5 midcap stocks Amnish Aggarwal is bullish on for near term

"Exports outlook seems relatively mixed but as I said that if you want to look at two wheeler space, I think TVS and Eicher have been doing far better. And in terms of valuation, I think Hero is the cheapest stock to look at," says Amnish Aggarwal, Prabhudas Lilladher.

What is your take as far as Bajaj Auto is concerned because exports have been weak and we know that the management is now saying it has bottomed out and all eyes will be on the margin performance?
As I said earlier margins are likely to be good for all the auto companies because the raw materials have been benign and the year-on-year growths have been reasonably good. As far as the export markets are concerned, I think in the near term it looks good because the base is favourable.

In terms of numbers, they should be okay. Exports outlook seems relatively mixed but as I said that if you want to look at two wheeler space, I think TVS and Eicher have been doing far better. And in terms of valuation, I think Hero is the cheapest stock to look at.


Also wanted your take regarding consumer durables because today there is news on Crompton Consumer wherein the leadership has changed and secondly, there are updates coming in for Whirlpool as well wherein the numbers for the global parent was announced and the Asian performance looked at a bit weak. Given we are all talking about an improvement in the real estate cycle would consumer durables follow or the valuations are still expensive?
The consumer durable valuations have come off the highs because after the first wave of Covid, the sector had seen massive re-rating. Now, if you look at particularly Crompton Consumer, the Crompton Consumer stock in the last 12 to 15 months has been significantly de-rated because, particularly post butterfly, there is some debt which came into the balance sheet.

The numbers they have not been that great. They faced competition in a couple of verticals of theirs, particularly in the pump segment. They have not been doing well in lighting and also they have not been that aggressive and major player in the past.

So I think Crompton has got de-rated in the last 12 to 15 months and now this management change which is happening, I think needs to look at in a very different manner because this is a board driven company and there is no promoter of the company per se.

We were hearing from quite some time that the company is not working in a singular manner. Now, with the Butterfly merger also announced, I think a lot depends on how the things go from here in terms of growth because Crompton if you can recall even a couple of years back, they had perhaps the best EBITDA margins in the industry.
Now, for the stock to bounce back, I think it will take some time. We need to hear more from the new management because Mr Shantanu Khosla will also be now more like be guiding the operations. So it is more like a wait and watch for us as of now.

Yes, the brands are strong and the company has done a lot, particularly after the acquisition by Temasek and Advent. They have pushed up their margins, their go to market strategy, which was spearheaded by Mr Shantanu Khosla and Mr Mathew Job.

Now let us see how the things pan out but definitely this is a stock, which has suffered massively in the last year, year and a half but definitely there is very limited clarity as of now.

Now, the second name you talked about is Whirlpool. I think if you look at Whirlpool in particular, I would say that the company in general and if you say your refrigerators or all the cooling products, including ACs, they have been suffering in the last year, year and a half because of the seasonality factors.

Now, as far as the parent company is concerned, Asia is not a very big part for them. But having said that, Whirlpool in India has also not been doing that great and I think now, with the summer season picking up this year well, so there is a possibility of some bounce back happening as far as the fortunes are concerned.

But definitely Whirlpool is not a leader as far as the refrigerator segment is concerned. So they had acquired Elica, which is a good business but again, Whirlpool, I would say, is also on the sidelines for quite some time.
The stock has reacted from something like 2700- 2800 of a peak. It has come to 1300 levels. However, I think the company needs to perform. The numbers have to come, summer season raises some hopes but there is a lot more delivery to come from the company before the stock can see any major rerating.

What are your top midcap ideas?
In the mid cap space, we have been quite positive on few of the QSR names. Particularly Westlife is one name we have been very positive about. In other midcap ideas, you can look at VIP Industries, which has corrected from, say, 707-750 odd to current levels. Then in the building material space you can look at, say, Prince Pipes, This is another name we are very, gung-ho about. And although the near term uncertainty is there but you can look at names like, for example, Sumitomo or PI Industries on the agrochemical space. I think these are some of the mid cap names, which we are very positive about.