Last Updated: Thursday, June 1, 2017

Market at peak; Top 10 Mid cap & Small cap stocks that can return upto 50%

This year, the stock market witnessed a secular bulls race behind the steep inflows of foreign funds and the strong involvement of domestic investors, in a sense, that fueling various reform initiatives and plans for governments Promote economic growth inches.

To give perspective, the Sensex benchmark between May 16, 2014 and May 25, 2017, a huge 6.628 points, or 27.5 percent, rose when the index closed at a record level of 30,750.03.

Not just that, the broader markets, too, showed exemplary performance on the bourses with the BSE Small-cap Index zooming 88 percent and BSE Mid-cap Index spurting 83 percent during the period under review.

We have prepared a list of 10 small & mid cap stocks from different brokerage which investors can bet on every dip for a time horizon of 12 months:

Top 10 Mid cap & Small cap stocks recommendation by Broking Houses

Alkem Laboratories: CMP Rs. 1862*
BUY| Target Rs 2257

Angel Broking has given a price target of Rs. 2,257 with Buy rating. The broking house believes robust growth in domestic pharma business on back of its leadership in the acute therapeutic business. Not only domestic business but also this pharmaceutical company is all set to launch more products in the USA market.

Key Numbers:

  • MARKET CAP (RS CR) :22,313.22
  • EPS (TTM) : 67.89
  • P/E : 27.49 
  • INDUSTRY P/E : 25.26
  • BOOK VALUE (RS) : 292.95
  • DIV (%) : 635.00%
  • DIV YIELD.(%) : 0.68%
  • PRICE/BOOK :6.37
  • FACE VALUE (RS) : 2.00

Dewan Housing Finance:  CMP Rs. 411*
BUY| Target Rs 520| Return 28%

Angel Broking maintains a buy recommendation on Dewan Housing with a target price of Rs 520. Dewan Housing Finance (DHFL) has a focus on the low and medium income (LMI) consumer segment. It has increased its presence in tier-II & III cities where the growth opportunity is immense.
Dewan Housing Finance (DHFL) focuses on the Small to Medium Income segment (LMI). It has its presence in Tier II and III cities where growth opportunities are huge and increasing more and more. 

Standalone Numbers;
  • MARKET CAP (RS CR) : 12,889.34
  • P/E : 4.45
  • BOOK VALUE (RS) : 249.39
  • DIV (%) : 80.00%
  • INDUSTRY P/E : 25.33
  • EPS (TTM) : 92.49
  • PRICE/BOOK : 1.65
  • DIV YIELD.(%) : 1.94%
  • FACE VALUE (RS) : 10.00

Jagran PrakashanCMP Rs. 179*
BUY| Target Rs225| Return 23%
Angel Broking has given a 12-month price target of Rs 225 with buy rating on Jagran Prakashan. The economic recovery should have a positive impact on the growth in advertising and circulation. In addition, the acquisition of a radio business (Radio City) would also increase the company's revenue growth, said the report by Angel Broking.

CESC: CMP Rs. 895
BUY| Target Rs 910| Return 7%

Edelweiss has given a price target of Rs 910 and maintains a Buy rating on CESC. CESC recently has undermined it's operations in 4 different segments; manufacturing, distribution, retail and IT & mall.
While the participation of the new companies would be similar to CESC, the split is a relatively logical division and one that seems appropriate to investors. It retains the intrinsic value and offers potential shareholders a more specific investment / game and a certain value / multiple expansion.
"We believe that the restructuring of the business segments (split between generation, sales and retail) will reposition the CESC in a way that will focus on every business segment," the note said.

