New Year Picks 2023: These 5 stocks under Rs 500 can give up to 60% returns – What should investors do

New Year Picks 2023: The Indian market in the coming year is expected to continue the volatility that it persists this year, for at least the first three-six months mainly due to moderate inflation, and rising interest rates among other factors, several analysts noted in their expectations for the Indian equities.

According to Motilal Oswal’s report, “India stands out like an oasis in the desert, where rest of world is facing multiple challenges. Domestic flows too have remained strong and now FIIs have turned buyers. Nifty now trades at a 1year forward P/E of 20x, which seems fair.”

The brokerage expects two themes to play out in the calendar year 2023 that is credit growth and capex and thus sectors like BFSI, capital goods, infrastructure, cement, and housing could be in focus.

Below are the five stocks under Rs 500 recommended by JM Financial that could give bumper returns in 2023.

Hindalco: Buy – Target: Rs 545; Upside: 23%

The brokerage maintained a Buy rating on Hindalco with a target price of Rs 545 per share, implying an upside of 23 per cent. This is mainly due to the robust performance of the metal company despite challenging circumstances and the outlook across most segments to remain positive.

The company continues to witness stable demand for sustainable aluminium solutions, given the positive demand outlook across end-user segments. Hindalco, given around 75 per cent steady and strong EBITDA being non-LME linked, remains the brokerage’s preferred stock in the metal space.

M&M Financial Services: Buy – Target: Rs 275; Upside: 20%

The brokerage gave a Buy rating on M&M Financial Services with a target price of Rs 275 per share, implying an upside of 20 per cent as the asset quality of the non-banking finance company (NBFC) improved meaningfully Disbursements sharply accelerated amid ramp-up of new products loans.

The management is confident that the margins should gradually recover from current levels. Given the Reserve Bank of India (RBI)’s ban on recovery and repossession activity through outsourcing arrangements, it demonstrated agility by swiftly onboarding around 4000 outsourced agents.

Arvind Fashion: Buy – Target: Rs 400; Upside: 24%

Arvind Fashion is on track to its profitable-growth target, working-capital optimization, de levered Balance sheet and rising cash-flows. Besides, management expects revenue to grow 12-15 per cent driven by network expansion and healthy comparable growth, the brokerage said.

JM Financial gave Buy rating on the stock with a target of Rs 400 per share, implying 24 per cent upside as it expects margins to rise with better full-price sales and operating leverage. The company will continue to focus on reducing debt and better inventory turns, leading to more cash-flow.

Ujjivan Financial Services: Buy – Target: Rs 400; Upside: 60%

While the stock has surged 60 per cent in the last six months, on the back of steadily improving asset quality and return metrics, the brokerage believes sustained delivery on this performance along with a gradual improvement in liability franchise are critical for further rerating of the stock.

As per the scheme of reverse merger, Ujjivan SFB would issue and allot 115 shares of the bank for every 10 equity shares to the shareholders of Ujjivan Financial Services (holding company). The brokerage maintained a Buy stance on Ujjivan Financial with target of Rs 400 apiece (60% upside).

Gokaldas Exports: Buy – Target: Rs 500; Upside: 45%

Gokaldas Exports is well placed to ride the growth in India’s apparel sector after regaining the confidence of global retailers (GAP, Columbia & Banana Republic). The company’s growth capex of Rs 3.7 billion over FY22-24 will ensure strong double-digit growth CAGR in revenues.

The brokerage gave a Buy rating on the stock with a target price of Rs 500 per share, implying a 45 per cent upside amid increasing scale and focus on cost optimization will further improve margins.

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