Best Mid Cap Stocks: As per the recently announced classification by Association of Mutual Funds in India (AMFI) in early 2023, stocks having market capitalization between ₹16,800 – 48,900 crore fall under ‘Mid-Cap’ category Are. As a result, currently more than 150 companies in the country fall under a single category of stock.
Over the years, it has been observed that mid-cap stocks have outperformed both large-cap and small-cap stocks. Such an advantageous position in the stock market has made them a favorite of seasoned investors. These types of stocks can take advantage of the best of both ends, that is risk moderation and adequate returns.
Some of the characteristics of mid-cap stocks include diversification of stocks, greater liquidity as compared to small-cap stocks and higher potential for growth leading to increased profitability.
Best mid cap stocks
In this article, we will race amongst the best mid-cap stocks in India. The primary factor in the selection of stocks has been the market capitalization of the companies. Let’s look at them one by one.
1 – Federal Bank Ltd
Federal Bank Limited is one of the Best Mid Cap Stock an India-based commercial banking company operating through a network of branches and ATMs across the country. The business segments of the company include Corporate/Wholesale Banking Segment, Treasury Segment, Retail Banking Segment and Other Banking Operations including Para-Banking Activities and Other Banking Transactions.
It generates most of the revenue from the domestic markets. The market capitalization of the company is Rs 27,747 crore.
As of the quarter ending December 2022, the bank has a total of 1,272 branches and 1,957 ATMs/recyclers. Apart from this, the bank has more than 1,10,00,000 customers using its services.
The financial position of the company has registered an increase with a shift from Rs 1,647 crore in FY 2020-21 to Rs 1,965 crore in FY 21-22.
The valuation of some metrics specific to the banking industry, the gross as well as the net NPA ratio, has gone down with the former going down to 3.41.
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2 – NMDC Limited
NMDC Limited is second Best Mid Cap Stock engaged in the business of mining a wide range of minerals including copper, iron ore, rock phosphate etc. Most of its revenue comes from the ‘Iron Ore segment’. Geographically, the company generates most of its revenue from the Indian domestic market. The market capitalization of the company is Rs 32,193 crore.
The company produces about 35 metric tonnes per annum (MTPA) of iron ore from its major iron producing units, which are ‘Bailadila’ sector in Chhattisgarh and ‘Donimalai’ in Bellary-Hospet sector in the state of Karnataka. It aims to achieve 100 MT iron ore production capacity by FY30.
The company’s revenue increased from Rs 15,370 crore in FY 2020-21 to Rs 25,882 crore in FY 21-22. Similarly, the net profit figure of the company has increased from Rs 6,247 crore during FY20-21 to Rs 9,392 crore in FY21-22.
Profitability metrics such as ROE and ROCE reported good improvement with ROE increasing from 21.71 per cent in FY20-21 to 28.96 per cent during FY21-22 and ROCE during the same period showing a momentum from 29.65 per cent to 37 per cent . Though within the ideal range, the company’s debt-to-equity ratio increased from 0.07 in FY20-21 to 0.1 during FY21-22.
3 – Power Finance Corporation Limited
Power Finance Corporation Limited is again Best Mid Cap Stock for financial institution operating in the country dedicated to the power sector and various projects under it. The product portfolio of the company includes short term loans, range of credit facilities etc.
The company works hard to explore new areas for sustainable development such as providing funding to nuclear power projects, renewable equipment manufacturers, etc. The market capitalization of the company is Rs 41,436 crore.
4 – Rural Electrification Corporation Limited
Rural Electrification Corporation Limited (REC) is forth Best Mid Cap Stock a government agency established in 1969. The agency was formed with the main objective as well as to promote ‘Power Sector’ projects across the country.
The company is also engaged in providing credit support to Central and State power sector utilities, private sector project developers etc. REC has a market capitalization of Rs 32,165 crore.
With revenue increasing from Rs 35,553 crore in FY 20-21 to Rs 39,282 crore in FY 21-22, the financial company exhibits a strong track record of robust growth. In addition, profit after tax increased from Rs 8,380 crore in FY 20-21 to Rs 10,048 crore in FY 21-22.
Profitability metrics have also shown an increase in numbers. The return on equity (ROE) moved from 21.32 per cent in FY20-21 to 21.39 per cent in FY21-22. The return on capital employed (RoCE) during the same period showed an opposite trend with a marginal decline from 9.29 per cent to 9.1 per cent.
The debt-to-equity ratio of the company, though higher than desired, has seen a decline for a couple of financial years, with the most recent change from 7.53 in FY 20-21 to 6.49 during FY 21-22.
2.8 in FY20-21 and subsequently going down to 0.96 from 1.19 during the same period, during FY21-22.
Profitability metrics such as ROE and ROCE moved in opposite directions with ROE showing upward momentum, most recently from 10.52 per cent to 11 per cent during FY 20-21. In contrast, the ROCE number decreased from 10.12 percent to 9.68 percent, keeping the time frame the same.
5- Aditya Birla Capital Limited
Based in Mumbai, Aditya Birla Capital (ABCL) is Best Mid Cap Stock a wealth management firm with a strong presence in various lines of business such as asset management, corporate debt, private equity, currency, commodity broking, etc.
The company is committed to the core objective of serving end-to-end financial services and catering to the needs of its retail as well as corporate customers. The market capitalization of the company is Rs 38,305 crore.
The consistent growth in revenue and net profit figures contribute to show a healthy picture of the company backed by efficient cost management. As mentioned, revenue grew from Rs 19,554 crore in FY 20-21 to Rs 22,608 crore in FY 21-22, and net profit increased from Rs 1,106 crore to Rs 1,660 crore during the same period.
Return on Equity (RoE) and Return on Capital Employed (ROCE) increased from 8.52 per cent in FY 2020-21 to 11.50 per cent during FY 21-22 and marginally improved subsequently during the same period. 8.12 percent to 8.24 percent.
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