Indian stock market in 2023 should remain buoyant because a range of macro-economic factors are expected to stem their growth. Indian stock markets have exhibited a strong performance, pushing benchmark indices to fresh highs in July. There has been a successful beginning to earnings season of 1Q24. Sustained inflows from FIIs and strong financial results of IT majors including TCS and HCL Technologies have collectively supported the increase in market indices. Overall, Indian stock market in 2023 is likely to seek support from BFSI sector and infrastructure companies.
TCS, which has been categorised as a largest IT firm by revenue, saw net profit of INR11,074 crore in 1Q24, exhibiting a rise of 17% year-on-year (YoY), with HCL Tech reporting net profit of INR3,534 crore, up 7.6 per cent year-over-year. Post the results announcement by respective companies, shares of these companies ended 2.47% and 0.09% higher, respectively.
Most of the experts expect bullish market outlook for Indian stock market in 2023. Positive economic growth and government policies should provide the much-needed support to stock prices. Apart from this, low-interest rates and healthy liquidity levels might attract investors and help Indian stock market in 2023. Return on foreign investments should fuel the market’s growth. Indian economy continues to evolve and a range of sectors such as e-commerce, healthcare, and technology have been gaining momentum. Higher adoption of digital technologies and e-commerce platforms should stem growth in such sectors, and investors might see healthy returns in such areas.
Indian government’s focus on infrastructure development should help Indian stock market in 2023 and can create positive impact on Indian market. Several initiatives such as National Infrastructure Pipeline and the Atmanirbhar Bharat Abhiyan should help in creating opportunities for companies in infrastructure and construction sectors. Therefore, these companies are expected to see reasonable growth levels.
With this mind, let us quickly have a look at some promising infrastructure stocks which should help Indian stock market in 2023.
1. KEC International
KEC International Limited, which has its headquarters in Mumbai, India, is flagship company of RPG Group. The company has been categorised as an Engineering, Procurement, and Construction (EPC) major and it delivers projects in key infrastructure sectors including Power Transmission & Distribution, Railways, Civil, Urban Infrastructure, Solar, Smart Infrastructure, etc.
The company has secured new orders worth INR1,007 crores throughout its various businesses. In Civil, business secured prestigious order for Design, Engineering, Procurement and Construction of Multi-speciality Hospital in India and, in Transmission & Distribution (T&D), it has secured significant order for 380 kV Overhead Transmission line project in Middle East. With these orders, the company’s YTD order intake comes in at record level of more than INR5,500 crores, exhibiting a strong growth of ~15% in comparison to prior year.
The company has released its results for first quarter (1Q24) ended June 30, 2023, with revenues coming at INR4,244 crore in 1Q24 against INR3,318 crore in 1Q23. EBITDA of the company came in at INR244 crore in comparison to INR168 crore in 1Q23. Its order book as on 30 June 2023 was of INR30,125 crore, exhibiting strong growth of 27% year-over-year.
KEC International Limited saw strong growth throughout revenue, profitability and order intake. Its revenue growth stemmed from healthy execution in both T&D and Civil businesses. It has seen sequential improvement in EBITDA margin, with the margin expanding by 140 bps over previous 3 quarters from 4.4% to 5.8%. The company has turned around its SAE Towers business, delivering positive PBT in 1Q24. Given its strong order book + L1 of more than INR35,000 crore and healthy tender pipeline, the company expects to deliver continued strong growth and better margins over coming quarters.
2. Dilip Buildcon Limited
It has a renowned infrastructure business in India. Initially starting operations in residential real estate space, it has been successful in branching out into building petrol pumps and later it delved into government projects. Later on, it started building roads. It has a strong presence in Madhya Pradesh and government of this state is a client of infrastructure company.
The company believes in capitalising on opportunities, while at the same time it is focusing on leapfrogging ahead of hurdles. In FY23, it has leveraged its operational efficiencies and capacities.
The company expects strong revenue growth in the coming year. Talking about EBITDA, the company continues to focus on significant improvement and intends to move closer to historical levels. In this year, the company expects to win new orders of ~INR10,000 to ~INR12,000 crores. Focus is on reducing debt, and on improving working capital days.
Significant ongoing projects are close to their completion, and a series of new projects are on the cards.
3. NBCC
NBCC is project management consultancy company for construction sector. Apart from this, the company is an infrastructure developer and operates an EPC vertical. It has released its financial results for the quarter ended 30th June 2023.
It saw standalone turnover of INR1,474.71 crores for 1Q24 in comparison to INR1,359.22 crores for 1Q23. Consolidated turnover of the company came in at INR1,913.79 crores in comparison to INR1,786.72 crores for 1Q23. The company remains on track to capitalise on significant benefits both in India and overseas. Focus is on capitalizing on new market opportunities by strengthening core competencies. It has strong presence in overseas and continues to explore new opportunities in African countries. Given renewed thrust of Indian government on infrastructure and real estate sectors, NBCC should be able to see strong growth over near and mid-term.
Bottom-line
Therefore, the combination of all the factors mentioned above should help Indian stock market in 2023. Apart from this, growth in emerging sectors, higher IPOs, and increased foreign investments should offer much-needed support.
That being said, investors are required to be cautious and should make informed decisions while investing in Indian stock market. With right strategy and approach, investors should be in an advantageous position to see promising returns in 2023. Increase in foreign investments should help Indian stock market in 2023 which should stem from government’s focus on ease of doing business, stable political conditions and healthy economic growth.
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