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Top Mid Cap Stocks to Buy for Long Term for a Diversified Portfolio

Top Mid Cap Stocks to Buy for Long Term for a Diversified Portfolio
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Stocks in the stock market are often classified based on their market capitalisation. This categorisation helps investors to make informed investment decisions. If you’re looking to invest in equities, you’ve probably heard of large cap and small cap stocks, but what about mid cap stocks? In this comprehensive guide, we’ll explain what midcap stocks are, about the NIFTY midcap index and how to invest in them.

What are Mid Cap Stocks?

Mid cap stocks in India have a market capitalisation of more than ₹5,000 crores but less than ₹20,000 crores and fall in between small cap stocks and large cap stocks.

Mid cap companies tend to show an upward trend in their market capitalisation, valuation and profits. 

List of Trending Midcap Stocks List 2024

The following are the top 10 stocks that are mid cap. Here is a list of the best mid cap stocks for 2024 investments in India. This mid cap stocks list is for an educational purpose and not meant to be recommendatory:

Stock NameSub-SectorMarket Cap (in Cr)Total Debt 5-Year CAGRShare Price
Indian Hotels Company LtdHotels, Restaurants & Leisure₹65,9903,139.0126.13₹471.3
Punjab National BankPublic Banks₹1,08,458--7.09₹98.75
Polycab India LtdElectrical Components & Equipments₹66,616191.47-₹4,169.95
One 97 Communications LtdBusiness Support Services₹47,904221.50-₹755.9
Astral LtdBuilding Products₹48,12198.3034.57₹1,774.4
Cummins India LtdMachinery₹56,29324.17417.53₹2,097.75
IDFC First Bank LtdPrivate Banks₹61,05715.19-₹81.8
AU Small Finance Bank LtdConsumer Finance₹49,09417.67-₹716.5
Abbott India LtdPharmaceuticals ₹54,69026.00151.69₹25,481.4
Ashok Leyland LtdMachinery₹50,9565.9824,145.02₹170.25

Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data is from 23rd January 2024.  However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!

Why Should You Invest in Midcap Stocks?

  • Mid cap stocks offer the best of largecap and smallcap stocks as they provide returns with moderated risk. Mid cap companies have a higher chance of expansion & growth than small cap companies; thus, a higher potential for growth exists.
  • There is also a higher return potential as they allow substantial dividends and will allow value appreciation since they are in their growth phase.
  • There is more information available to read and analyse about midcap shares than smallcap shares, so an investor can do a details analysis of the information before making a decision. 

However, there are also risks associated with investing in good midcap stocks. They can be more volatile than largecap stocks and are more likely to be impacted by market downturns. Additionally, midcap share price may have less liquidity, making it harder to sell them quickly.

Top Mid Cap Stocks in India: An Overview

Here is a brief overview of the top midcap stocks in India, among a list of the 100 best mid cap stocks companies. These are considerably good mid cap stocks that you can consider for investments in 2024.

Indian Hotels Company Ltd

The Indian Hotels Company Limited is a holding company engaged in short-term accommodation activities, and restaurants and mobile food service activities. On a trailing 12-month basis, it records an operating revenue of Rs. 6,010.21 Cr, showcasing an outstanding annual revenue growth of 85%. It maintains a great pre-tax margin of 22% and achieves a good return on equity (ROE) of 12%. It is one of the best mid cap stocks to buy for long term in India in 2024.

Punjab National Bank

Punjab National Bank (PNB or the Bank) is a public sector bank, providing various banking services, such as digital banking, personal banking, social banking, micro, small and medium enterprises banking, agricultural banking, corporate banking etc. On a trailing 12-month basis, it generates an operating revenue of Rs. 106,590.57 Cr, reflecting good annual revenue growth of 12%. However, the pre-tax margin is only okay at 5%, and the return on equity (ROE) is fair at 3%, indicating a need for improvement. It is one of the best midcap stocks for long term in India currently. 

Polycab India Ltd

Polycab India is a manufacturer and seller of wires and cables and fast moving electrical goods. The Company’s product line includes electric fans, LED lighting and luminaires, switches and switchgears under the ‘POLYCAB’ brand. On a trailing 12-month basis, it generates an operating revenue of Rs. 15,260.60 Cr, demonstrating an outstanding annual revenue growth of 16%. It maintains a healthy pre-tax margin of 12% and achieves an exceptional return on equity (ROE) of 19%. It is one of the best mid cap stocks for long term in India in 2024.

One 97 Communications Ltd

One 97 Communications generated an impressive operating revenue of Rs. 9,256.90 Cr. over the last 12 months, exhibiting a remarkable annual growth rate of 60%. While the revenue growth is commendable, there is room for improvement in the pre-tax margin, currently at -22%, and the ROE, which stands at -13%. It is one of the best mid cap shares to buy in India in 2024.

