Midcap Stocks: The midcap and smallcap segment, which have been underperformers for a long time, has gained a lot from the March low. Experts believe that in the long term, small and midcap stocks can be bullish. There has also been pressure on the economy this year and now it is in recovery mode. The valuation of large cap stocks is much higher than before. In such a situation, it is expected that in mid-year 2022, midcap performance will be better than large-cap stocks. Even in quarterly results, some such companies have raised good hopes for their performance. We have selected a few such stocks here, whose fundamentals have strengthened after the second quarter results.
Return: 26 percent
Brokerage house ICICI Direct has advised to invest in Radico Khaitan with a target of Rs 550. The current price of the share is Rs. 436. In this context, the stock can get 26 percent return. Radico Khaitan’s volume growth in the second quarter was 5 per cent. Export has seen strong growth of 70 percent, which is about 9 percent of total revenue. Overall revenue growth was 11 percent and income was 630 crores. Gross margin increased by 90 bps to 48.9 per cent. The company is getting the benefit of raising prices. EBITDA margin has also increased to 17 percent. The decision to reduce expenses on employees has been found. EBITDA grew by 24 per cent to Rs 107 crore.
Return: 25 percent
Brokerage house Anand Rathi has given a target of Rs 90 in Firstsource Solutions. In terms of current price of 72 rupees, it can get 25 percent return. Firstsource Solutions’ revenue grew 15 per cent year-on-year in the second quarter and 14 per cent sequentially. This quarter has been better for the company. Top client growth has been 35 per cent on a quarterly basis. However, on an annual basis, it has decreased by 6 percent. The company’s mottage business has contributed 28 per cent to revenue. For the financial year 2021, the constant currency guidance of the company has increased from 6-10% to 9-12%. The margin has also improved. The company is expected to grow further.
Ken Finn Homes
Return: 20 percent
Ken Fin Homes is the country’s largest financial company with more than 30 years of experience in home finance. The company has 164 branches across the country, 21 affordable housing loan centers. The company has reach in 20 states. However, there are more than 70 percent branches in South India. The company’s second quarter results were better than expected. There has been a good improvement in net interest margin. The management has kept Helchi provisioning buffer, which has strengthened the sentiments. The Kaia position of the sock bank of Kasatamar Base is also better. Brokerage house Yes Securities has given a target of Rs 550 in the stock. In terms of current price of Rs 460, it can get 20 percent return.
Return: 31 percent
Brokerage house MK Global has given a target of Rs 214 in PNC Infratech. In terms of current price of 163 rupees, it can get 31 percent return. The company’s quarterly results have been weak, but there is no shortage in the orderbook. Many old orders are on the verge of completion. Management has made revenue growth guidance positive for FY 2021. Further, the company is expected to perform better due to strong orderbook. The brokerage has raised FY21-23E EPS estimates by 58–33 per cent.
(Note: We have given the information here on the basis of the second quarter results and brokerage house report. There are risks in the stock market, so take the opinion of experts before investing.)