Top Performing Midcap Stocks of 2023 So Far

Small-cap stocks are lucrative because they offer quick returns and because small companies have more potential to grow.

On the other hand, large-cap stocks offer steady returns over a longer period of time. They are usually mature established businesses, with limited growth potential.

Mid-cap stocks offer a combination of both. That's why a large chunk of investors prefer mid-cap stocks over smallcaps or bluechip stocks. Midcaps provide a balance between growth and stability.

As per the market regulator, companies that rank from 101 to 250 in terms of market capitalisation are known as midcap companies.

The BSE Midcap index has underperformed the BSE Sensex in 2023 so far. The index is down 2% while Sensex is down only a percent.

While the overall performance of the midcap index may be negative, there are select mid-cap stocks that have outperformed the market and are already off to a good start in 2023.

Let's take a look at the best performing midcap stocks of 2023 so far.

By the way, we recently covered the smallcap version of the same, you can check it out here: Top Performing Smallcap Stocks of 2023 So Far.

#1 PB Fintech (Policybazaar)

The top gainer within the midcap space in 2023 so far is PB Fintech.

PB Fintech, the parent company of PolicyBazaar, offers a consumer-centric platform by partnering with financial services companies such as insurance companies to enhance their platforms from a consumer e-commerce perspective.

In 2023 so far (between 1 January 2023 and 6 March 2023), the stock has already rallied 33%.

After a long wait, PB Fintech share price is finally on the rise on the back of improved financials. For the quarter ended 31 December 2022 the company reported total sales of Rs 6,790 million (m). On a QoQ basis, sales are up by 7% and 69% on a YoY basis.

The key highlight of Q3 was the online platform's reducing losses. For the said quarter it reported a loss of Rs 874 m. Losses were down by 53% on a sequential basis and 71% on a yearly basis.

Insurance premiums for the company grew 70% on a yearly basis to Rs 30.3 billion (bn) in the December quarter. Credit disbursals were also up 57% on a YoY basis to Rs 30.2 bn while operating income came in at Rs 6,100 m.

PolicyBazaar expects to become EBITDA positive by the fourth quarter and it seems the market has factored that in the company's share price.

For more details, see PB Fintech company fact sheet and quarterly results.

#2 Persistent Systems

Second on the list is Persistent Systems.

Persistent Systems is a global company specialising in software products services and technology innovation. The company offers complete product life cycle services.

In 2023 so far (between 1 January 2023 and 6 March 2023), the stock has rallied 26%.

The company's Q3 earnings were in line with estimates, which has changed the sentiment for the IT company.

For the quarter ended 31 December 2022, Persistent Systems reported total sales of Rs 22,021 m, higher by 7% on a sequential basis and 45% on a yearly basis.

Net profit also saw a decent growth of 8% sequentially and 35% on a YoY basis.

The board of directors also declared an interim dividend of Rs 28 per share for the financial year 2022-2023.

Persistent Systems recorded its highest order bookings in the December 2022 quarter. The largest deal in Q3 was a US$ 70 m (about Rs 5,782.8 m) total contract value by a US online retailer that followed large deals from Software AG in the prior quarters.

It is aiming for a US$ 2 bn (about Rs 164.1 bn) revenue run rate by financial year (doubling in four years), with organic and inorganic sources contributing US$ 100-150 m (about Rs 8,204-12,306.4 m). The European share of revenue is expected to reach 12-15% of total revenue (including inorganic) from 9% at present.

Also, with high interest rates, the Indian rupee is expected to fall against the dollar which will benefit IT stocks.

Most IT stocks have fallen by 30-40% from their peaks in 2022 and offer a good risk reward ratio on the valuations front. The recession impact in the US is mostly priced in to Indian IT stocks. For more details, see Persistent Systems company fact sheet and quarterly results.

#3 Oil India

Third on the list in Oil India.

Oil India is a central public sector undertaking under the ownership of the Ministry of Petroleum and Natural Gas, Government of India. The Ministry of Petroleum and Natural Gas oversees its operations, with its headquarters in Duliajan, Assam.

It is engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of liquid petroleum gas.

In 2023 so far (between 1 January 2023 and 6 March 2023), the stock has rallied 26%.

The company's robust financial performance in Q3 is the main reason driving the rally. For the said quarter, the company's total sales are only 2% higher on a sequential basis and 31% up on a YoY basis. It recorded total sales of Rs 107,121 m.

