Stock to Buy: Gaurang Shah’s Favorite Midcap Stocks to Consider During this Downturn
Stock to Buy
Exploring Promising Midcap Stocks for Long-Term Gains
In the world of finance, identifying investment opportunities that promise substantial returns is a pursuit cherished by investors and financial experts alike.
Gaurang Shah, a distinguished figure in Geojit Financial Services, has embarked on the task of uncovering these opportunities, particularly within the midcap sector.
Shah’s astute observations have led him to believe that select midcap stocks have the potential to deliver returns of up to 15 percent over the course of 18-20 months.
In a market characterized by bearish trends and economic uncertainties, let’s delve into the stocks he has identified as potential gems.
Navigating Turbulent Markets
The Indian equity markets have experienced a wave of bearish sentiment in recent days. Investors are navigating treacherous waters, with increasing anxiety brought about by rising bond yields and geopolitical tensions, including the ongoing strife between Hamas and Israel.
Yet, amidst this uncertainty, there is room for optimism. On October 27, the market demonstrated a remarkable recovery, leaving investors to wonder whether opportunities for profit still exist in these uncertain times.
Cyient: The Next Large-Cap Contender
Gaurang Shah has identified Cyient as a company with the potential to evolve into the next large-cap stock. Cyient’s focus on engineering, construction, data analytics, networks, and operations sets it apart in a market dominated by technology companies.
Notably, while many IT firms posted lackluster results in the September quarter, Cyient stood out with consistently impressive performance.
In the second quarter, Cyient reported a remarkable 27 percent year-on-year increase in revenue, coupled with a staggering 127 percent growth in profits.
The company’s performance metrics are undoubtedly impressive, and its valuation further sweetens the deal. Currently trading at a price-to-earnings (PE) multiple of 25x, Cyient appears undervalued when compared to competitors like Coforge, which are trading at a PE multiple of 41x.
Furthermore, Cyient’s stock is trading at a 22 percent discount from its 52-week high, offering a golden opportunity for investors to explore this promising stock.
Indian Hotels: A Beacon of Hospitality
Indian Hotels, a prominent player in the hospitality sector and a part of the illustrious Tata Group, has started the fiscal year 2024 on a positive note.
Earnings have shown double-digit growth, with a standout performance in September 2023. The company’s exceptional showing can be attributed, in part, to its substantial gains from the G20 summit.
Indian Hotels anticipates a sustained demand for rooms in the forthcoming wedding and holiday seasons, a trend that it is well-positioned to capitalize on.
Despite a recent 8 percent dip in its stock over just five trading sessions, it remains an attractive prospect for any investor’s portfolio. Indian Hotels’ strong brand and its ability to weather market fluctuations make it a valuable addition to a diversified investment strategy.
Ashok Leyland: The Commercial Vehicle Champion
Ashok Leyland is a pure play in the commercial vehicle (CV) segment, and it boasts a robust market presence with a 29 percent market share in the truck segment by the end of FY 2022.
The company has also strategically expanded its footprint in the light commercial vehicle (LCV) segment through a modular platform strategy.
Ashok Leyland has been particularly successful in optimizing its supply chain to reduce vehicle costs, thus enhancing its competitive edge.
Furthermore, the company boasts a robust product pipeline in the electric vehicle (EV) segment, which is in high demand globally.
The company’s growth strategy is comprehensive, aiming to capture market share in historically weak areas, such as North and East India markets. This expansion also involves growing its dealer network and a continuous stream of new product launches.
Currently, Ashok Leyland’s stock is trading at a 16 percent discount from its 52-week high, making it a compelling addition to any investment portfolio, especially for those with a long-term horizon.
The company’s forward-looking approach and its significant role in the commercial vehicle segment underscore its potential for future growth.
KPIT Technology: A Scalable Technology Innovator
KPIT Technology differentiates itself from other IT companies by focusing on providing software services exclusively to automotive companies.
With nearly all of its revenue derived from the automotive business, KPIT Technology is positioned to leverage the remarkable scalability potential in this sector.
The company stands to benefit greatly from the automotive industry’s substantial investments in cutting-edge technology.
While the stock has experienced a recent dip of more than 10 percent in just 10 days, many experts believe that this setback is temporary. In the long run, KPIT Technology is expected to offer substantial growth opportunities.
Aside from its operations in India, this Pune-based company also conducts business in international markets, including Europe, America, Japan, and China. Notably, KPIT Technology has outperformed other midcap technology companies, such as Coforge and L&T Technology, over the last six months.
KEC International: Diversified Capital Goods Powerhouse
KEC International is a diverse capital goods engineering company that primarily serves Indian Railways. Operating in more than 48 countries, including regions like Africa, Central Asia, the Middle East, South Asia, and Southeast Asia, the company’s core business revolves around power transmission.
The increasing demand for electricity is expected to drive substantial growth in KEC International’s future business.
The company anticipates orders worth Rs 25,000 crore for FY 2024, representing an 11 percent annual increase.
Impressively, the company has already received orders worth more than Rs 7,500 crore so far this year, underscoring a robust order book.
As a result of this strong order pipeline, the company’s earnings are anticipated to surge significantly in the coming quarters.
In light of these factors, KEC International is a compelling choice for investors even in the midst of a market downturn.
The company’s diversification, strong order book, and strategic vision make it an attractive candidate for inclusion in a well-rounded investment portfolio.
Conclusion: Seizing Opportunities in Midcap Stocks
In conclusion, Gaurang Shah’s insights shed light on a diverse range of midcap stocks that hold the promise of delivering substantial returns.
Despite the challenges presented by bearish market trends and economic uncertainties, these stocks exhibit compelling attributes that make them attractive investment options.
Investors with a long-term perspective and an appetite for growth should consider the potential offered by these stocks.
While market conditions may be turbulent, the future remains uncertain, and the investment landscape ever-evolving, the stocks identified here offer avenues for investors to navigate the current challenges and realize profitable returns in the months and years ahead.
The path to wealth in the stock market often involves carefully selected investments in companies that demonstrate resilience, innovation, and a commitment to excellence. These stocks, as highlighted by Gaurang Shah, embody these qualities and present investors with opportunities to embark on a journey towards financial success.
The decision to invest should always be made after conducting thorough research, understanding individual financial goals, and consulting with a qualified financial advisor.
Each investor’s risk tolerance, financial situation, and investment horizon are unique, and therefore, it is essential to make investment decisions that align with one’s specific circumstances and objectives.
While these stocks may hold great promise, they should be considered as part of a diversified investment strategy that reflects an individual’s overall financial plan and objectives.
