15 midcaps & smallcaps that defied slump to rally over 50% in 6 months

If you wonder why midcaps and smallcaps have suffered so much all through the first half of this calendar, explanations one gets are lingering concerns over corporate governance issues, liquidity crunch in the economy and fears of growth slowdown.

Yet, 15 of these second-rung stocks bucked the trend and rallied over 50 per cent during the January-June period, with IT firm Tanla Solutions climbing as much as 142 per cent to trade at Rs 74 on June 28 from Rs 30.60 on December 31 last year.

Seamec, which is engaged in the business of offshoring and shipping, also more than doubled investor wealth during this period. The scrip jumped 141 per cent to Rs 484.70.

Shares of water and environment management business Ion Exchange, metals firm Adhunik Industries and NBFC Aavas Financiers have gained 80 per cent, 77 per cent and 76 per cent, respectively.

Among others, Adani Gas, DCM Shriram, Hester Biosciences, Centum Electronics, Info Edge, JM Projects, Godrej Properties, SRF and Just Dial figure on this list of midcap gainers with over 50 per cent rise.

The BSE Midcap and Smallcap indices are down 4 per cent and 3 per cent, respectively, while the Sensex has advanced 9.22 per cent in the same period.

Some of the poorly-governed companies are down in the dumps. Trade slowdown is already at its worst for investors. But good quality companies and well-governed companies are holding on, Jinesh Gopani, Head of Equity, Axis Mutual Fund, told ETNow during an interaction.

“Overall, there are diverse views on market dynamics. Tier-I companies and well-governed businesses will continue to do well and hold up as money is flowing in there. But there have been sharp corrections wherever there is any distress or trust deficit,” he said.

Midcap and smallcap stocks like Reliance Communications, Mercator, McLeod Russel, Reliance Power, LEEL Electricals, Reliance Infra, Eros International, Kridhan Infra, Cox & Kings, Sintex Industries, Jet Airways, Eveready Industries, Manpasand Beverages, Reliance Naval and Reliance Capital have been battered very badly over the past few months, leading to 50-91 per cent value erosion.

Travel and tour company Cox & Kings last week defaulted on the payment on commercial papers due to cash flow mismatch and a situation exacerbated by a rating downgrade.

PWC recently quit as auditor of Eveready Industries, saying it has been unable to obtain sufficient audit evidence of inter-company deposits and its recovery.

Yet, analysts like Mayuresh Joshi, Fund Manager, Angel Broking, believe select midcaps would probably do very well over the next 15 to 18 months.

“One needs to start cherry-picking good names from among midcaps, as the segment will probably outperform over the next four to six quarters,” Joshi said in an interaction with ETNow.