After the midcap stocks rallied in 2017, many top experts have suggested investors to move to largecap stocks. In an interview to CNBC TV18, Harsha Upadhyaya CIO-Equity, Kotak Mutual Fund said, “On valuation front, midcap is relatively higher compared to largecaps. As asset sizes increase, the challenge increases to find value in the space. However, funds which are mandated to invest only in midcaps will try to find opportunities within the space. Multicap portfolios where we can move across market capitalisations, our tilt is towards largecap.
We have been very focussed on largecaps within the multicap segment.” Godrej Consumer products, a largecap is Macquarie’s top pick from the consumer discretionary space. Macquarie says that volume growth is a catalyst for the stock. The global research firm has a target price of Rs 1,159 on the shares. Godrej Consumer Products shares closed at Rs 974 on Wednesday. Macquarie’s target price implies an upside of more than 19% from the current market prices.
The share touched its 52-week high Rs 1,083.65 and 52-week low Rs 701.68 on 27 July, 2017 and 30 November, 2016, respectively. Notably, the shares have returned more than 29% since January as compared to BSE Sensex returns of more than 26% in the same period.
Godrej Consumer Products’ consolidated net profit in the quarter ended September rose more than 12.5% from a year ago to Rs 361.95 crore on higher sales volumes. Notably, GCPL’s India volumes grew 10%. “Post GST, the trade channels are getting back to normal and consumer offtakes have improved. We remain optimistic that consumer demand will continue to pick up in the second half of the fiscal year,” GCPL’s executive chairman Nisaba Godrej had said in the statement.
Another global research firm CLSA says that a lot of consumer oriented companies are slated to benefit post implementation of GST. In its latest India strategy note, the global firm CLSA noted, “After the implementation of goods and services tax (GST) from July 1, companies highlighted the shift from the unorganised space to the organised space within their industry.” The research house said that investors like government’s pro-growth stance in public sector banks’ recapitalisation plan of Rs 2.11 lakh crore and are positive on mild fiscal relaxation through tax cuts. “Investors are turning positive in India, as they believe that the worst is over in terms of poor corporate earnings,” CLSA said.