Astral Ltd

Astral’s impressive financial performance includes a robust operating revenue of Rs. 5,420.10 Cr. over the last 12 months, showcasing a remarkable annual growth rate of 17%. The healthy pre-tax margin stands at 12%, accompanied by a commendable return on equity (ROE) of 16%. It is one of the best midcap shares to buy in 2024 in the Indian share market.

Cummins India Ltd

Cummins India (Nse) generated an impressive operating revenue of Rs. 8,258.69 Cr. in the last 12 months, showcasing a remarkable annual growth of 26%. Noteworthy financial metrics include a pre-tax margin of 18% and an exceptional return on equity (ROE) of 21%. It is one of the best midcap stocks to buy in India in 2024.

IDFC First Bank Ltd

IDFC First Bank boasts an impressive operating revenue of Rs. 31,884.84 Cr. in the last 12 months, demonstrating a remarkable annual growth of 34%. The pre-tax margin stands at a healthy 12%, while the ROE is currently fair at 9%, indicating room for improvement.

AU Small Finance Bank Ltd

AU Small Finance Bank generated an impressive operating revenue of Rs. 10,750.85 Cr. in the past 12 months, showcasing outstanding annual growth at 34%. Notably, the bank achieved a commendable pre-tax margin of 20% and a solid ROE of 13%.

Abbott India Ltd

Abbott India generated a robust operating revenue of Rs. 5,642.70 Cr. in the past 12 months. The company exhibited commendable annual revenue growth at 10%, coupled with an impressive pre-tax margin of 24% and an exceptional return on equity (ROE) of 29%. It is one of the midcap best stocks to consider investing in India in 2024.

Ashok Leyland Ltd

Ashok Leyland’s trailing 12-month operating revenue stands at Rs. 44,722.65 Cr, reflecting an impressive annual growth of 59%. With a pre-tax margin at 5% and a robust ROE of 14%, the company demonstrates solid financial performance.

Factors to Consider Before Investing in Mid Cap Stocks

When contemplating investments in mid-cap stocks, it’s crucial to weigh several key factors to make informed decisions tailored to your financial objectives:

  • Risk Tolerance: Mid-cap stocks often carry higher volatility than large caps. Assess your risk tolerance to align your investment strategy with your comfort level during market fluctuations.
  • Company Stability: Scrutinize the financial health and stability of mid-cap companies. Analyze balance sheets, cash flow, and debt levels to gauge the company’s resilience in varying market conditions.
  • Market Conditions: Consider the broader economic landscape. Mid-cap stocks may respond differently to economic shifts than large or small caps. Evaluate current market conditions and potential impacts on mid-cap sectors.
  • Growth Potential: Assess the growth prospects of mid-cap companies. Research their competitive positioning, industry trends, and growth catalysts to gauge their potential for future expansion.
  • Diversification: Maintain a diversified portfolio to mitigate risks associated with individual stocks. Balancing mid caps with other asset classes can enhance portfolio stability.
  • Liquidity: Evaluate the liquidity of mid-cap stocks. Ensure there is ample trading volume to facilitate buying or selling without significant market impact.

What are some Alternatives to Mid Cap Stocks?

While mid-cap stocks present opportunities for growth, it’s essential to consider a diverse range of investment options to align with varying risk appetites. Here are alternative avenues worth exploring:

  • Sovereign Bonds: Diversifying into sovereign bonds offers a more conservative investment approach. These government-backed securities provide a stable source of income, often with lower volatility compared to mid-cap stocks.
  • Balanced Funds: For investors seeking a middle ground between risk and return, balanced funds could be a viable option. Combining both stocks and bonds, these funds aim to provide a balanced portfolio, mitigating some of the volatility associated with mid-cap stocks.
  • Debt Funds: Investors inclined towards fixed-income securities might find debt funds appealing. These funds predominantly invest in bonds and other debt instruments, offering regular interest payments with relatively lower risk compared to equity-based investments.

Exploring these alternatives alongside mid-cap stocks allows investors to tailor their portfolios to specific risk preferences and financial objectives. It’s crucial to conduct thorough research and, if necessary, seek advice from financial experts before making investment decisions.

Investing in midcap stocks with smallcase

You can also invest in a basket of mid cap stocks via smallcase. Simply go to smallcase.com or the smallcase app, and log in via your phone number. Then, go to ‘Discover‘ and enter ‘midcap‘ in the search bar and hit enter. You’ll find an array of stock portfolios that have mid cap companies. You can filter the choices based on minimum investment amount, volatility, or the theme of the smallcase. Just pick the one that fits your investment criterion.

Make sure that you do your diligent research before picking the right stock, keeping in mind your long-term investment goals and risk appetite. 

How to Invest in Mid Cap Stocks?

Any investment portfolio should have an ideal mix of smallcap, midcap, and largecap stocks which helps in diversification and minimising risk in the long run.

