2 Midcap Stocks To Buy That Could Hold Good Potential In 2023

Markets are likely to end the year 2022 on a good note and in fact at near record levels. As we head into 2023, here are a few stocks that could be worth buying from the midcap space, according to brokerage firms.

Buy Havells, says ICICI Securities

Brokerage firm ICICI Securities has a buy call on Havells India for good returns. "As Havells has covered 3,000 towns with populations between 10k-50k, it is now planning to expand its distribution network in towns with populations of <10,000. It plans to rollout Utsav stores, which will act as the dealer / outlet in these smaller towns. It has rolled out >50 Utsav outlets as pilot in FY22 and plans to add another 1,000 outlets in FY23. While Crabtree brand caters to designer and high-end consumers, and Havells and Standard brands to the mass-premium segment, we believe the company is focusing more on REO brand in smaller cities and rural markets. REO is aimed at value-for-money consumers," ICICI Securities has said in a report.

Havells: Price target of Rs 1150

"We model Havells to report a PAT CAGR of 21.4% and RoE to be upward of 17%, over FY22-FY24E. We remain positive on the company's business model due to strong moats and growth opportunities. Maintain BUY with a DCFbased target price of Rs 1,550 (implied P/E 55x FY24E)," the brokerage has said.

Buy CreditAccess Grameen

Monarch Networth Capital has a buy on the stock of Buy CreditAccess Grameen with a price target of Rs 1,315.

"Management has guided for credit costs of 2% at the upper end for FY23, while we have built in 2.5% on a conservative basis. For FY24E, we have factored in credit cost at 1.8%. Even as we consider 25/50bps increase in credit cost following continued unrest due to political interventions, the impact on RoE would be to the tune of 70-140bps as against our current estimates of FY24E RoE at 18.6%," Monarch Networth Capital has said in its report.

Valuations and ratings for CreditAccess Grameen

"With the recent correction in the stock price, CREDAG trades at attractive valuations of 2.5x/2.1x FY24/25 P/BV. Given its ability to deliver high teens RoE, we believe current valuations provide decent entry point from a risk/reward perspective. We expect premium valuations to sustain and maintain our target P/BV multiple of 3.3x its Sept'24 BV of Rs.399 and retain our target price of Rs1,315," the brokerage has said.