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Jefferies' 10 midcap stock ideas to maximize your portfolio gains this year

Updated : 2020-01-21 13:26:44

Despite the broader correction in the midcaps last year, most analysts are bullish on this space in 2020. Demand slowdown and tight liquidity are the key concerns but Jefferies believes that the quality stocks will largely be resilient. It expects 3 main factors to influence midcaps in 2020 are multiple government initiatives, traction to organized segment, premium product launches, raw material trends, and balance sheet strength. Here are the top midcap picks from Jefferies this year:

 Astral Polytechnik:  Jefferies gave a 'hold' call to Astral Polytechnik with target price raised to Rs 1,215 from Rs 1,606 earlier. The stock's P/E this year is at 57.9x as compared to 86.2x last year. The stock is a key player in CPVC pipes. We expect steady growth in core pipes segment, backed by replacement demand and govt. initiatives. However, allied product segments could be impacted by weak demand, the report said. (Image: Reuters)
Astral Polytechnik: Jefferies gave a 'hold' call to Astral Polytechnik with target price raised to Rs 1,215 from Rs 1,606 earlier. The stock's P/E this year is at 57.9x as compared to 86.2x last year. The stock is a key player in CPVC pipes. We expect steady growth in core pipes segment, backed by replacement demand and govt. initiatives. However, allied product segments could be impacted by weak demand, the report said. (Image: Reuters)
 Finolex Cables:  The stock also received a 'hold' call with target price increased to Rs 425 from Rs 400 per share earlier. The P/E this year is stable at 15.7x v/s 17.6x in 2019. The brokerage firm believes that the government's impetus will boost building materials. (Image: Reuters)
Finolex Cables: The stock also received a 'hold' call with target price increased to Rs 425 from Rs 400 per share earlier. The P/E this year is stable at 15.7x v/s 17.6x in 2019. The brokerage firm believes that the government's impetus will boost building materials. (Image: Reuters)
 Finolex Industries  is another one that would benefit from the government's measures this year. The research house gave a 'buy' call to the stock with the target price raised to Rs 765 from Rs 730 earlier. All items related to real estate will see a boost post-government announcement. (Image: Reuters)
Finolex Industries is another one that would benefit from the government's measures this year. The research house gave a 'buy' call to the stock with the target price raised to Rs 765 from Rs 730 earlier. All items related to real estate will see a boost post-government announcement. (Image: Reuters)
 Havells India:  The brokerage gave a 'buy' call to the stock with a target price raised to Rs 880 from Rs 845. The stock's P/E is at a comfortable valuation of 47x as compared to 50x last year. The report said,
Havells India: The brokerage gave a 'buy' call to the stock with a target price raised to Rs 880 from Rs 845. The stock's P/E is at a comfortable valuation of 47x as compared to 50x last year. The report said, "We view Havells as a multi-year growth story. Roll-over our PT to FY22E EPS." (Company Image)
 HEG  also received a 'buy' call from Jefferies, however, the target price was reduced to Rs 1,630 from Rs 1,700 earlier. This year, the P/E stands at 5.4x, costlier than FY19 of 1.3x. In the case of graphite centric companies, Jefferies said,
HEG also received a 'buy' call from Jefferies, however, the target price was reduced to Rs 1,630 from Rs 1,700 earlier. This year, the P/E stands at 5.4x, costlier than FY19 of 1.3x. In the case of graphite centric companies, Jefferies said, "Industry is facing many challenges i.e. demand headwinds, softer realizations, shrinking spreads. Even so, retain Buy on HEG on inexpensive valuations and strong balance sheet." (Image: Reuters)
 Kajaria Ceramics  also received a 'buy' call from Jefferies with the target price increased to Rs 765 from Rs 765 per share earlier. This year, the stock P/E stands at 31.4x as compared to 38x last year. Extended rains, subdued construction, liquidity crunch, and weak sentiment could weigh on Kajaria's H2FY20e. But, medium-term triggers remain robust i.e. market share gains from the unorganized segment, government impetus to housing, optimized mix and entrenched brand & distribution, the report added. (Company Image)
Kajaria Ceramics also received a 'buy' call from Jefferies with the target price increased to Rs 765 from Rs 765 per share earlier. This year, the stock P/E stands at 31.4x as compared to 38x last year. Extended rains, subdued construction, liquidity crunch, and weak sentiment could weigh on Kajaria's H2FY20e. But, medium-term triggers remain robust i.e. market share gains from the unorganized segment, government impetus to housing, optimized mix and entrenched brand & distribution, the report added. (Company Image)
 Supreme Industries:  The brokerage placed a 'buy' call on Supreme Industries with target price raised at Rs 1,520 from Rs 1,480 earlier. This year, the P/E stands at 32.9x, less than FY19 of 33.7x. Jefferies report said,
Supreme Industries: The brokerage placed a 'buy' call on Supreme Industries with target price raised at Rs 1,520 from Rs 1,480 earlier. This year, the P/E stands at 32.9x, less than FY19 of 33.7x. Jefferies report said, "Most Midcaps under our coverage are market leaders, with pristine financials and strong potential for earnings growth. One of our top picks is Supreme Industries." (Representational Image)
 UPL:  The brokerage firm gave a 'buy' call to the stock with a target price raised to Rs 795 from Rs 745. The stock's P/E is at a comfortable valuation of 18.9x this year. The report said,
UPL: The brokerage firm gave a 'buy' call to the stock with a target price raised to Rs 795 from Rs 745. The stock's P/E is at a comfortable valuation of 18.9x this year. The report said, "We stay bullish on UPL given the scale and product mix benefits from Arysta. Interim hiccups (PPA adj, leverage, capex) could iron out by synergies and accretive cash flows. Global channel inventories and UPL's regional mix remain monitorable." (Company Image)
 V-Guard Industries  also received a 'buy' call from Jefferies, and, the target price was increased to Rs 295 from Rs 290 earlier. This year, the P/E stands at 40.2x, less than FY19 of 54.7x. The stock remains one of the top picks of Jefferies. Subdued demand and tight liquidity remain key concerns. However, a diversified mix, market leadership, and entrenched reach could help the company tide this slowdown. V-Guard took price hikes in Q4FY19; also, FY19 was a low base marred by Kerala floods, said the Jefferies report. (Image: Reuters) (Representational Image)
V-Guard Industries also received a 'buy' call from Jefferies, and, the target price was increased to Rs 295 from Rs 290 earlier. This year, the P/E stands at 40.2x, less than FY19 of 54.7x. The stock remains one of the top picks of Jefferies. Subdued demand and tight liquidity remain key concerns. However, a diversified mix, market leadership, and entrenched reach could help the company tide this slowdown. V-Guard took price hikes in Q4FY19; also, FY19 was a low base marred by Kerala floods, said the Jefferies report. (Image: Reuters) (Representational Image)
 Jefferies  in its research report gave an 'hold' call to Whirlpool India with target price raised to Rs 2,240 from Rs 1,970 earlier. The stock's P/E this year is at 51.4as compared to 73.1x last year. Key industry risks such as new entrants, increasing competition and already high organized penetration warrant caution on Whirlpool. Also, the stock now is at stretched valuations, said the brokerage. (Company Image)
Jefferies in its research report gave an 'hold' call to Whirlpool India with target price raised to Rs 2,240 from Rs 1,970 earlier. The stock's P/E this year is at 51.4as compared to 73.1x last year. Key industry risks such as new entrants, increasing competition and already high organized penetration warrant caution on Whirlpool. Also, the stock now is at stretched valuations, said the brokerage. (Company Image)
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