New Year Top Picks - Nine Stocks For 2023 Recommended By Axis Securities

Axis Securities Report

The market underwent heightened volatility during June 2022. This coupled with weaker global cues driven by higher inflation print in the U.S. resulted in a notable sell-off in the equity markets across the world. Led by the weaker global development, the Indian market, too, was confronted by the global headwinds and our benchmark index Nifty 50 dropped to the level of 15,294 on June 17, 2022.

However, the Indian market showcased commendable resilience since then and the benchmark recovered 18% from the June-22 bottom. Over the same period, the broader market midcap and small cap indices also recovered by 21% and 19% respectively.

Moreover, Nifty50 touched an all-time high level of 18758 on Nov, 30, 2022, led by the revival of the foreign institutional investor flows in the Indian equity market during the month.

India now stands tall as the fifth largest market in the world with a $3.5 trillion market cap. Only the U.S., China, Japan, and Hong Kong market are currently ahead of India.

Here are our top picks for 2023:

Hindustan Unilever Ltd. - Despite short-term challenges, the company’s long-term growth prospects remain strong as the management focuses on driving-

1. a broad-based portfolio and straddling across the price- matrix driving premiumisation,

2. cost savings initiatives,

3. market development and market share gains across the portfolio,

4. strong execution capabilities, which displays its strength in the diverse product portfolio, and strong financial prowess in this volatile and challenging environment.

V-Mart Retail Ltd. - We believe player such as V-Mart should see earnings and profitability improvement as rural and small towns recover, market share gain from smaller/unorganised players, continued demand for quality -for-money products, and sustained product additions. Moreover, the company intends to continue its healthy growth trajectory in-

1. the backdrop of increased demand driven by the resumption of economic activity,

2. the market share shifting from the unorganised to organised sector,

3. the company’s focus on the newly formed south zone through Unlimited stores to cross-populate selective stocks from South to North, and vice versa to add more variety and better options for consumers of both geographies,

4. recently acquired Limeroad will drive omnichannel strategy, and

5. appointing a consultant to revamp sourcing and scaling opportunities.

Federal Bank Ltd. - The bank's credit growth witnessed continued growth momentum and remained robust in Q2 FY23 with advances growing at 19% YoY. Federal Bank is also keenly focused on neo-banking tie-ups to reach the country’s under-banked population and expects these partnerships to contribute meaningfully to the overall business growth moving forward. Thus, supported by a broad-based demand pick-up as well by the newer segments namely credit cards and personal loans along with ample growth headroom in the existing core products, we expect the bank to post healthy growth in its book at 18% compound annual growth rate over FY22-25E.

RITES Ltd. - The company has a strong order book of Rs 5950 crore. It is well-diversified with high-margin consultancy contributing ~41%, turnkey projects ~49%, exports ~5%, and the rest from leasing. Furthermore, ~80% of the order book is sourced from the Government of India and its public sector undertaking while the rest are from private parties. The order book gives revenue visibility for the next new years.

Click on the attachment to read the full list of Axis Securities' top picks for 2023:

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