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    Sandip Sabharwal on 6 top investment ideas for 2023

    Synopsis

    “On the largecap side, L&T should continue to outperform because it is still very under-owned relative to growth prospects. I like M&M because fundamentally they are doing much better than what everyone expected and will continue to do much better and valuations are not so high. Among midcaps, it could be a wide variety of stocks across sectors on the capex theme. I like something like VA Tech Wabag.”

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    "On the auto ancillary side, I like Apollo Tyres because of reduced capex and possibility of margin improvements. Bharat Forge because of its ex auto forays should drive earnings strongly, especially on the defence part, over the next few years," says Sandip Sabharwal, asksandipsabharwal.com

    The other sector which has been languishing at the bottom of the barrel is insurance. Whether it is LIC or HDFC Life or whether it is Star Health or ICICI Lombard, Star Health and LIC, they are nowhere close to their issue price. Except for SBI Life and Max, none of the insurance stocks have given gratifying experience?
    Yes, exactly and that gives an opportunity now because I have never invested in insurance companies as I found the valuations to be very high and there was a story of secular growth and as such insurance companies doing well. I think we are now coming to that stage where valuations are more reasonable.

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    So both HDFC Life in terms of higher quality franchise and ICICI Prudential Life after the selloff in terms of something which could surprise as the market conditions improve offer value at this stage. Insurance was much fancied for many years but did not give returns. People have lost faith and now there is some opportunity. Given the kind of returns that will come in 2023, insurance companies should be able to outperform this year for sure.

    What about IT? Come next week and we will be talking about the earnings from the likes of TCS, HCL Tech, Infosys, etc. A large part of the Street is going in with muted expectations. Do you think the IT sector is poised for more disappointment?
    Yes, there are midcap and largecap IT companies. Midcap IT companies got more fancied and had a deeper selloff but they could have more impact on their performance as they are more dependent on a few clients where slowdown could have an impact. Larger companies might have a lesser impact but the management commentary ex of HCL Tech, has not turned negative.

    They are still relatively more bullish than what the data indicates in terms of growth that will be there. I think that it will be very interesting to watch. The results and commentaries come out starting next week and I would still wait out the IT sector overall.

    For those who have just tuned in. Imagine somebody is just tuning in right now and they have missed the initial part of your conversation. What are your best ideas for 2023 in terms of these stocks?
    On the largecap side, L&T should continue to outperform because it is still very under-owned relative to growth prospects. I like M&M because fundamentally they are doing much better than what everyone expected and will continue to do much better and valuations are not so high.

    On the midcap side, it could be a wide variety of stocks across sectors on the capex theme. I like something like VA Tech Wabag which is a company reinventing itself in terms of generating cash flows, trades at single digit valuations for next year and it had a peak at some stage of 750-800, still at 320-330, I would think that it should do well.

    Sugar is a space which we got into. The stocks have moved up but it is a good story for the next couple of years. Balrampur Chini has a better quality of management and their buybacks have reduced equity by nearly 20-25% over the last few years, which is good for returns for existing shareholders going forward.

    On the auto ancillary side, I like Apollo Tyres because of reduced capex and possibility of margin improvements. Bharat Forge because of its ex auto forays should drive earnings strongly, especially on the defence part, over the next few years. These are a few which come to mind.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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