Market capitalization or market cap is the total rupee market value of a company’s outstanding shares, a metric that gives investors an indication of the firm’s size vis-a-vis its competitors. The top 100 listed companies with a market cap of over Rs. 20,000 are known as largecap companies. Midcap companies will have a market cap ranging from Rs. 5,000 cr. to Rs. 20,000 crore, while smallcap companies will have a market capitalization of less than Rs. 5,000 crores.
Midcap companies have good growth prospects, making them investor favorites. In this blog post, we have listed some of the best midcap stocks to invest in. Read on to know some fundamentally strong midcap stocks you can consider for investment.
Best fundamentally strong midcap stocks (2024)
There are hundreds of midcap stocks trading in the market. Identifying the right stock can be challenging. A popular approach to investing in stocks is to put your money in fundamentally strong stocks. Essentially, choose fundamentally strong stocks of companies with solid financials, strong management, and active in an industry with a promising outlook.
Here we list the top 10 best midcap stocks that are fundamentally strong with bright prospects.
10 Best Midcap Stocks in 2024
| Sr no | Name | Sector | Market cap (in Rs. Cr.) | P/E ratio | 1-year return | Analyst Rating |
| 1 | Indian Hotels Co Ltd | Hotels | ₹91,484.01 | 71.19 | 59.84% | BUY |
| 2 | Solar Industries India Ltd. | Aerospace & Defense | ₹92,974.03 | 100.52 | 135.23% | BUY |
| 3 | Info Edge India (Naukri) | E-com app | ₹96,193.85 | 149.73 | 77.45% | BUY |
| 4 | Aurobindo Pharma Ltd | Pharmaceuticals | ₹89,915.15 | 25.15 | 79.37% | BUY |
| 5 | FSN E commerce (Nykaa) | E-com app | ₹60,172.04 | 1558.45 | 56.08% | BUY |
| 6 | Jindal Stainless Ltd. | Steel | ₹60,073.70 | 23.78 | 75.15% | BUY |
| 7 | Marico Ltd | FMCG | ₹88,136.02 | 58.10 | 21.56% | BUY |
| 8 | Radico Khaitan | Alcoholic beverages | ₹23,074.10 | 87.55 | 37.41% | BUY |
| 9 | AU Small Finance Bank | Private sector bank | ₹46,469.26 | 27.49 | -14.18% | BUY |
| 10 | Indian Bank | Public sector bank | ₹74,365.88 | 8.13 | 34.51% | BUY |
The above listed are some of the best midcap stocks based on their performance last year. These stocks have strong fundamentals and have the potential to rally in the coming months. However, past performance does not always guarantee future returns and it is advisable to research the stocks thoroughly before investing in them.
10 best midcap stocks with the highest dividend yield
Investments can create a passive income stream for investors. Hence, some investors prefer investing in dividend stocks as dividend income can supplement the investor’s income stream.
In theory, high-growth companies pay small dividends or no dividends as theirs is a growing business, and putting the money back into the business will aid growth leading to capital gains for investors. However, this is not always true in real life. Dividend payouts by a company are based on a combination of factors such as the company’s growth phase, shareholder preferences, and market expectations.
Here is a list of midcap companies with the highest dividend payout. You can consider investing in these companies if you wish to create a passive income stream or want to balance the risk, with regular income.
| Sr no | Name | Sector | Dividend yield | PE ratio |
| 1 | Hindustan Petroleum Corporation Ltd | Refineries | 5.22% | 8.79 |
| 2 | ICICI Securities Ltd | Stock Broker | 3.52% | 13.4 |
| 3 | Petronet LNG Ltd | Gas Distribution | 2.65% | 14.3 |
| 4 | NMDC | Mining and Minerals | 2.55% | 10.7 |
| 5 | Nippon Life India Asset Management Ltd | Finance & Investment | 2.34% | 37.2 |
| 6 | Oracle Financial Services Software Ltd | IT Software | 2.23% | 40.6 |
| 7 | Mahindra & Mahindra Financial Services Ltd | Finance & Investment | 2.02% | 18.4 |
| 8 | Mphasis Ltd | IT Software | 1.84% | 36.2 |
| 9 | General Insurance Corporation of India | Insurance | 1.75% | 10.1 |
| 10 | Oil India Ltd | Oil & natural gas | 1.54% | 14.1 |
The above listed are the best midcap stocks to buy if you want regular income from your investments. These midcap stocks have some of the highest dividend yields and also offer opportunities for capital growth in the long run. Head to the Lemonn app right away to check these stocks out before investing.
