December 2022 was a time when investors were staring at a host of uncertainties caused by a lingering military conflict, steep monetary tightening, and volatility had become a norm. It is in this turbulent environment that Moneycontrol Pro’s research team identified nine investing themes for 2023. This top-down selection was the starting point for identifying 19 high conviction ideas that the team believed offered promise in 2023. Stock selection was a meticulous exercise involving application of numerous filters to arrive at the final nineteen from over three-hundred stocks that they cover.
Also Read | MC Pro New Year Portfolio: 17 stocks for a rewarding 2024
A year later, the portfolio has delivered handsomely with an absolute return of 48 percent, against the Nifty’s return of 16 percent and the Nifty 500’s return of 22 percent, thereby generating alpha of 32 percentage points over the Nifty and 26 percentage points over the Nifty 500 respectively. Returns are calculated between December 23, 2022 and December 11, 2023.
Source: Moneycontrol Research
What worked well?
Firstly, the selection of the themes was bang on – with an overt tilt towards domestic market-focused stocks and avoiding exposure to businesses with global linkages except for companies with high earnings visibility.
The portfolio produced four multi-baggers. One was IRCON, the PSU rail and engineering company sitting on a huge orderbook that began to deliver as execution gathered pace. Another was Gabriel, a leading shock absorber manufacturer, which showed earnings traction riding on revival in the automotive sector and its focus on electric vehicles (EV). The remaining two stocks were from the travel sector – Safari (the luggage company) and RateGain (SAS player catering to airlines, hotels etc. with AI-powered data) that made most of the sector tailwinds.
Source: Moneycontrol Research
The mid-market hotel chain Lemon Tree wasn’t far behind and rode the upswing in occupancy and room rates as the industry continued to face a demand-supply mismatch.
The other success stories of the portfolio were beneficiaries of capex picking up. GRSE (Garden Reach Shipbuilders) from defense, VA Tech Wabag from water treatment and Thermax the leading energy and environment solutions company, saw steady addition of orders and acceleration in the pace of execution.
The market leader in automotive, Maruti and in jewellery, Titan, continued to deliver. Consumer sentiment remained buoyant for gold and the shift from unorganized was an added support for Titan.
The team’s bottom-up pick Heritage Food’s journey of improving share of value-added milk products amid easing shortage of milk turned it to be a winner. Syngene’s transformation to a full-fledged CRAMS player (Contract Research and Manufacturing) and tie-up with innovators acted as strong tailwinds.
Source: Moneycontrol Research
The ones that put up a moderate show
Financials, despite delivering strong numbers, thanks to falling credit costs and modest pressure on interest margins, did not strike a right chord with investors, although they continue to offer strong value. The team remains convinced about the growth journey of four banking stocks – Axis Bank, Federal, SBI, and DCB.
The ones that did not do well, but fundamentals remain sound
Campus Activewear suffered due to subdued consumer sentiment in an inflationary environment, Saregama with its weak numbers and JK Paper due to cyclicality in the industry, were drags in the portfolio.
The research team remains convinced about the fundamentals of all the companies selected for the 2023 portfolio and investors who had bought as per the recommendation of MC Pro can hold on to most of the high-quality names.
Moneycontrol Pro subscribers who had the benefit of having the 2023 portfolio at their disposal have benefited, as the numbers show. The good news is that this is not a one-time exercise and with the New Year fast approaching, it’s time for the next annual review exercise and its results. The MC Pro research Team, which had put together this portfolio last year, has toiled for hours this year as well and selected 17 high-conviction ideas even as yet another volatile year beckons in 2024.
Do watch out for MC Pro’s New Year 2024 Portfolio to be released on Monday, 18th December, exclusive for subscribers. If you are already a subscriber, you will get access to the portfolio as part of your subscriber offering. If you were looking for a reason to subscribe, there couldn’t be a better one. Click here to know more about subscribing to MC Pro.
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