Top 5 Multibagger Midcap Stocks of 2024

Whether it's a bull or bear market, investors are always on the hunt for multibagger stocks. One multibagger category that often remains in the shadows of their larger and smaller counterparts is midcap stocks.

Think of midcaps as the perfect middle ground-not too hot, not too cold, but just right. Midcaps offer an ideal balance between stability and growth.

While large-cap stocks are well-established with limited room for explosive growth, and small-caps are high-risk but potentially high-reward, midcaps strike the perfect balance.

They haven't yet reached the size and maturity of large caps, but they don't carry the same level of risk as smaller companies.

This gives them greater growth potential with relatively lower risk. In 2024, midcap stocks have demonstrated their strength by outperforming benchmark indices and delivering multibagger returns.

In this article, we will explore five midcap stocks that have turned into multibaggers in 2024.

#1 Oil India

Leading the list is Oil India.

Oil India is a fully integrated oil and natural gas company that explores, develops, produces and transports crude oil, natural gas and liquified petroleum gas (LPG).

Apart from its core business, the company has also ventured into renewable energy where it generates electricity through solar, wind and green hydrogen sources.

The constant expansion undertaken by the company has allowed it to ascend to the second-largest oil and natural gas company in the country. In 2024, Oil India contributed to around 10% of the country's crude oil production.

In 2024 so far, the company's stock price has shot up by more than 165%.

This remarkable growth can be attributed to several key factors. Hardeep Singh Puri, India's Minister for Petroleum and Natural Gas, highlighted in a tweet that the country has over 651.8 million (m) metric tonnes of crude oil and 1,138.60 billion (bn) cubic meters of natural gas waiting to be explored.

Additionally, during a recent visit to Russia, Prime Minister Narendra Modi advocated for a long-term arrangement for crude oil supplies from Russia, further boosting the sector's outlook.

Oil India has also strategically invested in Numaligarh Refinery (NRL) to strengthen its presence in the oil refining segment. NRL's operating performance has been robust, supported by a high gross refining margin, which benefits from a 50% excise duty exemption granted by the government since its inception.

NRL is expanding its refining capacity from 3 million tonnes per annum (mtpa) to 9 mtpa, with the expansion expected to be completed by September 2025 at an estimated capex of Rs 28,000 crore.

Additionally, for the June 2024 quarter, Oil India reported a 30.8% year-on-year (YoY) increase in revenue, reaching Rs 81.2 bn, while net profit surged by 32.2% to Rs 18.9 bn.

Looking ahead, the company has outlined a capital expenditure plan of Rs 60 billion for the financial year 2025, focusing on its refineries, drilling, and exploration businesses. This expansion will be financed through a combination of debt and internal accruals.

For more details, see the OIL INDIA company fact sheet and quarterly results.

#2 Oracle Financial Services Software (OFSS)

Next on the list is Oracle Financial Services Software.

OFSS, majority-owned by Oracle, is a world leader in providing IT solutions to the financial services industry.

The company develops, sells and markets computer software, and computer systems and provides consultancy and other information technology (IT) activities.

This midcap stock has risen from around Rs 4,336 apiece levels to Rs 11,174 per share, logging around 158% gains in 2024.

One of the reasons for this steep rally was its new launch in the AI space.

The company on 8 April 2024 introduced an artificial intelligence-powered cloud service that helps banks mitigate anti-money laundering (AML) risks.

The new cloud service enables banks to run inexpensive, hypothetical scenario testing to adjust thresholds and controls.

Further in May 2024, Accenture and Oracle announced a collaboration to harness the power of generative AI to transform financial planning and analysis, aiming to optimise operations and foster growth for their clients.

Adding to that, its parent Oracle Corp. reported strong earnings overnight in the US.

Its parent company, Oracle Corp. reported better-than-expected bookings and announced partnership deals with its tech rivals.

Further, the sentiment around IT stocks has turned positive ever since IT majors TCS, Wipro, and Infosys posted earnings for the third quarter.

For Oracle Financial, the growth in the fintech space will keep the company in focus.

Going forward, the adoption of AI in financial services and fintech companies is expected to grow at a CAGR of 23.37% in the next two years, a huge prospect for Oracle Financial as a leader in the AI space.

For more details, see the Oracle Financial Services company fact sheet and quarterly results.

#3 Trent

Next on the list is Trent.

Part of the Tata group, Trent is engaged in the business of retailing food, grocery, non-food, apparel, footwear, accessories, toys, and games through format and concept stores.

The company operates over 875 stores across 170 cities for various brands such as Westside, Zudio, Utsa, Misbu, and Star.

Its total retail business area is around 11 million square feet, slightly lower than Avenue Supermarkets.

In 2024 so far (between 1 January 2024 and 21 August 2024), the stock has already rallied 126%.

This can be attributed to strong quarterly results.

Tata group firm Trent reported a 54.85% year-on-year (YoY) growth in its consolidated net sales to Rs 41.5 bn.

Its operating profit margin improved to 14.9% in the June quarter. The retail chain benefited from strong demand for its fashion range, and emerging categories including beauty and personal care, innerwear, and footwear.

Westside had 228 stores at the end of the first quarter of FY25 vis-a-vis 165 stores a year earlier. It also has 559 Zudio stores at the end of June 2024 quarter vis-a-vis 388 stores a year earlier.

