Short Call | Nifty Midcap 100 pulls off the greatest balancing act in a decade; Granules India, Jubilant Pharmova in focus

Over the past three years, Nifty Midcap 100 has tripled investors' wealth, jumping 101 percent during the time period.

They say 'slow and steady wins the race', but they also say 'high risk, high reward'. If each of these quotes was to be allocated to an index, the Nifty 50 would be the slow and steady performer, while Nifty Smallcap 100 could be seen as the risky bet that could pay off.

Well, over the course of ten years, neither came out on top. The clear winner is the middleman: the Nifty Midcap 100. Less risky than small caps but riskier than the benchmark Nifty 50, this midcap index has managed to pull off the greatest balancing act, while outperforming both the indices over the past decade.

According to a report from Motilal Oswal, if all three indices were rebased (think reset) to 100 in August 2014, today, ten years later, the Nifty 50 would clock in at 235 and the smallcap index would be at 275. However, with a pinch of midcap magic, the NSE Midcap 100 would be at 396, far, far ahead of its peers.

A decade seems too long? Let's look at the past three years. The frontline index has risen around 46 percent, while Nifty Smallcap 100 has gained about 81 percent. Over the past three years, Nifty Midcap 100 has doubled investors' wealth, jumping 101 percent during the time period.

The numbers and raw hard data challenge everything that we think we know—in this case, the high-risk high-reward maxim. Sure, some smallcap counters have jumped 700/800 percent in fits of exuberance and irrationality. But as a whole, the midcap index has consistently outperformed the stalwart blue-chips and the erratic smallcaps.

Granules India (Rs 553, -2.1%)

Shares fell for the third day since the USFDA issued three observations for the company's Gagillapur manufacturing site.

Bull case: Focus on building niche pipeline in the high-margin oncology space, large-volume products, innovative tech-based products and backward integration to aid 36% earnings CAGR over FY24-26, writes MOFSL.

Bear case: Even though the company has a strong regulatory track record, concerns of compliance lapses at the Gagillapur plant may dent growth trajectory. Gagillapur plants boasts a production capacity which is more than the combined capacity of three of the company's other sites. A regulatory hurdle for the same can have a bigger consequence.

Jubilant Pharmova (Rs 1,174, +12%)

Stock surged on high volumes, positive outlook

Bull Case: The company's strong radiopharma pipeline, expanding PET diagnostics, and growing CDMO injectables segment position it for medium-term revenue growth, while rising M&A interest and the US Biosecure Act bolster its long-term potential.

Bear Case: The pharma company faces risks from US inflation impacting generics margins, potential delays in radiopharma product launches, and increased competition in the sterile injectables segment, which could limit growth despite the optimistic outlook in key markets.

Zen Technologies (Rs 1,664.90, +2.7%)

Shares rose after Nuvama initiated coverage on the stock with a 'Buy' rating and a target price of Rs 2,200.

Bull Case: 'Atmanirbhar Bharat' and increased defence spending could drive local manufacturing growth. The company projects 60 percent-plus revenue CAGR and 35 percent operating margins over the next 2–3 years, backed by a large backlog and rising demand for simulators and anti-drone systems. India's defence sector is poised for long-term expansion, fueled by indigenisation, export goals, and increasing defence budgets.

Bear Case: A slowdown in order momentum could impact the company's growth projections. Rising competitive intensity may pressure margins and market share.

(With inputs from Vaibhavi, Harshita, and Neeshita)