Oracle Financial, GMR Airports, Vodafone Idea, BHEL: 14 midcap shares jumped 20-35% since election outcome.

Since the election outcome on June 4, 2024, several midcap stocks have experienced significant gains, with 14 midcap shares jumping between 20-35%. Among the top performers, Oracle Financial Services Software Ltd saw its shares climb 35% to Rs 9,842.85 from Rs 7,288.55. Samvardhana Motherson International Ltd (SAMIL) increased by 28.51% to Rs 182.30 from Rs 141.85, and GMR Airports Infrastructure Ltd surged by 28.12% to Rs 97.91 from Rs 76.42.

Other notable midcap stocks include Vodafone Idea Ltd, LIC Housing Finance Ltd, JSW Energy Ltd, Whirlpool of India Ltd, UNO Minda Ltd, Shriram Finance Ltd, Exide Industries Ltd, Bayer CropScience Ltd, Aditya Birla Fashion and Retail Ltd, Bharat Heavy Electricals Ltd (BHEL), and Coromandel International Ltd. These stocks delivered strong gains following the election outcome, despite some concerns over valuations in the midcap and smallcap spaces.

Mythili Balakrishnan, Co-Fund Manager at Alchemy Capital Management, highlighted that the outperformance of midcaps and small caps is supported by robust earnings growth. The consensus anticipates that the underlying earnings of midcap and smallcap indices will grow at a compound annual growth rate (CAGR) exceeding 20% over the fiscal years 2024 to 2026, surpassing the mid-teens growth seen in the Nifty 50. Balakrishnan pointed out that the higher valuations of the midcap and smallcap indices reflect this stronger underlying earnings trajectory.

Specifically, Oracle Financial shares climbed 35% to Rs 9,842.85 from Rs 7,288.55, SAMIL shares rose 28.51% to Rs 182.30 from Rs 141.85, and GMR Airports shares surged 28.12% to Rs 97.91 from Rs 76.42. Vodafone Idea shares gained 27.89% during the same period, while LIC Housing Finance Ltd, JSW Energy Ltd, Whirlpool of India Ltd, and UNO Minda Ltd saw gains between 25-27%. BHEL, Shriram Finance, and Aditya Birla Fashion and Retail Ltd added 20-23%, according to data compiled from the corporate database AceEquity.

Emkay Global's post-election analysis indicated a shift in near-term preference towards the large- and top-end of the midcap range from small- and mid-cap (SMID) stocks. This preference is driven by the pursuit of stocks with strong earnings visibility, reasonable valuations, and low risk. However, from a 2-3 year perspective, Emkay Global retains its preference for SMID stocks, believing that the current economic cycle will continue to favor investment over consumption and manufacturing over services.

In conclusion, the midcap segment has shown remarkable resilience and growth following the election outcome, driven by robust earnings growth expectations and strategic investments. Despite concerns over valuations, the performance of these midcap stocks reflects a positive market sentiment and strong investor confidence in the growth prospects of these companies. The continued preference for midcaps and small caps by market analysts underscores the potential for sustained growth in these segments, making them attractive investment opportunities in the near to mid-term.