Mid cap stocks have rallied substantially in the last few months. There are select mid cap stocks that are still undervalued and have the potential to generate returns. Here are a few mid cap stocks, which individuals need to buy and hold and which could certainly brighten your returns until next Diwali.

Punjab and Sind Bank

It's been almost 4 years since Punjab and Sind Bank launched an IPO in the price band of Rs 113-120. Today, the stock is quoting at exactly half the IPO price of Dec 2010. It is currently traded at just Rs 58. In terms of price to book value the stock is trading at just 0.47 times, while the dividend yield works to 3.78 per cent.

Syndicate Bank

Like Punjab and Sind Bank, Syndicate Bank is another excellent buy. The good thing about the bank is that its non performing assets are under control and not as high as other PSU banks. The price to book value of the bank is a mere 0.6 times and the price to earnings ratio is highly attractive at 5 times one year forward earnings. If you buy the shares now the dividend yield works to as high as 5 per cent. An excellent pick that can create good long term value.

Arvind Remedies

Arvind Remedies is among the few pharma stocks that is highly undervalued. At the CMP of Rs 41, the stock is trading at a price to earnings multiple of just 1.6x FY17 earnings.

According to a research Report from Ventura, ARL is an early entrant in the government promoted "safe drugs" initiative for launch of phytopharmaceutical drugs. ARL has acquired patent rights of three drug products and tied up with a number of research institutes of repute for the same, and, a number of these drugs are in various stages of development. This pipeline seems promising and augurs well for the long run."

"We initiate coverage on ARL as a BUY with a Price Objective of Rs100 representing a potential upside of ~150% over a period of 24 months. At the CMP of Rs40, the stock is trading at a P/E multiple of 1.6x FY17E. We assign ARL a P/E multiple of 4.0x which is in line with its one year average. The P/E of 4.0x implies a target price of Rs100 on its FY17 EPS of Rs25/share. Any announcement of further capacity expansion and a higher than expected pick-up in growth and margins are upside triggers to our target price," says Ventura research report.

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