns for midcap stocks. Midcap index rose up to 44%. Experts believe that now in 2022, some such stocks can also perform well, which have been underperforming till now. Global brokerage and research firm UBS has selected 3 such stocks, which are not expensive in terms of valuation and can give good returns in future. These shares belong to those companies, in which the prospects of better earnings are clearly visible during the coming days. These three stocks are: 1. Just Dial, PVR and Aegis Logistics. These three stocks have been showing bullish momentum in 2022 till now. During the first 18 days of the year, an increase of 3 to 15% has been seen in them.
Just Dial: Buy
Target price: Rs 1,350, Expected Upside: 61%
Shares of Just Dial closed at Rs 838 on Tuesday. However, till a day earlier, its price was at Rs 875. During the entire year of 2021, the stock of Just Dial had registered a gain of 25 percent, which has been less than the average performance of the midcap index. In 2021, Mukesh Ambani group company Reliance Retail has also acquired Just Dial. UBS believes that after becoming a part of a strong group like Reliance, now this stock can see a lot of strength. The brokerage believes that the company’s businesses in the B2C and B2B category can perform better in the future, including ecommerce platforms like JDMart.
Analysts at UBS believe that Just Dial’s one-year forward PE is currently at 21x, which is slightly above its 5-year long-term average. In the opinion of UBS, the shares of Just Dial are currently trading at a considerable discount as compared to its local and global peers. This also means that the market is currently ignoring the growth potential in JDMart. In comparison, India Mart (IndiaMART), the country’s market leader in domestic B2B platforms, is currently trading at 50 times the price for FY23 PE. The brokerage has given a target price of Rs 1,350 for this. Accordingly, more than 60% profit margin is visible in Just Dial right now.
Aegis Logistics: Buy
Target price: Rs 380, Expected Upside: 69%
Aegis Logistics is entering into a deal with Vopak, which is expected to be completed by the end of this financial year. Analysts at UBS are confident that this deal will not only give Aegis a stronger partner, which will reduce its capex risk and also increase the company’s access to better technology. The company has also made a plan for massive capital investment (capex) in capacity expansion, which will give new strength to its growth.
Shares of Aegis is currently trading at a multiple of 16x against its one-year forward PE, which is lower than its 5-year long term average. UBS believes that the market is currently ignoring future growth due to the Aegis-Vopack deal. The target price of Rs 380 given by the brokerage for this company. On Monday, this stock closed at 224.45 and according to this, there is a scope of profit of about 69 percent in this right now.
PVR: Buy
Target price: Rs 2,000, Expected Upside: 27%
Although the new wave of COVID-19 increases the risk for PVR’s movie theater business, analysts at UBS believe that there is not much risk for the company due to the release on the OTT platform. He believes that the risk of a rapid increase in OTT releases is very low, as big budget films have to be released in theaters and in the time between small films to reach a larger audience through theatre. The chance comes. After the third wave of COVID-19 in India, the release of many films had to be postponed.
The shares of PVR are currently available at a considerable discount compared to the pre-COVID period. This decline is being attributed to the increasing threat of Omicron variants and the challenge being faced by OTT apps. But according to analysts at UBS, looking at the data, it seems that the market is exaggerating these concerns a bit. He believes that this stock has the potential to shock people positively in the coming days. If UBS has given a target price of Rs 2000 on it, keep it in front of the closing price of Rs 1570 on Monday, then there is a scope of increase of about 27 percent in it.
(Story: Kshitij Bhargava)
(Disclaimer: The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing)
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