When midcaps blinked: A year of sharp reversals and what lies ahead

A stalled index masked stock-level swings across sectors. Krishna Kant & Ram Prasad Sahu identify the biggest movers of 2025

Fast-rising midcap stocks ran into a wall in 2025, trailing their largecap peers after two strong years. The BSE Midcap index gained just 1.1 per cent last year, a steep pullback from its 26.1 per cent rally in 2024. This marked the index’s weakest annual performance since 2019, when it fell 3 per cent. 

In contrast, the BSE Sensex rose 9.1 per cent in 2025, improving on an 8.2 per cent rise the year before. As a result, midcaps lagged the benchmark by nearly 800 basis points, after comfortably outperforming it in 2023 and 2024. Nearly 61 per cent of midcap stocks — 84 of the 140 — ended the year in the red. Seventeen stocks declined 30 per cent or more, translating into weak returns for retail investors, who remain heavily exposed to mid and smallcap shares. 

Performance across individual stocks varied sharply. L&T Finance topped the index, climbing 133 per cent in 2025, while Ola Electric was the worst performer, shedding about 58 per cent of its market capitalisation. In all, 18 stocks rose 30 per cent or more during the year, with 12 posting gains of at least 50 per cent. 

The divergence underlines the risks and rewards of midcap investing. While the MidCap index has delivered higher long-term returns than the Sensex (a 15.5 per cent versus 12.6 per cent compound annual growth rate over the past decade), it has also been far more volatile. Over the past 15 years, its annual returns have ranged from a drop of 13.4 per cent to a jump of 54.7 per cent, roughly double the Sensex’s swing. 

Historically, weak midcap years have often been followed by a rebound. The current weakness offers investors a chance to pare exposure to overheated names and rotate into laggards that could turn around in 2026. 

Here are five of the best- and worst-performing midcap stocks of 2025, and what may lie ahead for them in 2026. This list excludes loss-making companies and has been selected to maintain the diversity of sectors. 

TOP GAINERS

L&T Finance

• Non-bank lender L&T Finance is one of the top performing stocks, with its share price more than doubling last year
• The company’s stock price climbed 133 per cent in CY25, more than  BSE Sensex and BSE MidCap, which were up 9.1 per cent and 1.1 per cent respectively
• Rally was driven by street expectation of a double-digit growth in the firm’s earnings in H1FY26 owing to growth in retail credit and a decline in credit cost after rate cuts by the RBI
• Analysts at Elara Capital expect L&T Finance’s net interest income (NII) and net profit to grow by 13.4 per cent and 30.3 per cent Y-o-Y respectively in Q3FY26
• The firm’s NII was up 6.3 per cent and net profit was up 5.5 per cent  in Q2FY26
• Analysts at JM Financial see limited upside from current levels given last year’s sharp rally, higher valuation and growing competition in retail lending

 

Laurus Labs

• With gains of 84 per cent, Laurus Labs is one of the top pharma gainers among midcap stocks over the past year
• The gains were led by third consecutive beat in quarterly results in Q2
• The performance was led by higher formulation sales (finished dosage form backed by robust anti-retroviral revenue), a superior mix in the contract development and manufacturing organisation (CDMO) segment, and improving operating leverage
• Motilal Oswal Research has raised its earnings estimates by 11 per cent and 10 per cent for FY26 and FY27. This incorporates improved ARV prospects, steady pick up in CDMO projects and, higher generics business backed by CMO opportunities
• The brokerage expects a 50 per cent earnings growth over FY25-28 and values Laurus at 58 times one year forward earnings

 

Muthoot Finance

• Muthoot Finance has been a big beneficiary of the rally in gold price — the underlying collateral for its loan offerings
• The non-bank lender’s stock was up 101.3 per cent in CY25, beating benchmark indices by a  margin. The rally has been underpinned by an equally strong rise in Muthoot’s earnings
• In Q2FY26, its gross interest income was up 47.8 per cent and net profit was up 90.4 per cent Y-o-Y
• Brokerages expect the earnings momentum to continue driven by high gold prices
• Motilal Oswal Securities has raised its FY26 and FY27 earning per share  estimates by 10 per cent each to factor in higher loan growth and sustenance of current net interest margins
• The stock is currently trading at a relatively high valuation with a P/BV of 4.8x

 