One can buy top midcap shares in India individually or by buying mutual funds or exchange-traded funds (ETFs) that invest in mid cap companies. Growth and value investing strategies are often used when investing in NSE midcap stocks. Funds and ETFs may occasionally own a range of equities and asset types, including long term mid cap stocks. Other times, the funds or ETFs may only invest in mid cap companies.You can track the best performing mid cap companies in India with the help of the Nifty Midcap index which captures the movements and forms a benchmark of the midcap segment of the market. You can then invest in individual stocks from the Nifty Midcap 100 index with your Demat account.

However, if you’re confused about which stocks to pick, you can explore smallcases:

  1. smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
  2. They’re created and managed by SEBI-registered experts
  3. smallcase.com offers over 200+ stock portfolios, created by 180+ managers
  4. Some of the popular smallcases among new investors are as follows:

Equity & Gold smallcase by Windmill Capital

Top 100 Stocks smallcase by Windmill Capital

All Weather Investing smallcase by Windmill Capital

Disclosures for aforementioned smallcases

What are the Various Features of Mid Cap Stocks? 

  • Volatility: These are less volatile than small-cap stocks but more volatile than largecap stocks. Mid cap companies have just entered the growth stage, so their position in the market is considered volatile. 
  • Low Liquidity: Mid cap companies are more liquid than smallcap companies since these companies are well-known and can be trusted,  so it’s easier to find a buyer for these stocks at a fair price. 
  • Growth: Mid cap companies have an abundance of opportunities to grow and turn into largecap companies with time. They are in their growth stage, so the rate of growth is rapid and is comparable to largecap stocks. 

Risks of Investing in Mid Cap Stocks

Navigating Mid-Cap Stocks: Key Risk Considerations for Investors

  • Heightened Volatility: Due to their heavy reliance on a single business line and a limited customer base, mid-cap stocks are more susceptible to market fluctuations. When volatility spikes, these stocks can experience abrupt price shocks, directly impacting investor returns.
  • Market Options Constraint: The mid-cap stock segment offers a restricted range of opportunities, posing a challenge for investors in selecting suitable stocks. In contrast, both large cap and small cap segments present a more diverse array of choices.
  • Risks in Market Speculation: Some mid-cap stocks may witness significant price surges fueled by market speculation. However, many of these companies may lack the financial resilience to sustain such speculative trends. A thorough analysis of a company’s historical financial strength is imperative for investors to assess its potential for future growth.

Advantages of investing in Mid Cap Stocks.

These are the advantages of investing in the best Mid Cap IT Stocks in India. 

  • Unlocking Growth Potential: Mid-cap companies continue their rapid expansion, potentially gaining broader market recognition and substantial stock price growth.
  • Enhanced Diversification: While many investors begin with large-cap or multi-cap stocks, incorporating mid-cap shares into your portfolio offers valuable diversification. This addition can help mitigate overall portfolio volatility.
  • Expert-Led Active Management: Experienced share managers specialize in actively overseeing mid-cap stocks, identifying high-growth potential companies. Fund houses employ dedicated teams for in-depth research, financial analysis, and active monitoring of portfolio company performance.

To Wrap It Up…

Investing in midcap stocks can be a great way to build a diversified investment portfolio and achieve long-term growth. However, it’s important to understand the risks associated with midcap stocks and conduct thorough research and analysis before investing.

FAQs

1. What are the best Mid Cap Stocks in India?

The best Mid-Cap Stocks in India are:
1. Indian Hotels Company Ltd
2. Punjab National Bank
3. Polycab India Ltd

Note: This list is for educational purpose only and not recommendatory.

2. How can I invest in Mid-Cap  stocks?

You can invest in a basket of mid cap stocks via smallcase. Simply go to smallcase.com or the smallcase app, and log in via your phone number. Then, go to ‘Discover‘ and enter ‘midcap‘ in the search bar and hit enter. You’ll find an array of stock portfolios that have mid cap companies.

3. Is it a good time to invest in Mid Cap stocks?

The best midcap IT stocks for long term offer portfolio stability while preserving a stronger growth potential than large-caps, delivering a valuable boost. However, investors must do their own research and/or consult their financial advisor before investing.

4. Who Should Invest in Mid Cap Stocks?

Moderate-risk profile investors seeking significant exposure in mid-cap and small-cap segments can explore Midcap Stocks. These funds diversify across market caps, offering lower risk compared to pure Midcap IT Stocks and pure Small Cap stocks.

5. Can Mid Cap stocks be profitable for investors?

While subject to interpretation, mid-cap stocks outperform small-cap stocks in specific scenarios. Small-cap stocks, despite potentially delivering greater growth and returns, exhibit high volatility. Consequently, mid-cap stocks provide a balance of solid returns, stability, and affordability.