Features of a midcap stock
Every stock segment, namely the largecap, midcap, and small cap all have distinct characteristics and pose varying degrees of risk. On a relative scale, largecap stocks pose the least risk and smallcap stocks pose the most. Midcap stocks fall in the middle, offering the best risk-return equation, relatively lower risk compared to smallcap stocks, and higher returns compared to largecap stocks.
Here are the salient features of midcap stocks:
- Midcap stocks have greater growth potential and offer investors the opportunity to make sizable returns.
- Midcap stocks are relatively more immune to volatility compared to smallcap stocks. However, they are more prone to volatility compared to largecap stocks.
- Midcap companies span different stages of growth. Some companies can be in the development stage, which is stable, but offers minimal returns. Some mid-cap companies can be in a growing phase and offer high returns.
How to invest in top midcap stocks on Lemonn?
Lemonn is a SEBI-registered stock broking app. To invest in top midcap stocks on Lemonn, follow the steps outlined below:
- Visit the Lemonn website to download the Lemonn app from the Play Store.
- Enter your mobile number to register
- Fill in your personal & bank details. Rest assured your details are secure with us.
- Complete paperless KYC in less than a minute.
- Review and e-sign your Account Opening Form.
For detailed steps to open an account on Lemonn, watch this video.
Once you have opened your account, you can buy the best midcap stocks listed above on the Lemonn App.
Advantages of midcap stocks
Here are some of the advantages of investing in fundamentally strong midcap stocks.
- Midcap companies can be in various stages of growth. This means a portfolio of multiple midcap stocks gives investors the option to balance high-risk investments with medium to low-risk investments. This in turn will help in enhancing portfolio stability and growth.
- Midcap companies have higher growth potential compared to largecap companies, which translates to a higher return on investment for investors.
- Investors can generate healthy long-term returns by staying invested in midcap companies with strong fundamentals and financials.
- Midcap companies offer a perfect blend of risk and return as they rank higher on the riskometer compared to largecap companies, but come with lower risk compared to smallcap companies.
Disadvantages of midcap stocks
Midcap stocks are a popular investment alternative, thanks to their growth potential. However, investing in midcap stocks does have some disadvantages. Here are some of them.
- Largecap companies that have a proven track record are considered stable. Midcap companies often do not have a proven record of stability and hence are riskier, demanding a close look at the financials.
- Midcap stocks are highly volatile when compared to large-cap stocks. Though the probability of providing good returns is high, there are equal chances of generating negative returns.
- Low-ranking mid-cap companies are highly prone to value-trap. When a company operates with limited cash flow and low profits, it is considered a value trap. In simple terms, the company can be in a stagnant position. Such mid-cap companies may not even trade.
Who should invest in midcap stocks?
Though midcap stocks may appear balanced in terms of risk and returns compared to smallcap and largecap stocks, they are not for everyone. Midcap stocks would be suitable for the following categories of investors.
- Investors looking for long-term investment options can consider midcap stocks as they can help them gain favorable returns in the long term.
- Investors looking for capital appreciation can consider midcap stocks.
- Investors with a moderate risk appetite can consider investing in midcap stocks.
Conclusion
Midcap stocks are great wealth creators. This makes them a popular investment choice for moderate-risk appetite investors. However, midcap stocks can be volatile and can give negative returns. Investors would do well to build a diversified portfolio to balance the risk posed by midcap stocks.
