From Maruti to Birla Soft: Religare Broking picks 5 top stock picks for 2023

Pranati Deva
Updated: 06 Jan 2023, 10:13 AM IST
TL;DR.

The calendar year 2022 turned out to be a roller-coaster ride for the participants. It was marked by multiple headwinds for the markets like geopolitical tensions, steep inflation rate hikes, and slowing economic growth, still there were pockets of opportunities. In a recent note, brokerage house Religare Broking noted that en though rising interest rate cycle is not likely to end in 2023, growth may not be impressive, corporate earnings may not justify higher valuations and the market may enter into a time correction; India will still remain best among the rest. This New Year will bring a lot of profitable stock specific opportunities, it said. The brokerage has listed 5 stocks for the upcoming year:

Maruti Suzuki: The brokerage has a buy call on the auto major with targets of ₹9,000-9,650. It advises investors to accumulate the stock in the ₹7,900-8,150 range. Maruti is the largest player in the passenger vehicle industry, commanding a market share of 43% in the domestic market and focusing on increasing its export business. It would be the biggest beneficiary from the demand in the passenger vehicle industry given its leadership position, a  strong presence in the entry-level segment and wide distribution network, noted the brokerage. In the next 2 years, MSIL intends to launch products in the UV segment, focus on premiumization and revamp its existing product portfolio, it further noted. Another positive is that Maruti is a debt-free company with healthy financials, consistent dividend payout and generates strong free cash flow. 

Voltas: The brokerage has a buy call on the stock with targets of ₹930-1,050. It advises investors to accumulate the stock in the ₹745-780 range. Voltas is India’s leading air conditioning company with a strong presence in unitary cooling products, engineering projects, and engineering products and services. It is the market leader in the room air conditioner category with a market share of 24.1%, noted the brokerage. The company will continue to benefit from favorable industry trends given its leadership position, strong product portfolio and pan-India distribution presence, it added. Going ahead, a  50:50 joint venture with Arcelik focused on sourcing raw material locally, capacity addition for AC and refrigerators and investment in making compressors would drive revenue and improve margins, predicted the brokerage. 

Exide Industries: The brokerage has a buy call on the stock with targets of ₹210-230. It advises investors to accumulate the stock in the ₹165-175 range. Exide Ind. is a market leader in the organized lead acid battery segment with strong brand recall value and healthy relationships with OEMs. Strong demand from the replacement market as well as recovery in the Automotive and Industrial segments would aid in gaining market share, said Religare. Its plans to foray into manufacturing of lithium-ion batteries which will cater to the growing demand for EVs and the Electric Mobility segment bodes well for future growth, it added. Further, the company's financials are stable and it is increasing its digital presence, focusing on renewable power and cost optimization measures to enhance margins. Besides, it is debt free and generates decent free cash flow, stated the brokerage. 

V-Guard Industries: The brokerage has a buy call on the stock with targets of ₹305-330. It advises investors to accumulate the stock in the ₹245-260 range. V-Guard is a well-diversified company with a strong presence in segments such as electrical (45.9% in FY22), electronics (23.5%) and consumer durables segment (30.6%). The brokerage is positive on the growth prospects of the company given the strong demand from the housing and real-estate sector, focus on high-margin products, expanding manufacturing facilities and synergies with acquiring company Sunflame Ent. The company is a strong player in south India and in the next 2-3 years its plan is to expand distribution reach to non-south markets by increasing revenue share up to 50% from 42% in FY22, it added. 

Birla Soft: The brokerage has a buy call on the stock with targets of ₹330-370. It advises investors to accumulate the stock in the ₹265-280 range. Birlasoft has unique, industry-leading capabilities from the Enterprise Product and Cloud companies. It has strategic-level partnerships with SAP, Oracle and Salesforce, and other digital players that would drive growth. Religare is positive on Birlasoft's long-term growth on the back of improving demand, robust order inflow, and strong relationships with partners and clients. Besides, demand from verticals such as manufacturing, BFSI, etc. and further expansion in Europe will aid strong growth, it added. Further, its plan is to focus on optimizing cost measures especially maintaining its employee cost and reducing attrition level that will help to protect margins, noted the brokerage.

First Published: 06 Jan 2023, 10:13 AM IST