These five fundamentally strong mid cap stocks offer a good balance of risk and reward
As you move down the market-cap tiers from large caps to mid caps and small caps, your risk increases, as do your potential returns.
If you're looking for a mixture of growth and stability, with a risk profile that falls between large caps and small caps, mid cap stocks can offer a good balance. However, identifying good mid cap stocks from hundreds of options is no easy feat. Knowing where to look is often the real challenge.
In this article, we've selected five fundamentally strong mid cap stocks using Equitymaster's screener – fundamentally strong mid cap stocks in India.
Let's dive in.
#1 GSK Pharma
GSK Pharma, a subsidiary of UK-based GSK plc, is a leading global biopharmaceutical company. Its portfolio includes general medicines, specialty medicines and vaccines.
It's a leader in private vaccines, with 22.2% market share. It also leads the dermatology segment and ranks fourth by volume in the acute therapy industry.
Revenue grew 9% year-on-year to ₹3,720 crore in FY25, driven by 8% year-on-year volume growth in the general medicine and specialty segments Margins expanded to 31%, leading to 32% year-on-year profit growth to ₹920 crore.
Return ratios were strong, with a 63.8% return on capital employed (RoCE) and a 46.9% return on net worth (RoNW).
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GSK is expanding into oncology, specifically gynaecological cancers. To this end, it's on track to launch Zejula (niraparib) for the treatment of ovarian cancer and Gemparli (dostarlimab) for recurrent endometrial cancer.
It's also eyeing the e-pharmacy sector to bridge the gap between rural and urban and expand its customer base. However, the growing penetration of generic drugs may pose a risk to the company.
#2 Page Industries
Page Industries is the exclusive licensee of Jockey International Inc in India, the UAE, Sri Lanka, the Maldives, Bangladesh and Nepal. It handles both the manufacturing and distribution of the Jockey brand of innerwear and leisurewear for men, women and children.
Page is also the exclusive licensee for the manufacturing, marketing and distribution of the Speedo brand of swimwear, swimming equipment, apparel and footwear.
Jockey operates in 2,713 cities through 110,826 multi-brand stores, 1,453 exclusive brand outlets (EBOs), 1,216 large-format stores, and online. Speedo products are available in 1,096 stores and 36 EBOs in more than 150 cities.
In FY25 the company's revenue rose 8% year-on-year to ₹4,940 crore, driven by store additions and premiumisation. Jockey is the market leader in the premium innerwear segment, which accounts for 99% of its revenue.
Margins improved to 21.5%, driven by cost optimisation and stable raw-material costs. Net profit surged 28% to ₹730 crore. RoCE and RoNW stood at 73% and 48%, respectively.
The company is facing a slowdown in demand due to reduced discretionary spending. However, management noted that there were signs of improvement, led by tier 2 and tier 3 cities, which outperformed metros and tier 1 markets. It estimated that demand was likely to improve in FY26 owing to income tax rationalisation, inflation falling to a six-year low, and a favourable monsoon.
The company is consolidating larger store formats to ensure premium brand representation. It has also launched a Jockey mobile app to attract customers online.
#3 Waaree Energies
Waaree Energies primarily manufactures solar photovoltaic (PV) cells and modules. It also provides engineering, procurement and construction (EPC) services for solar power plants, and trades other solar-related products including solar water heaters and solar water pumps.
It has 5.4 gigawatts (GW) of operational solar cells and 15 GW of module manufacturing capacity. Waaree leads in India's module shipments with a 14.1% market share. It has a solar power capacity of over 105 GW, and expects to hit 280 GW by 2030. It's well-diversified geographically, with manufacturing facilities in Gujarat, Uttar Pradesh and the US.
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Revenue grew 28% year-on-year to ₹14,800 crore in FY25, driven by order book execution. Margin expanded to 21%, aided by operating leverage, while net profit grew 107% year-on-year to ₹1,900 crore.
As of Q4 FY25, the company had an order book of ₹47,000 crore, with 43% from India and 53% from overseas. The order book provides revenue visibility of more than three years, as per FY25 revenue.
Waaree expects cell manufacturing to grow at an annual rate of more than 30% over the next five years. It's expanding capacity to capitalise on this demand, with most of it expected to go live in FY27.
The additional capacity, strong order book, and growing demand are expected to benefit Waaree in the years to come. However, policy uncertainties from the US could be a headwind for growth.
#4 CDSL
CDSL is a market infrastructure institution, part of India's capital market structure.
It's the largest depository in India in terms of demat accounts, with a 79% market share. CDSL's demat accounts grew 32% year-on-year to 153 million in FY25.
The company's core function is facilitating the dematerialisation of securities – converting physical securities into electronic form. It also settles trades executed on stock exchanges.
It provides services to all market participants, including exchanges, clearing corporations, depository participants, issuers and investors. Its subsidiary CDSL Ventures is the first and largest know-your-customer (KYC) registration agency. It recently expanded into insurance and commodity repositories.
Revenue rose 32% year-on-year to ₹1,200 crore in FY25, driven by a 37% increase in average daily turnover to ₹1.2 trillion. Net profit rose 25% year-on-year to ₹530 crore.
Management provided no forward-looking guidance owing to the subdued market. However, the company is confident of achieving long-term sustainable growth, driven by increasing penetration of demat accounts. It aims to maintain its dividend payout at 60% of operating profits.
#5 KPIT Technologies
KPIT focuses on providing technology solutions for the automotive industry, with a strong emphasis on mobility and vehicle engineering.It provides solutions to original equipment manufacturers (OEMs), including powertrain (conventional and electric), connectivity, autonomous (vision and control systems), and diagnostics. It's well-diversified geographically, with a presence in 14 countries across the Americas, Europe and Asia-Pacific (APAC).
Revenue increased 20% year-on-year to ₹5,800 crore in FY25, primarily driven by passenger cars, while commercial vehicles lagged. Margin remained stable at 21%, leading to a 41% year-on-year jump in net profit to ₹840 crore.
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The company plans to diversify into commercial vehicles and off-highway applications. Initial OEM projects have commenced, with ramp-ups expected in FY27. It's also diversifying into cybersecurity services and rolling out a cost-optimisation programme.
Though the company is facing a slowdown in demand owing to tariffs and geopolitical challenges, it expects a growth revival, driven by execution ramp-up in the second half of the fiscal year.
Fundamentally strong mid cap stocks from Equitymaster's stock screener
Conclusion
These companies have strong fundamentals and are leaders in their respective sectors. Their growth outlook also remains strong.
That said, it's always crucial to analyse a company's fundamentals, including its financial performance, corporate governance practices and growth strategies before deciding whether to invest.
Happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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