Five midcaps headed for a rally
The midcap index hit a 52-week high on Tuesday, after running up 75% from its March lows as market participants are seeing more value in these shares compared to the blue-chips with optimism around coronavirus vaccines boosting risk appetite. Analysts said concerns over steep valuations of various large-cap stocks have led to investors testing the mid-cap waters. Most mid- and small-cap stocks have underperformed the Sensex and Nifty since January 2018 with institutional investors staying away from them in the absence of stable earnings growth. These days, investors are feeling a lot more confident about their prospects. Leading brokerages opined below on which stocks they would bet on in the midcap space at this juncture, and Kaveri seeds is one among them.
IIFL: Kaveri Seeds
CMP: Rs 499.20
Target Price: Rs 850
Kaveri remains ignored by most investors despite steady EPS growth, around 45% core return on equity (ex-cash), and a 7-8% dividend plus buyback yield, said Abhimanyu Sofat, head of research, IIFL Securities. Sofat believes the stock is undervalued and that a shift in earnings mix towards the non-cotton business – which is less regulated, higher-margin and faster-growing – could drive expansion in margins and increase in valuation multiples.
Source- Economic times