New Year Top Picks 2023 Recommended By Motilal Oswal

Motilal Oswal Report

India outshined global markets in the year 2022, as it stood resilient to several global headwinds like; high inflation, rising interest rates, currency swings, geopolitics uncertainties and the onslaught of foreign institutional investor selling. This resilience has been led by several structural tailwinds which has placed India in a bright spot on the world map.

Despite a roller-coaster ride, Nifty gained 4% (as of Dec 22) for the year as compared to 10-20% fall in most of the global indices. Infact it touched a fresh life high of 18,888 in Nov 2022.

Nifty midcap index too remained resilient and gained 3% year-to-date. However Nifty smallcap index faced the major brunt with a fall of -15%. Public sector undertaking banks were clear outlier, witnessing a rally of 64% in the year till date.

As we step into CY23, the global factors, like recessionary fears, geo-political risks and rising covid cases in China could keep the equity markets volatile. U.S. Fed policy actions in 2023 along with Reserve Bank of India’s would hold importance where any moderation might encourage markets to pick up momentum.

We expect two themes to play out in CY23 viz. credit growth and capex and thus sectors like banking, financial services and insurance, capital goods, infrastructure, cement, housing, defence, railways could be in focus.

Here are our top picks for 2023:

Infosys Ltd. - Infosys continues to see traction in the large deal pipeline, despite an adverse demand environment. It is a long term beneficiary of an acceleration in IT spends, given its capabilities around cloud and digital transformation.

Maruti Suzuki India Ltd. - Maruti Suzuki is on a strong footing for a recovery in market share and margin with launches gaining traction and semiconductor shortages easing. It can gain further market share, led by an expected shift towards petrol and hybrid vehicles, resulting in ~14% volume compound annual growth rate over FY22-25E.

Apollo Hospitals Enterprises Ltd. - We are positive on Apollo Hospital due to a favorable case-mix and increasing occupancy driving better prospects for healthcare services, strong franchise in the Pharmacy space, with healthy store additions, and ongoing investments to enhance its franchise under Apollo 24/7. We expect 15% revenue CAGR over FY22-24 driven by growth in Pharmacy, healthcare, Apollo Health and Lifestyle businesses.

UltraTech Cement Ltd. - UltraTech is expanding grinding capacity domestically to 131 million tonnes per annum/154 mtpa by FY23E/FY25-26E which offers strong growth visibility. Further, cement demand is expected to pick up post the festive season and volume growth should be in double-digits in FY23/24. We expect sales volume growth of ~9% in FY23/24.

Click on the attachment to read the full list of Motilal Oswal's Top Picks for 2023:

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