Midcap stocks have rallied in line with the indices which are now at their new lifetime highs. At the moment to invest one needs to be very cautious and circumspect. It's not prudent to place large amounts in the market at one shot. Investors are advised to be cautious. Here are 4 best midcap shares that investors could invest for the long term. These are picked from brokerage reports.
Engineers India is another stock that brokerage firm Motilal Oswal has recommended. The company reported its quarterly numbers only recently.
According to the brokerage order inflows stood at Rs 7 billion (v/s Rs 1.5b YoY). Order book stood Rs 80 billion, down 16% YoY (order book/revenue: 2.6 times). Revenue at the company for the quarter ending March 31, 2021 stood at Rs 11.2 billion, up 31% YoY and 31% above our estimate, with
the entire beat led by the Turnkey segment.
According to the Motilal Oswal report the dividend yield on the stock itself can work to near 7% in FY 2022. A good midcap stock to hold in the portfolio for long term investors. The stock is also available at a p/e of 11 times one year forward earnings.
Motherson Sumi Systems is one of the largest manufacturers of wiring harnesses for commercial vehicles. The company/group is one of the biggest rearview mirrors for passenger cars in the world. The company has a massive global presence and is the supplier to some of the top auto companies in the world.
Emkay Global has set a price target of Rs 325 on the stock as against the current market price of Rs 252,making it one of the better midcap stocks to buy.
The broking firm has factored robust revenue/EBITDA CAGRs of 14%/33% over FY21-24E, driven by expectations of a cyclical upturn in underlying Auto segments in domestic/ global markets and healthy order-book in SMR PBV.
"In addition, we expect return on equity to expand notably from 10% in FY21 to 29% in FY24E. The proposed restructuring exercise aligns interests of all stakeholders and creates a platform for future growth through both inorganic and organic routes. Reduced stake of Sumitomo Wiring Systems in MSS will allow to pursue acquisition opportunities more aggressively.
Retain Buy with target of Rs 325 (Rs 240 earlier) based on 24 times FY23 Estimated Earnings per Share (20 times earlier). We increase valuation multiple on improving growth prospects and revised P/E multiple is in-line with historical averages. Key downside risks are demand contraction in target markets, weak performance of larger clients, and adverse currency rates, among others," the brokerage has said.
Shares of Motherson Sumi were trading at Rs 252 on the NSE.
Quess Corp is a staffing and managed outsourcing services company that caters to the needs across processes such as sales & marketing, customer care, after sales service, back office operations, manufacturing operations, facilities and security management, Human Resources, IT & mobility services, etc.
Broking firm, Motilal Oswal has set a price target of Rs 820 on the stock. The broking firm sees many positives on the stock, including the announcement of a new dividend policy - payout of 33% of FCF over three years, especially as this indicates the management is comfortable with the cash generation ability.
"This further strengthens the view on the digestive strategy by Quess (rather than acquisitive) and indicates increased focus on cash flow. The company has also guided for minimum 70% OCF/EBITDA for FY22, along with reiterating its aim to deliver 20% ROE in FY23. Over the medium term, we expect QUESS to be a big beneficiary of the recent labor law reforms. Our target price of Rs 820 per share implies a multiple of 18x FY23 estimated, earnings per share. Reiterate Buy," the broking firm has said.
Shares of Quess Corp were last trading at Rs 764 on the NSE, which from the target price makes a good midcap top be a part of the portfolio.
Alkem Laboratories is a top player in the pharma business with 21 manufacturing facilities at multiple locations in India and the United States of America. According to broking firm Motilal Oswal, ALKEM is well-placed to benefit from a medium term recovery in the Domestic Formulation business.
"Alkem had a positive impact of higher offtake of COVID-19 associated drugs in the recent past. The reduction in COVID-19 cases, coinciding with seasonal change, bodes well for a pick-up in the performance of Acute therapies. Accordingly, we expect ALKEM to deliver 15% CAGR over FY21-23 estimated in domestic formulation. Bunched-up Abbreviated New Drug Application launches over the next 12-15 months are expected to improve sales growth as well as profitability of the US business. We estimate 10% CAGR in United States sales over FY21-23 estimates. We remain positive on the back of robust growth in the domestic formulation business and improving profitability in the US segment. We reiterate our Buy rating at a revised target price of Rs 3,730 per share," the broking firm has said.
The stock of Alkem was trading at Rs 3,170 on the NSE.
The stocks mentioned above are taken from brokerage reports. We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in