by In this article, I am going to discuss 7 Multibagger Midcap Stocks ideas that have a growth potential in the coming years and most of these companies have a market cap of 10k crores to 30k crores except for 2 companies however, they have good growth prospects.
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7 Multibagger Midcap Stocks
7 Multibagger Midcap Stocks with potential and for the long term perspective are as follows:
1. Deepak Nitrite
- The first company that we are going to talk about is a 50 yr old all-rounder in the chemical sector.
- Their revenue comes from basic, specialty, and performance products.
- It is also a market leader in products like sodium nitrite, OBA, and fuel additives.
- This company has more than 100 products and a global customer base of more than 700 and 35% of their revenue comes from exports.
- This clearly depicts that his company is well-diversified and 1 important benefit of diversity is that any cost, revenue, or demand pressure in any 1 segment, will be covered up by the other.
- We find the application of their products in many other sectors as well like Pharma, Agriculture, dyes, and pigments.
- In fact, the chemical sector also has a lot of policy support from the government like Atmanirbhar Bharat and it is also a clear beneficiary of the global China outlook.
- This company is taking the right decisions at the right time.
- In India, 16% demand for phenol and 9% demand for Acetone is fulfilled through imports so to fulfill this demand this company has taken a 300 cr of CAPEX and this is the import substitution strategy which is a very positive thing.
Financials and Valuations
- The financials and valuations also seem to be quite promising.
- Their 5yr profit CAGR is 65% and this month this company has shown a profit growth of 26%.
- Their ROE and ROCE are around 40 and they have an OPM of 28%.
- Currently, their price to earnings multiple is around 33 and that of its competitors is around 50.
- However, this company has a bit of raw material price fluctuation risk and also an angle of competition with China
- 1 interesting fact that I would like to share is that in the past 6 months, this company has sold its products to China.
- So if you have Deepak Nitrate in your portfolio then let me know your thoughts in the comment box.
2. Muthoot Finance
- The next company has a market cap of 60k crores but this is genuinely a promising company.
- This company is in the NBFC sector and 86% of its business comes from gold.
- This company can target people with limited credit history through gold loans.
- Practically there is a minimum impact of NPA on gold loans as there is sentimental value attached to gold.
- In case of default, they can sell the collateral i.e. gold, and recover the dues, and if this point was simple for you to understand then just drop a ‘yes’ in the comments. It will be an indicator for me that this anecdote has worked.
- This company has more than 5400 branches, 60% of their branches are located in southern parts so there is a bit of geographic risk here.
Financials and Valuations
Muthoot Finance is currently trading at a P/B ratio of 4 and Bajaj finance is trading at a 9 P/B ratio.
3. Polycab
The next company that we are going to discuss has 2 business divisions that are cables and wires also fast-moving electrical goods like fans and switches.
What’s something special about this company?
- 80% of its business comes from wires and cables where it is the market leader.
- They have 20% of the market share.
- The demand for wires and cables is directly linked to infrastructure. If there is infrastructural development in coming yrs
- then wires and cable companies are definitely going to boom.
Financials and Valuations
- 10% of their revenue comes from the FMEG division and this division has shown a growth of 37% in 5 years.
- They have more than 4100 dealers and distributors network and more than 1.65 lakhs of retail outlet presence and it is crucial to have a strong distribution for any consumer-facing business.
- This company is targeting a revenue of 20k crores in FY26 and currently, their revenue is around 3k crores
- This company is planning to have a 7x revenue growth in the coming 5 yrs.
- In fact, their sales have increased by 11% of CAGR in past 5 yrs and PAT has increased by 36% of CAGR.
- Their debt is also minimal and they will clearly benefit from profit and loss.
- So if you already have Polycab in your portfolio then The financials and valuations also seem to be quite promising.
- Their 5yr profit CAGR is 65% and this month this company has shown a profit growth of 26%.
- Their ROE and ROCE are around 40 and they have an OPM of 28%.