Standalone Numbers;
  • MARKET CAP (RS CR) : 11,901.63
  • P/E : 13.79
  • BOOK VALUE (RS) : 660.86
  • DIV (%) :100.00%
  • INDUSTRY P/E :15.27
  • EPS (TTM) :65.10
  • PRICE/BOOK :1.36
  • DIV YIELD.(%) : 1.11%
  • FACE VALUE (RS) : 10.00

Cholamandalam Invest & Finance (CIFC) : CMP Rs. 995*
 BUY| Target Rs 1140| Return 12%
Axis Securities has given a 12-month price target of Rs 1140 and maintains a buy rating Cholamandalam (CIFC). Cholamandalam Invest & Finance is now a Pan-India player with presence across 25 states via its over 700 branches and growing presence in Loan against property business (now 30% of AUM).

Standalone Numbers;
  • MARKET CAP (Rs. Cr.) :15,937.96
  • P/E : 22.18
  • BOOK VALUE (Rs.) : 280.03
  • DIV (%) : 45.00%
  • INDUSTRY P/E : 35.01
  • EPS (TTM) : 45.99
  • PRICE/BOOK :3.64
  • DIV YIELD.(%) : 0.44%
  • FACE VALUE (RS) :10.00

Brokerage House Prabhudas Lilladher's Top pics
Glenmark Pharma: CMP Rs. 611*
BUY| Target Rs 974| Return 45%
Prabhudas Lilladher  has given a 12 month price target of  Rs 974 with Buy rating and believes that the company's rating is severely affected by the post-strong performance of Q4 FY-17 and it trades at a PE of 17x and 13x FY18-E and FY19-E earnings. Prabhudas Lilladher believes that current rating underestimates US growth potential in core business and gradually reduces gross debt while it unnecessarily overestimates the number of risks associated with ROW. 
Indraprastha Gas Ltd (IGL) : CMP Rs. 984
BUY| Target Rs 1,149| Return 16%
It is expected that IGL will report healthy volume growth over the medium term supported by the constant conversion of private vehicles and taxis. The increase in legal activism in view of greater pollution will make CNG the preferred choice of fuel. Prabhudas Lilladher has given a 12 month price target of Rs 1149 with Buy rating.

Jindal Steel & Power Ltd: CMP Rs. 118*
BUY| Target Rs 180| Return 59%
Jindal Steel & Power Ltd trades at cheap valuations with P/B of 0.7x, EV/EBITDA of 6x and EV/T of US$710, the domestic brokerage firm Prabhudas Lilladher values the stock at Rs180 with an estimated growth of this steel business at 6.5x FY19 and power operations (2,400MW) at Rs45m/MW. Supported by a wealthy portfolio of value-added products in slabs, RUBM, Rebar, MLSM; JSPL is the best placed to take advantage of the demand from a turnkey oil refinery, windmill, railways, defense and construction industry.
JK Lakshmi Cement: CMP Rs. 475*
 BUY| Target Rs 625| Return 28%

JK Lakshmi cement a well-know brand in Indian cement sector and with a 7% market share in the region, it is the fifth largest cement producer in North India. Growth of JK Lakshmi cement is well poised as one of the most efficient operations. It has a strong entry into the most profitable eastern region with a capacity of 2.7mtpa along with increasing consolidation in Gujarat. JKLC is one of the top pick of Prabhudas Lilladher in cement sector with 12 month target price of Rs. 625 at EV/EBITDA of 12x FY19E.
Sadbhav Engineering (SEL): CMP Rs. 315*
BUY| Target Rs372| Return 17%
The stock is trading at core PE of 15.1X FY18E earnings. Prabhudas Lilladher continues to believe SEL will be the key beneficiary of strong outlook in road sector and improving outlook in Mining and Irrigation sector notwithstanding the current quarter's under-performance. A sound budget and strong management team give us more comfort. Real Estate Company expects the company to deliver a CAGR of 23 percent of FY16-18E earning law. Healthy balance sheet and strong management continue to give us additional comfort. The brokerage firm expects the company to deliver 23 percent earning CAGR over FY16-18E.
*All prices are derived from NSE as on 25/05/2017

 Top 10 Mid cap & Small cap stocks that can return up-to 50%
The views and investment tips expressed by investment experts on Money n Business are their own, and not that of the website or its management. Money n Business advises you to check with SEBI certified experts before taking any action.
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