Mid-caps to beat Nifty on earnings growth, says CLSA

Earnings growth of companies in the BSE mid-cap index is likely to outperform blue-chip companies in the Nifty, driven by economic recovery, broking house CLSA has said. The brokerage said mid-cap earnings could gain 33 per cent over 2015-2017, compared to a 17 per cent increase in Nifty companies during the period. Investor interest in mid-caps, companies with a market value of less than $5 billion, will continue to rise, CLSA analysts Mahesh Nandurkar and Abhinav Sinha said. The BSE mid-cap index trades at 16.3 times one-year forward earnings, compared to Nifty valuations of 16.4 times and 14 times for the BSE small-cap index. The BSE mid-cap has risen about 10 per cent from its January 2008 high versus 42 per cent gain in the Nifty, while the BSE Small-cap index is down about 18 per cent, CLSA said.

Phoenix Mills, Ramco Cements, Tata Communications, Voltas are the among CLSA's preferred mid-cap bets.