20 Midcap Stocks in India For Accelerated Wealth Creation

midcap stock in indiaIt is statistically proven that long term investments in equities (stocks) can outperform any other conventional form of investments or asset classes such as real estate, gold or bank/post office deposits. However, a lot of people hesitate to invest in the stock markets due to a number of reasons including risk of losing the capital, volatility in the stock market, confusion between speculative trading vs investment, and the uncertainty around the companies that they invest in or sheer lack of knowledge to pick the right stocks.

Investing in Mutual funds (Read Systematic Investment Plan or SIP) is probably the easiest and safest route to enter the stock market rather than going for direct stock investment. However, the return on investment can be much higher if you go for direct equities as long as you pick the right stocks and companies to invest in.

An ideal stock portfolio (Read my stock portfolio that I often update) should have a mix of large cap and midcap stocks across several sectors/industries to minimize your risks. However, if you are looking at a faster growth rate you can even think of a Portfolio that’s heavier on the Midcap side if not an All-Midcap Portfolio. Given below, is a list of 20 handpicked midcap stocks that I believe should offer significant wealth creation (at least four to five times, if not more) for investors in the next ten years.

My List of 20 Midcap Stocks in India

Most of the Midcap stocks in this list are those with the proven record of high return on investment (Based on the ROE, ROCE parameters, sales/profits growth numbers etc) over a period of time. I have also included a couple rather new players which I think will excel in their respective businesses and hence offer higher returns to investors. Further, these companies are run by excellent management and promoters too and hence the business health and longevity is not under threat.

Here’s my winner list:

1. Amara Raja Batteries
2. Apollo Hospitals Enterprises
3. Atul Auto Ltd
4. Aurobindo Pharma
5. Avanti Feeds
6. Bharat Forge Ltd
7. Britannia Industries
8. Cera Sanitaryware
9. Colgate Palmolive Ltd
10. Dewan Housing Finance Ltd
11. eClerx Services
12. IndusInd Bank
13. Kaveri Seed Company
14. Kitex Garments (Previously suggested)
15. Mayur Uniquoters
16. Motherson Sumi Ltd
17. Pidilite Industries
18. Torrent Pharmaceuticals
19. UPL Ltd
20. Zensar Technologies Ltd

(Some notable omissions include Page Industries, Eicher Motors etc which have run up quite a bit)

Investment Methodology

Since the markets have run up a lot, putting all your money as lump sum investment can be very risky at the moment. Hence the following is the methodology that I suggest.

  • Make a shortlist of 12-15 of the above midcaps for your investment. Give more weightage to sectors like Pharma, Banking and Auto ancillaries
  • Systematically buy these stocks either by putting a fixed amount per month into buying the shortlisted stocks or by adding these stocks at every market correction
  • Track your investment on a periodic basis for any change in fundamentals of the selected companies. You don’t need to track them on a daily basis as long as your choices are good and have a long term plan with them
  • Periodically (once a year may be) validate and check the sector-wise weightage of your holdings and readjust if required
  • Watch them grow! And do not let the market fluctuations affect your investment decision UNLESS the fundamentals of your invested companies change.

Disclaimer: I am not a qualified finance adviser or portfolio manager. Please consult the experts before taking any investment decision in the equity market. You may have to do further research on these stocks on financial portals, websites of these companies as well as mandatory filings by them before taking any positions. As a disclosure, I have investments in many of the stocks mentioned above at the time of writing of this post.

Related Posts

10 Multibagger Midcap Stocks in India
10 Small Cap Stocks with Growth Potential

Good luck with your investments!

My Stock Portfolio

Ever since I posted my article on Midcap recommendations, I have been getting emails from a few readers asking for stock recommendations, mutual fund ideas, SIP investments etc. As it is practically impossible to answer all queries by email, I thought of making it simpler by publicly posting my stock portfolio in this post (which I hope to keep updating at least once in a quarter)

Note: Before attempting to invest in any of these stocks, I strongly urge you to read through the rest of this post – especially the Disclaimer section.

My Equity Portfolio

* Last updated on 2-April-2018

1. Long Term Basket (5+ Years)

* Last action: Added more ONGC

Stock Name Investment Horizon Status
Asian Paints Ltd Long Term PROFIT
Aurobindo Pharma Long Term PROFIT
Bajaj Finance Ltd Long Term PROFIT
HCL Technologies Ltd Long Term PROFIT
Hindustan Uniliever Ltd Long Term PROFIT
*Kotak Gold ETF Long Term FLAT
Lupin Ltd Long Term LOSS
NMDC Long Term PROFIT
ONGC Long Term LOSS

2. Medium Term Basket (6 Months to 5 Years)

(# Some of these stocks may be moved to Long Term basket later)
* Last action: None

Stock Name Investment Horizon Status
IDFC Medium Term LOSS
IDFC Bank Medium Term PROFIT
Subex Ltd Medium Term LOSS

3. Short Term – Swing Trade Basket (Few Days to Weeks)

* Last action: Booked profit on Tata Motors (DVR), Added ITC

Stock Name Investment Horizon Status
Coal India Short Term LOSS
ITC Short Term LOSS

My Investor profile

I am retired Software professional who took an early retirement from the IT industry to pursue a few simpler interests in life. I have been an investor in the equity market for many years but stopped the same just about an year before my retirement due to change in risk profile. However, seeing the new majority government in action at the center (and my own need to build wealth post retirement), I decided to get back to the stock market again to ride the bull run. I intent to build a portfolio of 5-10 stocks in the coming weeks with special focus on mid caps with good valuation that I intent to keep from 6 months up to 5 years. At the same time, I plan to allocate a bigger chunk towards well known large caps and blue-chip companies with very long term view (5-25 years). There’s also some swing trade or short term positions that I hold from time to time.

By the way, direct equities form only about 20% of my overall portfolio due to my investment risk profile. I also do trading in equities once in a while but that’s more for fun. I am 99% an investor (and less of a trader) with medium to long term goals. I am also invested heavily in mutual funds (~30%) and that’s what is giving me real good returns from long term point of view. Having said that, I must say that I have the knack of picking the right stocks at the right time but since I exited them too early, I ended up having limited profits from stocks as compared to my funds. I plan to rectify this with my new approach of having buy-and-forget large/mid caps stocks in one basket, medium term picks in another and swing trade/short term picks in yet another as shown in the three tables here.

Disclaimer

The stocks listed here are actually part of my portfolio and it doesn’t necessarily mean a recommendation to your investment goals. Further, here in this forum, I will NOT be discussing why I bought certain stocks, when I bought/sold, target price etc. All financial details, disclosures, news and research reports of the stocks mentioned here are available on portals like Bombay Stock Exchange or Moneycontrol.com. Hence, you are requested to do your own research and adjudge the suitability of the stocks mentioned here for your kind of investments.

The long term portfolio mentioned here may not be of interest to many people who are in the look out of quick bucks from the stock market. However, some of the stocks mentioned in the short to medium term portfolio (second table) may interest some of you.

Further, I am not a qualified Financial Adviser or portfolio manager to help you with your investment needs. Any loss or gain that may be resulted from investing in the stocks mentioned here may not be attributed to me.

Good luck in your equity investments!