GE Vernova T&D India

• GE Vernova T&D India is one of the leading capital goods maker with a 50.5 per cent rally in its share price in CY25, beating the BSE Sensex and BSE Mid-cap by a big margin
• The rally has been accompanied by a surge in the company’s earnings The net sales and net profit were up 38.8 per cent Y-o-Y and 111.6 per cent Y-o-Y in the first half of FY26 on back of higher project execution
• Analysts expect the company to maintain its growth momentum as energy transition, EV adoption, and data centres are driving investments in grid modernisation and expansion
• The company is also likely to gain from global capex in power transmission as nearly a quarter of its revenues come from overseas projects
• Incred Equities expects the company’s EPS to clock a CAGR of 54 per cent over FY25-28 period

 

National Aluminium Company

• Public sector aluminium producer National Aluminium Company (NALCO) has been one of the top performing companies in this segment
• Its share price was up 48.6 per cent Y-o-Y in CY25 and it continues to show strength in 2026
• The rally is being driven by a rise in aluminium prices translating into higher margins and profits 
• Aluminium prices in international markets are up 25 per cent over the last one-year
• Nalco’s net sales and net profits were up 7.3 per cent Y-o-Y and 34.9 per cent Y-o-Y respectively in Q2FY26
• Axis Securities has a ‘buy’ rating on the stock given continued strength in aluminium prices and likely gains from planned commissioning of 1 million tonnes per annum alumina refinery expansion in June 
• The valuation, however, has become expensive with P/BV of over 3x, limiting upside from current level

 

TOP LOSERS

Vedant Fashions

• The top loser in this list is  the stock of wedding wear major, which has shed 54 per cent over the past year
• This is on account of higher competitive intensity, lower than expected store additions and profitability pressure 
• Pressure in the near term is expected to stay. JM Financial Research expects a 3 per cent growth in Q3 revenue due to a weak weddings season in January 2026 leading to lower sales compounded by limited store expansion with just 20,000 square feet addition in Q3 
• Gross margins are expected to decline to 69 per cent in Q3 compared to 72 per cent in Q3FY25 due to GST rate changes. Operating profit margins are expected to contract 273 basis points because of lower productivity, says Nuvama Research

 

Clean Science & Technology

• The stock has lost 38 per cent over the past year on account of promoter stake sale related overhang and weak earnings show
• The company’s Q2FY26 operating performance was lower than consensus estimates due to subdued volume growth and slower than expected ramp up in hindered amine light stabilisers portfolio
• The lower volume was largely due to heightened competition from Chinese players led by subdued pricing, as well as lower off-take from select customers 
• Upcoming capacity additions are expected to drive growth going ahead, believes Prabhudas Lilladher Research. However, margin pressures may persist due to lower realisations in certain established products

 

Crisil

• Financial ratings and market analytics provider Crisil has been a laggard and its share price has underperformed the broader market by a big margin in 2025
• The stock price was down 35.3 per cent in CY25 and it continues to move sideways in the new year
• The fall is attributed to earnings slowdown reported in recent quarters
• Crisil’s consolidated net sales and net profit were up 9 per cent and 13.4 per cent Y-o-Y in H1FY26, even as valuations remain rich
• The stock is trading at a trailing P/E of 47x and P/BV of 12.5x, one of the highest in the financial services sector
• Brokerages remain cautious on the stock given weakness in its domestic ratings business (25 per cent of its revenues) and research, analytics & solutions segments
• Yes Securities says that growth recovery is key to sustain valuations at current levels

 

Relaxo Footwear

• The stock is down 35 per cent over the past year with Q3 expected to be the eighth quarter of falling revenue growth on a Y-o-Y basis
• Centrum Research believes that intense competition at the mass end, muted demand environment, and down-stocking by distributors and channel partners to liquidate old inventory will weigh on Q3 revenue growth
• Elara Securities believes that a delayed volume recovery, stagnant mix limiting premiumisation, and lag in distributor restructuring amid weak demand and execution pressures is likely to restrict sharp improvement in the company’s performance
• The brokerage has cut its earnings by 10.5 per cent for FY26, 11.6 per cent for FY27 and 15.3 per cent for FY28

 

Crompton Greaves Consumer Electricals

• The stock of the consumer durable major has lost nearly 36 per cent over the past year
• H1FY26 was a washout across parameters given early and extended monsoon and mild summers
• Profitability in H1FY26 also took a hit as operating profit margin was down 190 basis points
• The electric consumer durables segment has been the weak link in the company’s performance in the first half, given that its margins declined 520 basis points in this period due to  commodity prices and lack of operating leverage
• Motilal Oswal Research, however, is bullish on the future growth trajectory of the company given higher investments in promotional spending and efforts to improve the brand strength