However, the highlight of Q3 results is the sharp rise in profits. State-owned Oil India reported its highest-ever quarterly net profit in the third quarter ended December 2022 on the back of a rise in crude oil and natural gas prices.

Total profit came in at Rs 28,000 m, up 62% on a QoQ basis and 114% on a YoY basis.

The rise in profitability was aided by a higher realisation of crude and gas that the firm produces and sells. Also, output increased, helping both the top line and bottom line.

The board of the company has also declared an interim dividend of Rs 10 per share. Oil India is one of the high dividend yield stocks in India.

For more details, see the Oil India company fact sheet and quarterly results.

#4 ABB India

Established in 1949, ABB India is one of the most reputed names in the Indian infrastructure sector. Its operations can be divided into four major segments: electrification, process automation, motion, and robotics.

ABB India follows the calendar year format and the company's financial year ends on 31 December 2022.

In 2023 so far (between 1 January 2023 and 6 March 2023), the stock has rallied 24%.

ABB India share price rallied after it reported a steady financial performance. For the quarter ended 31 December 2022, the company reported total sales of Rs 24,969 million (m). On a QoQ basis, sales are up by 15% and 30% on a YoY basis.

For the said quarter it reported a profit of Rs 3,059 m. Profits increased by 51% on a sequential basis and 58% on a yearly basis.

The company has achieved a significant milestone in order booking by reaching Rs 100.3 bn in 2022 and Rs 23.4 bn in the fourth quarter of 2022. The growth during the fourth quarter of 2022 was led by large value orders in industrial solutions and segments like data centres in electrification.

For more details, see ABB India's company fact sheet and quarterly results.

#5 Polycab India

Polycab India is engaged in the business of manufacturing and selling wires and cables and fast-moving electrical goods under the Polycab brand. The business activities are carried out through wires and cables, fast-moving electrical goods, copper, and other segments.

It generates the highest revenue from the wires and cables segment.

In 2023 so far (between 1 January 2023 and 6 March 2023), the stock has rallied 19%.

Revenue of the country's second-largest listed consumer electrical maker was up 13% on a QoQ basis and 11% on a YoY basis. The total revenues for Q3 stood at Rs 37,549 m.

Polycab India's Q3 profit came in at Rs 3,616 m, which is 33% higher sequentially and 46% higher on a YoY basis.

The net profit was driven by an 18-20% volume uptick in the wires and cables segment amid a high base and falling prices of commodities.

The segment reported an 11% growth with volumes offsetting the price corrections. The wires and cables segment is the largest business of Polycab accounting for 87% of consolidated revenues.

The company indicated there is demand from both business-to-business as well as the business-to-consumer segments. The key driver for the wires segment is the growth in the real-estate sector while cable demand is being led by the increase in private and government capital expenditure.

Going ahead, the company expects good volume growth in Q4 on the back of a strong demand environment.

For more details, see Polycab India's company fact sheet and quarterly results.

Which other midcap stocks are rising in 2023?

Apart from the above, here are other midcap stocks that have rallied in 2023 so far.

Company name	Closing Price as on 06 March 2023	Share price rise in 2023
Cummins India	1,632.60	18%
Power Finance Corporation	161.7	15%
Voltas	912.2	14%
Samvardhana Motherson International	83.2	12%
CG Power and Industrial Solutions	298.3	10%
Supreme Industries	2,699.20	10%
Bajaj Holdings & Investment	6,312.00	10%
Schaeffler India	2,999.40	9%
Sona BLW Precision Forgings	458.6	9%
Mahindra & Mahindra Financial Services	256.4	9%

Data source: Ace Equity

Investment Takeaway

The five midcap stocks highlighted above rallied because of their strong Q3 performance. It looks like they are poised for a better quarter as the financial year 2022-23 comes to end.

However, the overall market scenario is quite volatile. The Adani-Hindenburg saga along with inflation concerns has left a doubt among investors.

Every investment carries a potential of return and risk. The key to investing successfully in any type of company, small or big, is to minimise your risks.

Focus on building a sound investment strategy. If you don't have one, start working towards it. If you do, check to see if your investments are on track and continue to reflect your investment horizon, financial situation, and risk tolerance.

Since you are interested in midcaps, check out the most profitable midcap stocks.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...