10 Midcap Stocks To Buy From Motilal Oswal’s India Strategy Report

Nifty FY22E EPS estimates see minor tweaking

The India Strategy Report by Motilal Oswal Financial Services has tweaked the Nifty FY 2022 (E) EPS to Rs 730 from Rs 732 earlier and Rs 874 (prior: Rs 865) for FY22 and FY23, respectively.

FY22 earnings for Oil & Gas have seen upgrades on the back of higher crude and gas prices, offset by downgrades in Autos. Metals, BFSI, and Oil & Gas are likely to account for 34%, 25%, and 13% of the total incremental earnings, respectively, in FY22

Key model portfolio changes

Motilal Oswal Financial Services has maintained an overweight stance on BFSI, Information Technology, Metals, Cement, and Capital Goods. It has also raised Consumer from Neutral to Overweight given the improving underlying demand backdrop and retain Neutral positions in Auto and Healthcare.

“While Motilal Oswal Financial Services maintain underweight stance on Energy, they have reduced the extent of the under weight position. In BFSI, the company adds IndusInd Bank, which is showing strong traction in advances. In Consumer, added Jubilant FoodWorks. In Midcaps, Motilal Oswal Financial Services introduces APL Apollo Tubes.

10-midcap stocks to buy from the India strategy report

According to the report the top stocks to buy from the midcap space include names like Max Financials, Steel Authority of India, Deepak Nitrite, L&T Technology, APL Apollo Tubes, Chola Finance, JK Cements, Indian Hotels, Orient Electric and Aditya Birla Retail.

While we at good returns do recommend stocks to buy based on brokerage reports, we would advise some bit of caution given where stocks are. Midcap stocks would also be slightly risky to buy, given that they have been extremely volatile. Also, the Sensex at 60,000 is expensive and its trading at significant premiums to long-term averages, which is one more reason why investing in stocks in lumpsum could be slightly risky.

Corporate earnings to be supported by recovery

According to Motilal Oswal Corporate earnings for 2QFY22 are likely to be supported by recovery in domestic demand as indeed the higher global commodity and energy prices.

“There remains a clear divergence in intra-sector earnings growth. Global cyclical plays such as O&G and Metals continue to support earnings growth on the back of high commodity prices, and Technology continues to see robust demand-led growth. On the flip side, Autos remains challenged with supply-side issues (semi- conductor chip shortage) as well as slower demand recovery (2W). Moreover, Healthcare appears to be impacted by pricing headwinds in the US Generics business,” the brokerage has said.

Disclaimer

The above 10 stocks to buy are picked from the India Strategy report of Motilal Oswal Financial Services. Please note investing in stocks is subject to market risks and one needs to be cautious at this point of time as markets have gone-up sharply. Neither the author, nor Greynium Information technologies Pvt Ltd would be responsible for losses incurred based on a decision made from this article.