The benchmark indices have closed flat during FY23, but a total of 191 stocks from the broader market returned over 100% to investors. Of the lot, 45 were penny stocks (of value below Rs 10), while 14 were of firms that command a market capitalisation of over Rs 5,000 crore.
The 14 stocks comprised one fast-moving consumer goods (FMCG) firm, two banks, three capital goods companies and six from infra-related sectors such as construction, steel, shipbuilding and castings/forgings. Two others were from varied sectors.
“With the lockdown and then the Russia-Ukraine war impacting the supply chain and export markets, Indian players saw an opportunity. A surge in order inflows and margin expansion gave a leg-up to the companies” said Parikshit Kandpal, vice-president (Institutional Research), HDFC Securities.
He pointed out that despite the high commodity inflation, the firms were able to pass on the rising costs to customers, who were willing to pay more to stock up on inventory.
The BSE Capital Goods index gained 25% during the year, second only to Industrials, which gained 25.6%. “Capacity expansion on the back of ‘China-plus-one’ gave confidence to investors, while profitability also got a boost as there is hardly any debt on the books of these companies,” added Kandpal.
Banks have been in good shape throughout the year despite a rising interest rate regime, thanks to a clean-up in their balance sheets, strong credit off-take, and expansion in net interest margins. Market players said with the focus shifting to growth, banks could see better days ahead.
Only one FMCG brand — Varun Beverages — featured in the list. However, what’s important to note is that the firm’s market cap stood at Rs 40,750 crore as of FY22, and it jumped to over Rs 90,000 crore in FY23. Despite the high base, the stock returned 121%, rising from Rs 627 to Rs 1,387. Varun Beverages is the largest bottler of PepsiCo outside the US, according to a Jefferies report released in March. It accounts for above 90% of PepsiCo’s India volumes.
The report said that price revisions in FMCG are undertaken in the usual course of the business, which hasn’t impacted the sector’s performance.
Further, despite Reliance Industries’ entry into the soft beverage segment with the acquisition of Campa Cola, it faces a challenge owing to the requirement of visi-coolers at points of sale. Varun Beverages, it said, has a network of 37 manufacturing facilities and 925,000 visi-coolers.