Super 20 multibagger stocks zoom up to 475% in Q2. Did you miss the rally?

As the stock market seems benefitting from a K-shaped economic recovery and the sheer buying power of domestic investors in the face of the triple whammy of rising dollar, spiking US bond yields and high crude oil prices, at least 20 stocks have given multibagger returns in the September quarter.

A screener of stocks with a market capitalisation of at least Rs 500 crore shows that 802 stocks gave double-digit returns in Q2 as against Sensex's 2% return during the period.

Shares of Kolkata-based smallcap Jai Balaji Industries, which manufactures iron and steel products like TMT bars, are up 475% to top the multibagger list. Similarly, shares of another smallcap GVK Power & Infrastructure are up 300% so far in Q2 following a 50% rally in just two weeks.



Shares of PSU rail stock IRFC have also more-than-doubled in less than 3 months amid investor fascination for all things PSU.

DB Realty, a leading realty player of both commercial and residential projects in and around Mumbai, has jumped 126%. Backed by marquee investor Rekha Rakesh Jhunjhunwala, the company had recently announced diversification plans to venture into the hospitality business through a series of acquisitions.

Insolation Energy, Kintech Renewables, Premier Explosives, Ashapura Minechem, Mafatlal Industries, Lloyds Enterprises, Sarveshwar Foods, Unitech, IFCI, Pakka, Genus Power Infrastructures, CFF Fluid Control, Responsive Industries, Lancer Container Lines, GMR Power and Urban Infra and Artson Engineering are other multibaggers on the list.

What should investors do?
If you are looking for the next multibagger then do not forget that after the madcap rally in the broader market, valuations have gone for a toss in many pockets. Chris Wood of global brokerage firm Jefferies had recently warned that there is room for a correction in the midcap area, most particularly as a continuing rise in the oil price has the potential to create some renewed inflationary noise in India.

In the past five years, Nifty Midcap has outperformed Nifty50 by 5 percentage points and Nifty Smallcap has underperformed by 2 percentage points on an annualized basis. When seen from a 10-year timeframe, Nifty Midcap has outperformed Nifty by 6.1% and Smallcap by 3.3% annually. The broader market rally, therefore, has a lot to catch-up with long-term outperformance.

"Given that the valuations are not cheap, we expect all the incremental flows to look for names that are cheaper on a growth-adjusted basis," Elara Securities said. It had recently given buy ratings on four smallcap ideas - SJVN, Chalet Hotels, NCC and PNC Infratech.

Vinit Bolinjkar of Ventura Securities remains positive on the midcap and the smallcap space saying that earnings have so far not disappointed.

"If you were to drill down further into the midcap and smallcap, you will find a large number of stories which have got good secular growth trends and valuations are not that expensive," he said.

Global brokerage firm Nomura, which has just upgraded India to overweight from neutral rating, said it likes a mix of stocks with reasonable relative valuations and domestic growth areas. Top picks include ICICI Bank, Axis Bank, L&T and M&M.

Religare Broking has listed Mphasis, Nuvoco Vistas, Jyothy Labs and CCL Products for a return in the range of 16-21% from a 9-12-month perspective.

(Data inputs: Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)