Consolidated net profit also rose 135.5% YoY to Rs 3.9 bn in the June quarter.

Further, Trent's value apparel format Zudio opened a record 203 new stores during FY24 while entering 46 new cities during the year, taking the total number of stores to 545.

The company ranks among the top players in India's fast-growing retail industry.

Looking ahead, Trent expects to generate 10% of its sales from its new shopping site, westside.com, within the next four years.

Currently, Westside operates 169 stores across 88 cities, offering a range of branded apparel, footwear, accessories, and home furnishings, primarily through its owned labels.

Previously, Tata Unistore, which manages the e-commerce platform Tata CLiQ, exclusively sold Westside branded products, including clothing, footwear, and home items.

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

#4 PB Fintech (Policybazaar)

Next on the list 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 2024 so far (between 1 January 2024 and 21 August 2024), the stock has already rallied 110%.

This can be attributed to the third straight quarter of profit in the April-June 2024 period.

Revenue from operations rose by 51% YoY to Rs 10.1 bn in the first quarter of FY25 compared to Rs 6.7 bn in Q1FY24.

Driven by exceptional gains of Rs 410 m owing to disinvestment via subsidiaries, the company reported a net profit of Rs 600 m for the June quarter of FY25 against a loss of Rs 120 m in the year-ago period.

The businesses witnessed a combined growth of 78% YoY in new premiums for Q1FY25.

Further, better take rates driving greater renewal commission growth of 35% year-on-year, an increase in the percentage of health and ULIPs, and the investment in advisers to support faster development are likely to support revenue growth in the coming quarter.

Additionally, the company incorporated its wholly-owned subsidiary PB Pay Private Limited. PB Pay was launched to function as a payment aggregator with a paid-up capital of Rs 270 m.

It has also entered into a strategic partnership. The new tie-up will combine the product portfolio of ICICI Lombard and the reach of Policybazaar and provide accessible insurance solutions to nearly 10 m customers.

Going forward, the company aims to strengthen its market position and expand its reach both domestically and internationally.

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

#5 Glenmark Pharmaceuticals

Last on the list is Glenmark Pharmaceuticals.

Glenmark Pharma is actively involved in the discovery of new molecules, NCEs (new chemical entity) and NBEs (new biological entity).

It develops pharmaceutical product formulation and active pharmaceutical ingredients in regulated and semi-regulated markets.

Its API business sells products in over 80 countries, including the US, various countries in the EU, and South America.

As of August 21, 2024, the company's shares have surged by 96% this year.

Several factors have contributed to this impressive performance. Glenmark's US-based unit, Glenmark Therapeutics Inc., launched Olopatadine Hydrochloride Ophthalmic Solution USP, 0.1% (OTC), comparable to the active ingredient in Pataday Twice Daily Relief.

Additionally, the company reported a 6.9% year-on-year increase in revenue, reaching Rs 32.4 billion, and a multifold rise in net profit to Rs 3.4 billion, up significantly from Rs 144.8 million the previous year.

Despite challenges in the US market, Glenmark Pharma's branded medicines have continued to grow, particularly in Europe and other key international markets.

According to IQVIA data for March 2024, the company climbed two spots in FY24 to become the third-largest player in the Indian Pharmaceutical Market's (IPM) Cardiac segment.

Looking ahead, two significant developments are expected to drive future growth: the advancement of Winlevi in Europe and the global expansion of Ryaltris.

As of March 2024, marketing applications for Ryaltris have been submitted in over 80 countries, with commercialization already underway in 34 major markets, including the US, Europe, Australia, Russia, South Africa, and South Korea.

Glenmark is also actively strengthening its product pipeline. In the fourth quarter alone, the company filed two Abbreviated New Drug Applications (ANDAs), bringing the total to six ANDAs filed in FY24.

In January 2024, the company partnered with Pfizer to launch Abrocitinib in India for the treatment of moderate-to-severe atopic dermatitis (AD).

Further enhancing its innovation efforts, Glenmark announced a strategic alliance with its subsidiary, Ichnos Sciences, in the same month.

For more details, see the Glenmark Pharma company fact sheet and quarterly results.

Conclusion

Investing in multibagger midcap stocks offers a compelling opportunity for those looking to achieve significant returns with a balanced level of risk.

These companies are often in a phase of rapid expansion, either entering new markets, launching innovative products or scaling their operations. As they grow, their stock prices can increase significantly, leading to multibagger returns over time.

Additionally, midcaps tend to be more agile and adaptable to market changes, which can further enhance their growth prospects.

The inclusion of midcaps in a diversified portfolio enhances diversification benefits by adding exposure to companies with different risk profiles. Moreover, midcaps may attract interest as potential targets for mergers and acquisitions, potentially benefiting investors through acquisition premiums.

However, it's essential to acknowledge the downsides. Midcap stocks come with higher inherent risk and greater volatility than large-caps, making them more susceptible to market fluctuations and economic challenges.

It's important to note that investing in midcap stocks requires careful research and due diligence. Not all midcaps will turn into multibaggers, so it's crucial to identify midcap companies with strong fundamentals, a clear growth strategy, and a competitive edge in their industry.

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...