BSE Midcap index hits 52-week high; Astral surges 9% on strong Q4 results

Despite global concerns, the domestic market structure remains positive on the back of healthy macro data, strong earnings, and recent FIIs buying, brokerage firm Motilal Oswal said in a note.

The S&P BSE Midcap index hit a 52-week high of 26,567.21 in Tuesday's intra-day trade, on the back of strong earnings and renewed buying by foreign portfolio investors (FPIs). The index surpassed its previous high of 26,440.81, touched on December 12, 2022. It had hit an all-time high of 27,246.34 on October 19, 2021.

Thus far in the calendar year 2023, the midcap index has rallied 4.3 per cent, as against 2.6 per cent surge in Smallcap and 1.8 per cent rise in the Sensex.

At 10:33 AM; the S&P BSE Midcap index, was the top gainer among broader indices, up 0.89 per cent, as compared to 0.57 per cent rise in the S&P BSE Smallcap index and 0.15 per cent decline in the S&P BSE Sensex.

Despite global concerns, the domestic market structure remains positive on the back of healthy macro data, strong earnings, and recent FIIs buying. Even valuations are providing comfort. Thus investors are recommended to buy on dips as growth at reasonable valuations will continue to be the theme to generate returns in FY24, Motilal Oswal Financial Services (MOFSL) said.

Shares of industrial plastic products company, Astral and state-owned general insurance firm,The New India Assurance Company from the index surged 9 per cent and 6 per cent, respectively. Tube Investments of India, Indian Hotels Company, General Insurance Corporation of India and LIC Housing Finance were up in the range of 3 per cent to 5 per cent.

Among the midcaps - AU Small Finance Bank, Aurobindo Pharma, Cholamandalam Investment and Finance Company, Hindustan Aeronautics, IDFC First Bank, L&T Finance Holdings and Max Healthcare Institute hit their respective 52-week highs on the BSE.

Astral, pioneer in manufacturing of CPVC pipes & fittings, posted a strong 38.1 per cent year-on-year (YoY) jump in its consolidated profit after tax at Rs 199 crore in March quarter (Q4FY23). Revenue from operations grew 8.3 per cent YoY at Rs 1,506 crore.

Earnings before interest, taxes, depreciation and amortization (EBITDA) margin improved to 20.8 per cent from 16.6 per cent in a year ago quarter. The margin expansion is largely due to benefit of use of low-cost inventories and amid sharp fall in PVC prices, down 32 per cent YoY.

On the volume front, ICICI Securities believe pick up in construction activities and launch of new products segment have helped drive overall volume growth of plumbing products in Q4FY23.

Going forward, the brokerage firm believes the company will continue to report volume led revenue growth supported by new product launches and capacity additions in new geographies. However, analysts believe the EBITDA margin will normalise in coming quarters reducing impact of inventory gains.

Shares of Godrej Properties hit eight-month high of Rs 1,424, up 3 per cent in intra-day trade so far. In past one month, the stock of real estate company has gained 11 per cent. Meanwhile, the company reported a good set of earnings for Q4FY23.

Godrej Properties signed-off FY23 with the highest-ever bookings of Rs 12,200 crore and believes demand traction to continue aided by favorable affordability. Management has good visibility on the launch pipeline and intends to launch ~20msf in FY24E and expects to deliver Rs 14,000 crore of sales bookings in FY24 (up 15 per cent YoY).

Over the medium term, management expects the sector to witness robust growth backed by under-penetration of home-ownership in India. The branded players such as Godrej Properties will be the key beneficiary of this trend, MOFSL said.