10 midcap stocks for gains in this volatile market

10 midcap stocks for gains in this volatile market

• Dolat Capital has upgraded stance on the Indian market to neutral, led by significant improvement in factors that turned their opinion to negative. According to the brokerage firm, sharp drop in the gold imports, softening oil prices and temporary extension of timeline of US tapering has given enough fire power for the markets to move up sharply. It feels that current liquidity-led rally will need stronger legs to sustain. This can be sustained only by growth in earnings, wider participation of stocks and outcome of the general election scheduled next year. As the market plays catch-up, Dolat Cap recommends 10 midcap stocks that you can buy or accumulate and gain around 33% in the long-term.

• Rating: ACCUMULATE • Target: Rs 399 • Upside: 9% • Rationale: Biopharma and contract research segment is

expected to grow by 15% and 21% over FY13-15E. Strategic partnerships with BMS/Mylan ensures higher visibiltiy in earnings going forward. Anticipate 24% earnings growth over FY13-15E.

BioconBSE: 532523 | NSE: BIOCON

• Rating: BUY • Target: Rs 430 • Upside: 33% • Rationale: Delinquency rates still lower than industry. Decline

in NIM was sharp, expect to improve in 2HFY14.

Karur Vysya BankBSE: 590003 | NSE: KARURVYSYA

• Rating: ACCUMULATE • Target: Rs 355 • Upside: 6% • Rationale: Huge replacement demand to drive growth. Huge

capex to augur volumes

Amara Raja BatteriesBSE: 500008 | NSE: AMARAJABAT

• Rating: ACCUMULATE • Target: Rs 235 • Upside: 2% • Rationale: Gap between Asian Paints and Berger Paints has

widened. Premiumisation strategy has played out well for the company which has resulted in an improvement in operating margins.

Berger Paints IndiaBSE: 509480 | NSE: BERGEPAINT

• Rating: BUY • Target: Rs 344 • Upside: 26% • Rationale: Not impacted by change in allocation of domestic gas

to city gas distributors (CGDs) sector. Ability to maintain gross spreads though the gas cost is increasing. Current price seems to factoring the extreme negatives of the ongoing legal case with PNGRB.

Indraprastha GasBSE: 532514 | NSE: IGL

• Rating: BUY • Target: Rs 185 • Upside: 27% • Rationale: Sustained strong volume traction. Volumes up 2%;

Pricing up 1%. Demand momentum strong across SBUs. EBIT Margin down in Q2FY14.

KPIT TechnologiesBSE: 532400 | NSE: KPIT

• Rating: ACCUMULATE • Target: Rs 448 • Upside: 14% • Rationale: Extensive range of products enabling SIL to play

plastic consumption story. Ability to innovate and bring new plastic products in the market. Brand focus gives pricing power and increasing share of value added products.

Supreme IndustriesBSE: 509930 | NSE: SUPREMEIND

• Rating: ACCUMULATE • Target: Rs 785 • Upside: 16% • Rationale: Revenue growth of 20% and EBITDA margin at 23-

24% for FY14e. Indore SEZ plant to contribute inFY15E. Institutional business to contribute Rs 4.5bn in FY14E and Rs 5.0bn in FY15e.

Ipca LaboratoriesBSE: 524494 | NSE: IPCALAB

• Rating: BUY • Target: Rs 61 • Upside: 29% • Rationale: The rise in fresh NPL formations only temporary,

overall asset quality much better than industry. Agility to hold on to the margins even in turbulent times.

City Union BankBSE: 532210 | NSE: CUB

• Rating: ACCUMULATE • Target: Rs 240 • Upside: 33% • Rationale: Favorable portfolio mix to aid margin expansion

backed by high visibility in CSM business. Anticipate 32% revenue growth over FY13-15E. Sustenance of elevated return ratios likely as new capacities turn accretive.

PI IndustriesBSE: 523642 | NSE: PIIND