- Currently, their price to earnings multiple is around 33 and that of its competitors is around 50.
- However, this company has a bit of raw material price fluctuation risk and also an angle of competition with China
- 1 interesting fact that I would like to share is that in the past 6 months, this company has sold its products to China.
- So if you have Deepak Nitrate in your portfolio then let me know your thoughts in the comment box.
4. Endurance technologies
- The next company is a clear beneficiary of the EV ecosystem.
- EV vehicles need parts made of aluminum is they are lightweight and give better performance and this company is a market leader in aluminum die-casting.
- It is one of the largest auto component companies in India and they have 30% of the market share in shock absorbers and front forks.
- They have an ROE/ROCE of more than 15% and also they have reduced their debt in past few years in fact, now it is negligible.
5. Tata Consumer Products
- The Next company is from the FMCG space. This company has shown a PAT of 460 crores last year in FY 20 and this year in FY21 it has gone up to 857 crores here we see significant growth.
- The company has a market cap of 17k crores there is a good scope of growth here.
- This company is from the FMCG space and aspires to be the market leader
- It is the 2nd largest tea player globally. They have a wide range of products in the food and beverage category Tea, coffee, salt, pulses, etc.
Financials and Valuations
- 39% of its revenue comes from exports.
- This year most of the business of this company, company has shown double-digit growth in both revenue and volumes
- This year their revenue has increased by overall 20%.
- Recently this company has acquired brands like soulful and Nourish co.
- This clearly shows that this company is also targeting inorganic growth.
- Their ROE/ROCE is less than 10% which is not the best of things and its Q4 results have also been impacted because of T inflation and non-performance of the international business.
- It is crucial to track their upcoming results.
6. Finolex Industries Ltd
- The next company is into manufacturing pipes and fitting.
- They have a network of 900 dealers and retail touchpoints of 21k and a 20% market share in PVC pipes.
- The demand for their products is linked to Agri, housing, and construction and this sector is going to be a beneficiary of a lot of government schemes.
- So considering this growth outlook they have also increased their manufacturing capacity.
- Their capacity in the PVC pipes segment was 2.5 l MTPA in 2015 which they have increased to 3.75l MTPA in 2020 which is a very positive thing.
- Their realization in plastic pipes has also gradually increased in 2018 it was 93000 Rs/MT which has increased to 149k Rs/MT in 2021 which is a good thing.
- This company has 2 major business divisions of PVC resins ie. polymer and PVC pipes.
Financials and Valuations
- The demand for PVC resins is going to increase by 6.8% CAGR till 2030 and that of PVC pipes is going to increase by 14.7% CAGR till 2026.
- So there is clear visibility of demand for their products.
- It has achieved the highest quarterly revenue in the previous quarter of 1249 crores.
- Their sales and profit are also constantly rising.
- Their 3 yrs profit CAGR has been around 35%.
- Their ROCE & ROE is also around 35 which is a fantastic thing.
7. Sumitomo Chemicals
- Our final company belongs from an agriculture space basically it manufactures crop protection like insecticides, pesticides, etc.
- The best this is that their products are proprietary to their Japanese parent company.
- This company has more than 10 technicals.
- Technicals are the chemical compounds that are required in certain proportions in final products.
- They have 14k+ distributers also they have 200+ brands and 20+ patents which is fantastic to see.
Financials and Valuations
- Financially this company has grown by 11% in 11 yrs.
- Their profit has also grown by 50% in past 12 mths.
- Other financial parameters of this company are also healthy they have 32% of ROCE and 24% of ROE 18% of OPM and negligible debt.
Disclaimer: This analysis is not any recommendation and only for educational purposes, so please consult your financial advisor before any investment decisions. One should follow the Risk Management, Money Management, and Fear and Greed concept of the market to avoid big losses.
I have covered the main pointers of every stock but do you want me to share a full fundamental analysis of each company do let me know in the comment box below. I will be happy to do fundamental analysis and write an article on each company.
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