Drop and run! 30 stocks with big gains in H1 may run out of steam
The Davids of Dalal Street continued to outpace Goliath all through the first half of calendar 2017. While the BSE Sensex advanced 16 per cent in those six months, the BSE Midcap and Smallcap indices rose 21 per cent and 26 per cent, respectively.
And within them, there are those big performers. Over 30 midcap and smallcap stocks from across the sectors more than doubled investor wealth, with the best performer, Indiabulls Ventures, jumping as much as 680 per cent year to date.
Other stocks on the list included Venky’s (India) (282 per cent), Avanti FeedsBSE -1.72 % (up 205 per cent), MEP Infra (up 202 per cent), Bhansali Engg (up 199 per cent), GeojitBSE 3.16 % Financial Services (up 175 per cent) and Phillips CarbonBSE 0.92 % (up 171 per cent).
Brokerage Kotak Securities has a buy rating on Venky’s (India) with a target price of Rs 2,150. The stock traded at Rs 1748.95 on July 3, which means the stock may see over 20 per cent upside if it were to hit the Kotak target price.
Other top gainers from the space included Jaypee InfratechBSE 5.93 %, Indiabulls Real Estate, JP Associates, Sharda MotorBSE 1.70 %, Visaka IndustriesBSE 2.47 %, HEG, V-Mart Retail and Future Life, which have surged between 135 per cent and 170 per cent since January 2 this year.
After the recent runup, some market experts have turned cautious on midcaps and smallcaps. But some believe select counters will continue to outperform during the second half of 2017.
Sanjeev Jain, Senior Manager for Equity Research at AUM Capital Market, said: “Valuations of smallcap and midcap companies are looking stretched now. We may see 10-15 per cent correction in some of them over the next two quarters. GST rollout will boost the Indian economy. Stock-specific investors may look at Kajaria CeramicsBSE 0.76 % for robust fundamentals. GST has also improved the prospects of the entire organised tiles sector. The stock can give 20-25 per cent return over the next 12 months.”
Sectorwise, shares of auto and auto ancillaries companies such as Sharda Motor, Minda IndustriesBSE 0.34 %, Lumax IndustriesBSE -1.38 %, Sona KoyoBSE 2.50 %, Escorts and TVS MotorBSE 0.94 % have surged up to 156 per cent year to date.
“Ashok LeylandBSE 0.93 % is among my top picks from the midcap space,” Jain said. Shares of Ashok LeylandBSE 0.93 % has gained 15 per cent year to date.
Aviation stocks SpiceJetBSE 1.64 % and Jet AirwaysBSE 1.32 % climbed 125 per cent and 55 per cent, respectively, during this period.
With an 82 per cent return, NCL IndustriesBSE 0.70 % was the top gainer from the cement pack. Others included Dalmia Bharat, Sanghi IndustriesBSE 8.16 %, Udaipur Cement and Prism CementBSE 0.16 %, which rose up to 70 per cent.
In the financial space, IIFL Holdings, Motilal Oswal Financial ServicesBSE 3.37 %, GIC Housing FinanceBSE 3.22 % and Can Fin HomesBSE 0.45 % have risen 130 per cent, 119 per cent, 110 per cent and 95 per cent, respectively, so far this year.
Shares of LT FoodsBSE 1.12 %, Vadilal IndustriesBSE 8.06 % and ADF FoodsBSE -0.52 % have surged 133 per cent, 63 per cent and 72 per cent, respectively, in the FMCG space.
Market experts see a multibagger in Tata GlobalBSE -1.15 % Beverages. Shares of the company have risen 21 per cent to Rs 150.55 as of June 30 from Rs 123 on January 2.
“Tea is one sector where there is a huge amount of unorganised market and that will be impacted after GST implementation. Organised players will benefit. In the tea segment, Tata Global is one stock that has not participated. For an FMCG company, this is very cheap because you have Hindustan Lever, ITCBSE 1.50 % or even other companies like Procter & Gamble, Grodrej Consumer, DaburBSE 1.14 %, Marico, all quoting at about 25-30-35 times earnings and here you are getting this company for 15 times,” said Rajen Shah, Chief Investment Adviser, Tradebulls.
At the lower end, Shilpi CableBSE 4.97 % tumbled the most at 82 per cent during the first six months of 2017. Videocon IndustriesBSE 4.80 %, Capital Trade, Lanco InfratechBSE -0.88 % and PTL Enterprices have declined between 65 per cent and 80 per cent so far in 2017.
“Largecaps are now better positioned, though select opportunities exist in the midcap space too. But that side of the market definitely has overvaluation of a material level over the largecaps. There’s a good possibility that the largecap space will attract more capital over the next 12 to 18 months,” Sailesh Bhan, Deputy CIO, Reliance Mutual Fund, said in an interview with ETNow.
“After GST rollout, the market looks confident that the government has started implementing its policies. We may see 5-8 per cent rise in equity benchmarks Sensex and Nifty in the near term,” said Jain of AUM Capital Market.
The biggest tax reform since Independence came into force on July 1 after a 17-year wait.