Brokerage Religare Broking believes that the New Year 2023 may see the end of the rising interest rate cycle but growth may not be impressive. As a result, corporate earnings may not justify higher valuations and the market may enter into a time correction. However, India will still remain the best as compared with the rest of the world.
The benchmark equity index NSE Nifty advanced 2.61 per cent to 17,806.80 on December 23 from 17,354.05 on December 31, last year. A couple of factors including the Russia-Ukraine war, rising interest rates, outflows by foreign institutional investors and fear of rising Covid cases at the fag-end of the year kept the market volatile.
Considering the present market condition, Religare Broking believes that the next year will bring a lot of profitable stock-specific opportunities. Here’s what it suggests for the New Year:
Maruti Suzuki | Market price: Rs 8,142 | Target price: Rs 9,000-9,650 | 11%-19%
Maruti Suzuki is the largest player in the passenger vehicle industry commanding a market share of 43 per cent in the domestic market as well as it remains focused on increasing its export business. The company has reclaimed the record high after spending nearly 5 years in a corrective phase.
It is seeing normal correction and gradually inching toward the major support zone. It may spend some time here before resuming the trend.
Voltas | Market price: Rs 778 | Target price: Rs 930-1,050 | Upside: 20%-35%
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 per cent. The company will continue to benefit from positive industry trends given its leadership position, strong product portfolio and pan-India distribution presence.
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Religare Broking further believes that going ahead, a 50:50 joint venture with Arcelik, focusing on sourcing raw material locally, capacity addition for AC and refrigerators and investment in making compressors would drive revenue as well as improve margins. The brokerage added that Voltas has reached the support zone of the Fibonacci retracement and looks highly oversold.
Exide Industries | Market price: Rs 177 | Target price: Rs 210-230 | Upside: 19%-30%
Exide Industries is a market leader in the organised lead acid battery segment with strong brand recall value and healthy relationships with OEMs. The company has recently ended the 4-year-long corrective phase, with a breakout from an inverse head & shoulder. After the initial surge, it is witnessing a gradual decline and inching closer to the neckline(support) area of the reversal pattern. This fall is an opportunity for those who missed the chance earlier.
V-Guard Industries | Market price: Rs 261 | Target price: Rs 305-330 | Upside: 17%-26%
V-Guard is a well-diversified company with a strong presence in segments such as electrical (45.9 per cent in FY22), electronics (23.5 per cent) and consumer durables segment (30.6 per cent). 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 per cent from 42 per cent in FY22. Religare Broking 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 Enterprises.
Birlasoft | Market price: Rs 280 | Target price: Rs 330-370 | Upside: 18%-32%
Birlasoft has unique, industry-leading capabilities from enterprise product and cloud companies. It has strategic-level partnerships with SAP, Oracle and Salesforce, and other digital players that would drive growth. The brokerage 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 and BFSI, among others. Further expansion in Europe will aid strong growth. Moreover, its plan is to focus on optimising cost measures especially maintaining its employee cost and reducing attrition level that will help to protect margins.
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