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5 Mid-cap Stocks To Buy, As Stock Buying May Now Extend To Midcap Space

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A rally in the indices is always followed by a rally in small ad midcap stocks. Here are 5 midcap stocks to buy, which could be beneficiaries of a broader market rally.

 

Buy Petronet PNG Stock for 20% upside

Buy Petronet PNG Stock for 20% upside

Emkay Global is bullish on the stock of Petronet LNG and sees upside of 20%. Implied marketing margin on spot LNG was strong at ~USD33/mmbtu due to tradinginventory gains. EBITDA/mmbtu fell 17% qoq to Rs51.2 (up 1% yoy). Other expenses excluding forex loss were 14% below our estimate. Other Income was also a beat.

"We maintain our earnings estimates for FY23-25E on the back of a decent performance despite challenging market conditions. We rollover our DCF-based target price to Sept'24E with a 2% increase to Rs 260. We retain our Buy rating on the stock," the brokerage firm has said.

Buy Aditya Birla Fashion & Retail for 30% upside
 

Buy Aditya Birla Fashion & Retail for 30% upside

Emkay Global sees a nearly 30% upside on the stock of Aditya Birla Retail from the current levels. The firm cuts FY23/24E EBITDA marginally, as it factors in D2C investments. "The FY26E top-line target is factored in, but we remain conservative on margins by ~200bps. Value accretion in D2C, adjusted for ~5% equity dilution from potential warrants conversion, remains a potential upside. We retain Buy with a TP of Rs360 on 25x Sep'24 Pre-IndAS EBITDA," the brokerage has said.

 Target price of Rs 360 on Aditya Birla Fashion and Retail

Target price of Rs 360 on Aditya Birla Fashion and Retail

Strong recovery trends, aggressive expansion plans, and improving margin profile should drive healthy revenue/EBITDA CAGRs of 15%/27% over FY20-25E. RoIC (ex-goodwill) is expected to improve to 30% by FY25. "We retain Buy with an unchanged target price of Rs 360 on 25x Sep'24 pre-IndAS EBITDA (26x earlier). Multiple reduction is led by a 3M rollover to Sep'23E vs. Jun'23E earlier," Emkay Global has said in its report.

 Buy Motherson Sumi Wiring India

Buy Motherson Sumi Wiring India

Emkay Global expects Motherson Sumi Wiring India to outpace the underlying industry on account of premiumization and EV transition. Motherson Sumi Wiring has already received EV orders from multiple OEMs and has technology assistance from Sumitomo Wiring Systems.

"We expect the company to sustain ROIC at 50%+ over FY23-24E. We retain Buy with a DCFbased target price of Rs 88 (earlier Rs 86), implying a multiple of 32x on Sep'24E EPS (earlier Jun'24E EPS)," the brokerage has said.

Strong 30% upside on the stock of LIC Housing Finance

Strong 30% upside on the stock of LIC Housing Finance

Emkay Global sees a nearly 30% upside on the stock of LIC Housing Finance. Strong housing demand being witnessed in most regions along with price stability being maintained leads us to believe that LICHF can deliver strong individual housing growth. Management's aspiration to expand construction finance augurs well for overall growth.

"We rollover our forecasts to Sep'23E and retain our Buy rating with a Sep'23E TP of Rs 490 (earlier Rs 450), valuing the firm using the excess return on equity (ERE) method. Our target price implies a Sep'24E P/BV of 0.8x (same as earlier). Key downside risks: Further asset-quality weakening in the non-core housing and project loans segment," the brokerage has said.

Buy Birla Corporation

Buy Birla Corporation

Emkay Global sees an upside of nearly 20% on the stock of Birla Corporation.  Mukutban plant is expected to support volume growth and help maintain BCORP's volume market share. Besides, its aim to achieve a 30mt capacity by FY27E should dispel concerns about long-term growth, in our view.

"Factoring in Q1FY23 beat and lower opex/ton, we have increased our FY23-25 EBITDA estimates by 3-4% and increase our TP to Rs1,200 (from Rs1,070) post quarterly rollover to Sep'23. Our DCF-based target price implies a one-year forward EV/EBITDA of 8x," the brokerage has said.

Read more about: stocks to buy
Story first published: Tuesday, August 9, 2022, 9:41 [IST]
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