Best Mid Cap Stocks
While the midcap stocks segment apparently ended flat last year at an index level, their intra-year movement reflects a different picture. Last year, mid-caps saw volatility. The year started on a weak note and later, the Russia-Ukraine conflict made matters more complicated. Finally, there was a sharp wave of selling. The ups and down turned off several investors away from midcaps.
However, at the dawn of the New Year, the story is changing. People have started showing an interest in mid-caps again because of their extraordinary competitive advantages. Midcap stocks are far more nimble than their larger counterparts. They adapt to improved market rates. This post discusses some of the best mid-cap stocks to consider in 2023.
A Quick List of Mid Cap Stocks - Must-buys in 2023
| Company Name | Market Cap (in Rs. Cr) | Industry |
| Aether Industries Limited | 10,838.04 | Pharmaceutical |
| Escorts | 25,903.90 | Commercial Vehicles |
| Polycab India | 44,154 | FMEG |
| Deepak Nitrite | 24,806 | Commodity Chemicals |
| Crompton Greaves | 18,944 | Household Appliances |
5 Best Mid Cap Stocks - Quick Details
Here is a small list of mid cap stocks that have been performing well on the market. However, you should research well before making any investment decisions.
Aether Industries Limited
Aether is a 9-year-old speciality chemicals manufacturer with robust growth credentials. The organisation has recently come out with an IPO. The company features an R&D intensive speciality chemicals operations. In the financial years 2019-2022, the company reported a revenue CAGR (Compound Annual Growth Rate) of 43%. The company strives to expand its product portfolio with fresh inflows of Rs. 627 crores from the IPO. It is among the most promising mid cap stocks list.
Besides its value-driven product and operational prospects, Aether’s IPO valuation is also premium. Though Aether has seen a few ups and down in the previous years, its diversified customer base, robust financial track record, and higher return on equity make it a favourable subscription.
However, according to adept analysts, the business is highly dependent on manufacturing facilities. Therefore, any unexpected slowdown or shutdown in operations may adversely impact the company’s overall performance. Besides, non-compliance or alterations in regulatory rules can also affect Aether’s business. Given this, investors should be mindful while putting money in Aether and keep a close eye on its movements.
Escorts
Escorts, aka Escorts Kubota Limited, is an India-based engineering company. It provides solutions for railways, infrastructure and agriculture. Currently, the company has four segments, namely, construction equipment, auto auxiliary products, railway equipment, and agri-machinery. While Escorts’ stock was down by 6.1% in the early months of the year, its key financial indicators have always been fairly decent.
This indicates that the stock could potentially rise in the long term. Over the past five years, Escorts has managed a moderate net income growth of 18%. Factors like management efficiency and low payout ratio have worked as the driving force for the said growth. If you compare the net income growth of Escorts with the industry, you will find it similar to the industry standard, i.e., 17%.
Furthermore, from Escorts activities, it seems that the company is serious about sharing its profits with shareholders. The future payout ratio of the organisation may probably rise to 9.8% in the upcoming five years. In addition, its ROE (Return on Equity) is expected to increase by 12% despite the potential increment in the payout ratio. Overall, Escorts has some positive attributes to consider, including a good earning growth, heavy reinvestment efforts, and a potential rise in ROE, among other factors.
Polycab India
This market leader in the wires and cables industry holds a 222% share in the organised space. With a vast product portfolio and a good distribution reach with 2,05,000 retail touchpoints (second only to Bajaj Electricals), Polycab’s performance has been impressive. The company shares rose by 30% last year, with a fresh high in December.
The stock's 52-week high was Rs. 2,993 on 14th December 2022, and it's expected that it will cross the mark of Rs. 3,200 by the end of 2023. When it comes to positive attributes, Polycab exhibits several. These include healthy cash positions, robust balance sheets, noteworthy revenue growth, and industry growth, among other factors.
With the holistic growth of the FMEG (fast moving electric goods) sector, Polycab is expected to strengthen its portfolio in the coming years. The company aims to achieve a revenue of Rs. 20,000 crore by FY2026. Considering the data, it seems profitable to invest in Polycab stocks.
Deepak Nitrite
Deepak Nitrite Limited has had a noteworthy share price movement in the recent months. Over the last three years, Deepak Nitire's stocks have zoomed 411%. The company is considered among the better performing mid cap stocks list.
With gains, there’s been a remarkable 735% over the last five years. However, in 2022, this chemical manufacturer consolidated its shares. While the stock has shown extreme volatility in recent months, its revenue growth and increased RSI (relative strength index) make it an investable stock.
Crompton Greaves
While 2022 is set to end on a lower note for Crompton Greaves Consumer Electricals, this stock is expected to perform well in 2023. Analysts have initiated coverage on the stock with a ‘Buy’ recommendation. In fact, some have gone bullish on the stock due to its good market position in the distribution network, core categories, and the company’s good track record of product innovation.
Crompton Greaves has always been well-positioned in primary growth levers like strong brand recall, premium positioning, well-weaved distribution and sales channels, elevated revenue contribution, sector-leading margins, free cash flow generation (FCF) and a pleasing return ratio. Moreover, Crompton Greaves recently acquired Butterfly Gandhimathi, which is said to be effective in setting the organisation’s next leg of growth.
This will probably strengthen Crompton’s position in approximately Rs. 10,000 crore domestic appliances categories. Considering this data, it's seemingly worthwhile to invest in Crompton’s shares in 2023.
Conclusion
If you are encouraged by the mid cap stocks, you may want to consider those noted here. However, before investing, check on a few factors, which include the stock’s growth potential, diversity, liquidity, and risks. Mid-cap stocks are more volatile than large-cap ones as they hold a comparatively weaker managerial infrastructure and organisational management. They also feature lesser capital size and fewer revenue resources.
We’ve discussed some of the best mid cap stocks in India. It may help you identify risks and choose sound stocks to invest in. The unstable nature of the market may lead to a financial bubble when mid-cap stocks start reaping high returns. When the bubble bursts, you may not find the whole picture as profitable.
Therefore, invest mindfully. People who seek to stay invested for a long time and have a moderate risk tolerance, may invest in mid cap stocks. These stocks are an acceptable option for portfolio diversification.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.