Midcaps likely to end 2017 on a high note; 10 stocks which doubled your wealth

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26 Aug, 2025 12:21

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The S&P BSE Midcap index rose over 40 percent compared to 26 percent rally in the S&P BSE Sensex despite concerns of stretched valuations as well as growth concerns.

The S&P BSE Midcap Index’s trailing price to earnings (P/E) ratio — a widely watched valuation measure — on Monday’s close stood at 45.09 times while the S&P BSE Sensex was trading at a P/E of 24.75 times. The gap was 20 times.

But, what propelled midcaps in the year 2017 was strong domestic flows which most experts think are likely to continue in the year 2018.

“Midcaps delivered 40 percent returns compare to Sensex returns of about 26 percent and is likely to continue delivering higher earnings growth as these companies are largely domestically focused and continued strong flows by domestic institutions,” Yogesh Mehta, VP- Retail Research, MOSL told Moneycontrol.

More than 60 percent of the stocks in the S&P Midcap index outperformed Sensex returns so far in the year 2017, as of data collated on Monday, 18 December.

As many as 61 stocks gave returns in excess of 26 percent so far in the year while 32 stocks out of 94 stocks in the Midcap index underperformed the benchmark.

Coming to stocks which more than doubled investors’ wealth so far in the year 2017 include names like Vakrangee which rose 173 percent, followed by Jindal Steel & Power which rallied 154 percent, and Tata Global Beverage was up by 138 percent.

Other stocks which rose by about 100 percent include names like Dalmia Bharat, Endurance Technologies, TVS Motor Company, Adani Enterprises, L&T Finance, and Sun TV.

The mid-cap index has outperformed its large-cap counterpart by a considerable margin not just in the year 2017 but over the last 4 years, which has pushed the former’s valuation at lifetime highs.

“Even when compared to its own historical valuations, the Nifty Mid-cap 100 P/E at ~52x TTM earnings is more than 2x its peak valuations of 24-26x in Jan-2008, Oct-2010 and Jul-2015,” Jayant Manglik, President, Retail Distribution, Religare Securities Ltd told Moneycontrol.

“Notably, on all these three occasions, the Nifty Mid-cap 100 index had witnessed a correction of 70%, 40% and 20% respectively thereafter. Even when compared to the Nifty’s P/E at ~26.6x TTM earnings, the Mid-cap 100 index valuation is at near 100% premium, which was not the case until a couple of years back, wherein the latter traded at a discount,” he said.

Investors should hold onto companies which still have some clarity on earnings recovery while for others booking partial profits is the right strategy. But, experts feel that the valuations could remain stretched for some more time.

Hence, investors should look at buying quality stocks on every decline. “Some investors are worried about valuations after a stellar rally in midcap and smallcap basket,” Santosh Meena, sr Research Analyst, Swastika Investmart Ltd told Moneycontrol.

“They might be right but still, there are plenty of opportunities in the market in midcap and smallcap basket because many sectors are showing turnaround story where valuations are still reasonable,” he said.

Manglik of Religare Securities Ltd said that investors should focus on companies which have greater clarity on their earnings trajectory and also have other fundamental aspects going for them like good management, robust return ratios, etc. These stocks generally command premium valuations.

“Some good companies do trade at valuations, which may not entirely be justifiable when looked at from the medium-term perspective. Nonetheless, investments in such companies should be in a staggered manner, as the market may provide lower levels to add onto such companies,” he said.