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Last Updated : Dec 02, 2018 10:33 AM IST | Source: Moneycontrol.com

Midcaps and smallcaps to rally after Dec 11; here are 3 mid-term buy ideas

Sumit Bilgaiyan of Equity99 said the Nifty has strong support at 10,825-10,745 levels and resistance at 10,945-11,035 levels

Moneycontrol Contributor @moneycontrolcom
 
 
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Sumit Bilgaiyan

Equity99

We have seen a rally on Nifty and Sensex in all working days of the past week and during November F&O series but midcaps and smallcaps still lag

in the market.

We believe midcaps and smallcaps will also see a rally after December 11, once results of state elections are announced.

We have seen good results across the sectors in the first half of the financial year that proves our country is on a solid growth trajectory.

Smallcaps and midcaps are still down 36 percent and 20 percent respectively from their highs. The losses will, however, narrow down in the coming months.

There are many important events in the coming week which will drive the market. RBI Monetary policy statement will be announced on December 5 and OPEC will meet on December 6. Exit polls of five state elections will be declared on December 7.

For this week, the Nifty has strong support at 10,825-10,745 and resistance at 10,945-11,035.

Here is the list of three fundamental picks which could give good returns in medium term:

Radico Khaitan

Radico Khaitan is one of the largest players in the Indian spirits industry and owns brands like 8PM whisky, Magic Moments vodka, etc. It is presently the market leader in premium vodka category with its brand Magic Moments.

The company posted strong numbers for Q2FY19. Its net profit increased by 73 percent to Rs 49.54 crore from Rs 28.60 crore YoY on 28 percent higher sales at Rs 1,906.1 crore.

EBITDA grew by 39.5 percent in Q2FY19 and EBITDA margin expanded by around 305bps YoY to 17.7 percent. PAT increased by 79 percent to Rs 96.91 crore and sales grew by 40 percent to Rs 4,021.37 crore in first half of FY19.

RKL trades at PE ratio of 33x. We recommend buying in a staggered manner for medium to long term.

Ajanta Pharma

Ajanta Pharma is a specialty pharmaceutical company engaged in development, manufacturing and marketing of quality finished dosages with seven state-of-the-art manufacturing facilities in India and Mauritius.

APL has maintained CAGR of 15 percent in sales and 19 percent in net profit over the last five years. The company has posted stable numbers for Q2FY19.

Net profit stood at Rs 125.39 crore on higher sales of Rs 544.11 crore in Q2. PAT increased by 2 percent to Rs 231 crore and sales grew by 4 percent to Rs 1,055 crore in first half of FY19.

APL trades at PE ratio of 22x. We recommend buying in a staggered manner for medium to long term.

Torrent Power

Torrent Power is one of the leading brands in the Indian power sector having a portfolio of coal-based, gas-based and renewable power plants with an aggregate generation capacity of 3,600 MW.

The company distributes power to over 3 million customers annually in its distribution areas of Ahmedabad, Gandhinagar, Surat and Dahej SEZ (Gujarat), in Bhiwandi (Maharashtra) and in Agra (Uttar Pradesh).

The transmission and distribution loss in license areas of the company is amongst the lowest in the country. The company has posted strong numbers for Q2FY19. Net profit increased by 29 percent to Rs 413.52 crore from Rs 321.65 crore YoY on 18 percent higher sales of Rs 3,444.54 crore. EBITDA grew by 18 percent to Rs.987 crore in Q2.

PAT increased by 22 percent to Rs 640.84 crore and sales grew by 17 percent to Rs 6,972.67 crore in first half of FY19.

TPL trades at PE ratio of 12.2x. We recommend buying in a staggered manner for medium to long term.

The author is Founder of Equity99.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Dec 2, 2018 09:56 am
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