5 midcap stocks for up to 44% return? Brokerages have 'buy' ratings on these 5 stocks; check out their targets

Stocks to Buy: As domestic equity benchmarks continue to hover within 1-2 per cent of their lifetime highs scaled in the past 3-6 weeks, several analysts have identified buying opportunities in a bunch of quality stocks they believe have the potential to give significant returns over the long run. The headline Nifty50 index, for instance, has gyrated within a 974-point range so far in May, down 265.7 points or 1.2 per cent from its all-time high of 22,794.7 (May 3), as of May 21.

Here are five midcap stocks that brokerages HDFC Securities, Nuvama, Sharekhan and Hem Securities have maintained their ‘buy’ calls on with targets suggesting upside potential of as much as 44 per cent at the closing levels of May 21:

Here are some of the key things to know about these five midcap stocks that the four brokerages are positive on:

Sobha

According to HDFC Securities, Sobha is a significant beneficiary of strong demand in Bengaluru while its established presence in the high-value Gurugram market provides it with additional opportunities for growth and improved margins.

Gurugram accounted for13 per cent of Sobha’s sales volume and 18 per cent of sales value in the past three years, according to the brokerage.

HDFC Securities is positive on Sobha given the real estate company’s robust launch pipeline movement from land to development.

Restaurant Brands Asia

Restaurant Brands Asia’s continuous focus on gaining more traffic in India and Indonesia through value offerings will help it achieve better same-store sales growth (SSSG) in the coming years, according to Sharekhan.

The brokerage expects Restaurant Brands Asia’s cash flows to improve from the current financial year, “when both businesses attain certain maturity and deliver consistent improvement in profitability”.

While the focus of Restaurant Brands Asia’s India business is on improving footfalls through its well-placed strategy to enhance the operating leverage, that of its Indonesia unit is on becoming a profitable venture, wrote analysts at Sharekhan in a research report dated May 17.

The brokerage mentioned the following among the key risks to its estimates:

• Any disruption caused by store closures
• Heightened competition due to the entry of a new brand
• Slowdown in expansion in key markets

Krishna Institute of Medical Sciences (KIMS)

Nuvama lowered its FY25 profit, EBITDA and revenue estimates for KIMS after the medical and healthcare service provider reported a set of quarterly numbers that fell short of the brokerage’ estimates.

According to Nuvama, which has lowered its FY26 PAT estimate for KIMS by 24.5 per cent, and its revenue and EBITDA estimates by 14 per cent each, KIMS staged a weaker-than-expected financial performance for the March quarter with lower occupancy at core hospitals in FY24.

However, the brokerage has acknowledged positive trends in the company’s operating parameters, with a strong balance sheet.

Nuvama forecasts KIMS’s revenue, EBITDA and PAT to maintain CAGRs of 23, 22 per cent and 19 per cent over the FY24-26 period, valuing the stock at an EV/EBITDA multiple of 20 times its FY26 estimate.

Vinati Organics

Nuvama remains positive on Vinati Organics shares citing demand recovery in antioxidants and acrylamido tertiary-butyl sulfonic (ATBS) acid, and capacity expansions.

The specialty chemicals manufacturer staged a strong recovery in the March quarter despite a weak performance for the financial year FY24, but its management aims for a revenue CAGR of around 20 per cent over the next three years and a sustainable EBIDTA margin of  26 per cent as against its 24.7 per cent in FY24, according to the brokerage.

Piramal Pharma

Optimistic about Piramal Pharma’s long-term performance, Hem Securities projects CAGRs of 17 per cent and 29.74 per cent for the drug maker’s revenue and EBITDA over the FY24-FY26 period, respectively.

The brokerage values the stock at 28 times the estimated FY26 earnings per share (EPS).

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