Stock picks for 2023: L&T, SBI, Axis Bank among top brokerage picks for the new year

• While analysts remain positive about 2023, multiple factors including geopolitical tensions, rising Covid-19 cases in China, monetary policy actions could have an impact on markets.
• Business Insider India has examined analyses of multiple brokerages to figure out stocks that are expected to shine in 2023.
• Here are some of the stocks recommended by brokerages including ICICI Direct, HDFC Securities, Sharekhan, Motilal Oswal and Religare Broking to invest in next year.
  

The year 2022 has been an eventful one, with multiple headwinds in the form of rising geopolitical tensions, continued supply chain constraints, boiling crude oil prices and elevated inflation that triggered interest rates hikes by central banks around the world, causing a turmoil in equity markets globally.

As we step into 2023, equity markets could be driven by key sectors like banking, finance and insurance services (BFSI), IT and metals, say analysts.

In 2022, the Indian equity market emerged as an outlier in a world where most markets delivered negative returns. Benchmark indices Sensex and the Nifty50 rose nearly 3% this year as domestic institutional investors stepped in to fill the gap left by foreign institutional investors (FIIs) during the year. In comparison, Asian and US markets registered a steep 10-30% fall in the year.

“The relatively stable equity market in India was a result of a smart economic recovery from the pandemic shock and the growing dominance of retail investors,” said a report by Quantum Mutual Fund.

In 2023, however, geopolitical tensions, rising Covid-19 cases, monetary policy actions, change in commodity prices including crude oil and India’s union budget are among factors that will impact the markets.

Amid all these uncertainties, the key question is which stocks would be suitable to invest in this scenario?

Business Insider India has examined analyses of multiple brokerages – including ICICI Direct, HDFC Securities, Sharekhan, Motilal Oswal and Religare Broking – to give you a list of stocks that are expected to shine in 2023.

Here are the stocks recommended by brokerages for investment in 2023.
Note: Change as on December 27, 2022

L&T best placed to take advantage of a capex revival
Infrastructure behemoth Larsen & Toubro is amongst the top picks of brokerages as they believe the company is well poised to be the key beneficiary of a capex upcycle driven by investments in both public and private sectors.

“With a pick-up in the capex cycle and diversified segmental exposure, we believe L&T is the best capex play in the large cap capital goods segment. The company is optimistic about meeting its 15% growth guidance for revenue and order inflow in FY23,” said a report by ICICI Direct Research.

Debt-free Maruti Suzuki another favourite of brokerages
India’s largest carmaker Maruti Suzuki is another favourite of analysts considering it is debt free, pays consistent dividend, and has strong free cash flow and healthy financials.

“Maruti 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 CAGR over FY22-25E,” said a report by Motilal Oswal.

In the next 2 years, the automaker intends to launch products in the utility vehicle segment, focus on premiumisation and revamp its existing product portfolio.

SBI and Axis Bank among top BFSI picks
State Bank of India and private lender Axis Bank are also among stocks that might do well next year. Analysts say SBI is one of the few large-cap stocks available at a reasonable valuation with high growth visibility led by strong retail loans and a pick up in the corporate segment.

“Bank lending has been growing at double-digit rates as of this fiscal. Revival in consumer demand, rise in private capex followed by rise in government spending can be triggers for the growth. SBI, being a leader in the industry, could be a best play on this theme,” said analysts at HDFC Securities.

Similarly, Axis Bank has also been witnessing strong growth in the retail and mid-corporate segment, which, along with micro, small and medium enterprises, would remain the key growth drivers for the bank, according to analysts at Motilal Oswal.

PI Industries, Macrotech to shine
The chemical manufacturer PI Industries is expected to maintain its growth momentum with better-than-expected sales growth and margin expansion.

Macrotech Developers, which markets its properties under the Lodha brand, is expected to continue strong growth next year as well due to a strong pipeline, say analysts at Motilal Oswal.

With the brand new year just around the corner, and several factors set to affect the markets, these commentaries from brokerages should make it easier to help build an equity portfolio in 2023.


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