Astral, Ramco Cements, ABB India, Lupin, among highest midcap gainers of May
Indian midcap stocks have performed well in May, with the Nifty Midcap 100 index surging 6.5% during the month, while the Nifty gained 2.6%. The top-performing midcap stocks in May include PVC pipes and plastic products maker Astral, The Ramco Cements, and heavy electrical equipment maker ABB India.
The Indian equity market has seen a stellar rally since the month of April with the benchmark Nifty nearing its all-time high level led by persistent inflow of foreign funds, resilient domestic macros and improving corporate performance.
The Foreign Institutional Investors (FII) have pumped in ₹27,856.48 crore in the Indian equities in May after remaining net buyers in the month of March and April as well, showing their confidence in the domestic market as the global peers face challenges.
However, Nifty’s gains of 2.6% in May were overshadowed by a strong outperformance of the Nifty Midcap 100 index that surged 6.5% during the month. The index has risen 7.7% YTD amid improved sentiment for the midcap stocks and market analysts expect this relative outperformance to continue going ahead.
Also Read: Midcap index outshines benchmarks while Nifty, Sensex take a pause near all-time high level
Here are the top performing midcap stocks in the month of May 2023:
Astral Ltd
PVC pipes and plastic products maker Astral Ltd has been the top performer in the midcap segment during the month of May. The shares of the company jumped 25.83% during the month. The stock has risen over 40% in one year and has a market cap of ₹48,910 crore as on May 31.
The company’s performance during FY23 remained robust across segments, including pipe and fitting business and Paints and adhesives segment.
The company had recorded a 45.5% rise in Q4FY23 net profit at ₹205.7 crore as compared to ₹141.4 crore, in the corresponding period in the previous fiscal. Total revenue increased 8.3% YoY to ₹1,506.2 crore led by healthy volume growth of 15%.
EBITDA rose 42.5% YoY to ₹309 crore, while EBITDA margin improved significantly to 20.5% from 15.6%, YoY.
“We still believe that Astral is a consistent quality performer and it is a compounding story on back of its strong performance in FY23 and robust guidance of volume & margins across segment for FY24-25,” said Praveen Sahay, Research Analyst, Prabhudas Lilladher.
The brokerage house maintained a Buy rating on the stock and raised the target price to ₹1,830 from ₹1,620 earlier.
The Ramco Cements
Shares of The Ramco Cements rallied 22.81% during the month of May. It is the fifth largest cement company in India with a total production capacity of 22 MT and also has a captive thermal power capacity of 175 MW and a windmill capacity of 126 MW. It boasts a market cap of ₹21,343 crore.
The company has shown superior volume growth and better-than-expected realization and margins in the quarter ended March 2023.
The cement manufacturer has consistently gained market share and has guided to 20% volume growth in FY24, post registering a 35% YoY volume growth in FY23.
Demand in the cement sector is expected to remain resilient amid a normal monsoon and infrastructure push by the government.
Geojit Financial Services has upgraded the stock to Buy and increased the target price to ₹1,030 from ₹845 earlier, considering strong volumes and improving margins.
ABB India
The share price of heavy electrical equipment maker ABB India rose 20.71% in May. It has risen 70% in 1 year and commands a market cap of ₹87,178 crore.
ABB India reported adjusted net profit of ₹245.2 crore in the quarter ended March 2023, surpassing consensus estimates.
The company’s revenue rose 22.5% YoY to ₹2,411 crore driven by improved execution and favourable product mix. It witnessed a 36.4% rise in order inflows at ₹3,125 crore across verticals.
Lupin
Shares of pharma major Lupin has given 13.39% returns in the month of May. It is the third largest generic player (by prescriptions) in the US. The midcap company commands a market cap of ₹36,612 crore.
Lupin reported a consolidated net profit of ₹246.7 crore in Q4FY23 as against a net loss of ₹344.27 crore in Q4FY22. Its revenue from operations stood at ₹4,330.30 crore, rising by 12% YoY led by the US and API business. The pharma player witnessed strong growth in EBITDA at ₹615 crore, up by a whopping 117.8% YoY.
ICICI Securities maintains Hold rating on the stock due to sensitivity of margin recovery on few US launches, ongoing cost rationalisation that is yet to bring sustainable cost reduction and weak return ratios
The key triggers for future price performance will be resolving regulatory challenges, speeding up approvals and key launches in the US and change in mix towards complex products and with expense optimisation to improve margin profile.
Honeywell Automation
Shares of Honeywell Automation, the industrial goods company, were among the top performing midcap stocks in May. The stock rose 12.53% during the month, boasting a market cap of ₹35,450 crore.
The company’s performance in the March quarter was healthy, led by strong improvement in margins and net profit. Its net profit rose 54% YoY to ₹112.03 crore in Q4FY23, while consolidated revenue rose 27% to ₹849.68 crore.
EBITDA increased 59% to ₹138.8 crore, while operating margin expanded to 16.34% in the March quarter.
The company expects an uptick in execution and growth in topline eying opportunities in global markets. Slowing inflation, easing chip shortage and supply-chain issues are likely to aid the company’s margins going ahead.
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