Despite the current flurry of volatility due to macroeconomic conditions, mid-cap stocks have outperformed the benchmark Sensex in the broader market. In the last three months, on BSE, when Sensex went up more than 5%, the Midcap index has jumped almost 9%. There is more potential for midcap stocks in the latest rollercoaster tone of the markets, with Centrum giving a buy rating to three stocks in the retail segment. These companies that mainly cater to the urban population and operate in the mid-premium segment are likely to outperform their peers.

In a report, Akhil Parekh Research analysts, and Kevin Shah Research Associate at Centrum are optimistic in 3 stocks in the midcap basket.

In their Q2FY23 preview report for midcaps, the analysts said, “from our retail universe we expect companies that primarily cater to the urban population and operate in the mid-premium segment to outperform their peers. Metro Brands is expected to, Trent and Page registered a healthy YoY growth. as the target consumer group of these companies has been less affected by inflation so far. Also, the strong brand strength allowed these companies to easily pass the RM inflation in last year’s run.”

Additionally, the analysts’ note added, “From our building materials universe we expect PVC pipe manufacturers such as Supreme Industries to continue to feel margin pressure in the second quarter. We expect pipe players to have the edges PVC in the quarter before it starts. recovering in 3Q. Cera Sanitaryware is expected to perform in the building materials space compared to the pipes, tiles and wood panel sectors according to our channel checks.”

In their diversified midcap portfolio, analysts expect CCL Products and La Opala to register healthy YoY growth.

According to Centrum analysts, expect CCL to report strong YoY (flattish QoQ) growth. Volume and price trend remains strong on a YoY basis. They also expect margins to improve sequentially for CCL Products as the higher coffee prices are fully reflected in sales.

Otherwise, analysts expect La Opala to have a healthy quarter. The demand during Onam and Durga Puja is expected to increase the sales growth in 2Q and 3Q according to the feedback we have received. However, EBITDA margins may decline sequentially with the recent start-up of the new opalware facility and it will take time to fully absorb the cost.

In addition, they also expect Mold-Tek Packaging from the universe to register a growth of more than 15% led by strong demand in the paints segment.

Following the above, Centrum has given buy ratings to four stocks. These are:

Page Industries: Centrum gives it a buy with a target price 59,775 each.

CCL Products: Buy rating with target price of 525 each.

La Opala: Buy rating with a target price of 442 each.

On Tuesday, shares of Page Industries ended at 51,438.15 apiece down 1.85%, and CCL Products shares closed at 484.80 apiece lower by 2.5%, and shares of La Opala finished at 357 apiece below 1.27% on BSE. The latest drop in these stocks makes them affordable.

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