Correction are some times opportunities; 5 mid & smallcap cement stocks with upside potential of up to 30%

Cement has been a sector where most of the analysts have been caught off guards. The stocks have done well and a large number of analysts have been sticking to their stands that pricing and capacity utilization is an issue. What they probably ignored was the fact that any industry which has been facing headwinds for a long time tends to sort the issues and few players are able to make a comeback as consolidation takes place. Pretty much what we have seen in power.

While the recent performance of stocks like REC, PFC and recently listed IRDEA has brought focus back to one segment of power companies. But the fact is that in the last few years, the sector has been going through a consolidation. Some of it was forced by the banks due to many companies going under the IBC and some due to the fact that any industry which has gone through a troubled phase of almost a decade, the players who are able to survive tend to get more attention because they have learnt the art of surviving a tough phase which is one most important feature for long term survival. Power sector stocks are now catching up with what the market has witnessed in the last few years.

In the last five years many segments of the chemical and specialty chemical sector have been coming into focus. They stay in the limelight for some time, then as too much money chases them which makes their valuations move up very sharply and then a long phase of consolidation. In such a scenario it has been witnessed that at any point of time analysts remain bullish on select stocks. The list is based on upside estimated by the analysts, with the highest potential stock coming on the top of the list.

It is after a long period of time, that bears have finally made their presence felt on the street. Whether it is, large, mid or small cap market breadth in all segments witnessed a sharp decline. In such times, if one is looking to buy stocks it would be better to look at stocks where some developments have made analysts turn bullish on them. These selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame.

While one might be focussed what is happening in nifty and mid-cap space, if one looks at the recent performance of the large caps, there are a number of them which have done a catch up in just the last two weeks. When the valuation differential in mid and large caps stocks becomes extremely high, large caps tend to do well as mean reversion takes place. ET screener powered by Refinitiv’s Stock Report Plus lists down quality stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy . The screener applies different algorithms for all BSE and NSE stocks.

Capital good companies had faced tough times for many years. Given the fact that hardly any capacity buildup was taking place in any industry, a number had to change their product portfolio and had to live with very low margins. But all the efforts have now started to show some results. Given the performance of the stock, a large majority of these stocks have hold recommendations from the analysts.

There are sectors which under perform for years and then they come back to focus. Thanks to the fact that the textile industry was completely dominated by China and other countries, the Indian textile industry has been in bad shape for decades. However, post covid, partially due to China Plus one narrative. Secondly due to the fact that the government has been focusing on manufacturing, textile stocks have come into focus. This list is drawn from Stock Reports Plus, powered by Refinitiv, with over 4,000 listed stocks along with detailed company analysis focusing on five key components - earnings, fundamentals, relative valuation, risk and price momentum.

While the focus of news stays ACC and Ambuja and other large cap cement stocks, it would be better to look at many other players, some of them in mid and small cap space. Some of them have improved their performance in terms of operational efficiency. The list is based on upside estimated by the analysts, with the highest potential stock coming on the top of the list.

In 2008, the IPO of a power company got subscribed in less than a minute of its opening and the size of that issue was Rs 11,563 crore. This just shows the desire to own power sector stocks at that point of time. From those days of frenzy to the nadir in 2014, when power companies were on the top of the list of NPA of the banks. Power companies have seen both the extreme of valuations. It is a sector where after many failures and to some extent a consolidation, some companies have emerged which know how to deal with all kinds of economic and industry cycles. That is probably the reason why a number of companies from the power sector have seen a sharp re-rating in the last one year. Hoping the survivors have learnt their lessons.

Among many industries which have seen a strong transformation in the last nine years due to policy initiatives has been the sugar industry. This is despite the fact that sugar is a state subject where central policies can only play a limited role. If one looks at the balance sheet of a large number of them, they are far better placed than they were six years ago and to some extent in the last two years even the institutional investors have started to take exposure in this sector which they have avoided for more than three decades.