Religare Broking, a prominent domestic brokerage firm, has identified four midcap stocks from sectors such as information technology (IT), cement, and fast-moving consumer goods (FMCG). These stocks are believed to have the potential to yield returns ranging from 16% to 21% over the next 9-12 months.
Regarding the FMCG sector, Religare acknowledges the challenges it has faced due to weak rural demand but notes improvements in volumes. The brokerage observes that the easing of raw material costs is expected to translate into better profitability. FMCG companies are anticipated to experience volume-led growth, driven by capital expenditure, strong brand recall, and increasing momentum in rural areas.
Here are the four midcap stocks recommended by Religare:
1. Mphasis:
With a current market price (CMP) of ₹2,442, Religare has initiated a ‘buy’ rating on Mphasis. The brokerage foresees a potential upside of 21.2%, with a target price of ₹2,960 over the next 9-12 months. Mphasis is an IT solutions provider with a market capitalization of ₹46,034 crore. Despite macro challenges in the IT sector, Religare is optimistic about Mphasis’ strategy, which includes investments in new-generation technology and customer-centric approaches.
2. Nuvoco Vistas Corporation:
Religare recommends a ‘buy’ rating for Nuvoco Vistas Corporation, with a CMP of ₹381. The brokerage envisions a potential upside of 19.5%, targeting ₹455 in the next 9-12 months. As India’s fifth-largest cement group with a market capitalization of ₹13,609 crore, Nuvoco Vistas has been consistently expanding its capacity. The company aims to further increase its capacity and improve EBITDA per ton by FY25E, driven by product mix enhancements and utilization improvements.
3. Jyothi Labs Ltd:
Jyothi Labs, a leading FMCG company in India with a market capitalization of ₹13,485 crore, is recommended by Religare with a ‘buy’ rating. The stock currently trades at ₹367, and Religare anticipates a potential upside of 16.5%, setting a target price of ₹428 over the next 9-12 months. Jyothi Labs is known for its Ujala brand and ranks highly in other product categories. The company’s focus is on volume-led growth, brand building, and digital expansion.
4. CCL Products:
Religare initiates a ‘buy’ rating for CCL Products, which is one of India’s largest instant coffee makers with a market capitalization of ₹8,566 crore. The stock trades at ₹644, and Religare predicts a potential upside of 20.4%, targeting ₹776 over the next 9-12 months. CCL Products ventured into the frozen foods category with its plant-based brand ‘Continental Greenbird’ in India, aiming to expand its FMCG presence. Stable financials, strong brand recall, and global customer relationships contribute to the company’s growth.
These midcap stocks have been selected based on their growth potential and their alignment with key market trends, making them attractive choices for investors seeking returns in the coming months.
