To begin with, let us understand what are multibagger stocks. Precisely, stocks which have the potential to generate returns that are several times their costs are known as multibagger stocks.
More often than not, these are the ones which are undervalued and have strong fundamentals, hence, presenting as excellent investment options. Most of the time such companies have strong corporate governance background and have businesses which have potential to scale significantly in a short span of time. In other words, a stock which double its price is known as two-bagger while if the price tend to grow 10-times, it will be known as a 10-bagger. As a result, multibaggers are ones whose prices have increased multiple times of their initial investment values. In this article, we will focus on Top Atmanirbhar theme-based stocks to buy for rest of 2023
Experts believe that Atmanirbhar theme can develop multibagger stories and investors should consider investing in such stocks. Atmanirbhar stories which are expected to result in significant gains can be from industries such as defence/ EMS/ infra and capital goods.
Stock market does not move in one secular direction as there are fluctuations and consolidations. Currently, Indian stock market has seen a significant rally and equities have moved pretty fast since April 2023 low. Nowadays, we continue to experience some consolidation and experts believe that this consolidation is expected to be healthy for equity market. As of now, market has been commanding higher valuations. Apart from this, recent inflation print has been limiting the chances for P/E expansion. Investors who are here for the long-term (i.e., 2-3 years) should benefit from the current consolidation.
Reserve Bank of India in a recent policy meeting announced that it is keeping interest rates unchanged at 6.5%. Overall, the apex bank has maintained hawkish stance in a bid to combat increased inflation (mainly food inflation). Apart from this, inflation risks have increased because of significant upward revision of the inflation forecast to 5.4% for FY24. There has been a decision to bring 10% incremental CRR for banks.
Moving forward, if food inflation persists for a longer period, RBI might continue with its stance of liquidity tightening. Talking about interest rates, the apex bank is projected to remain on hold through FY24 and a rate cut is expected before 1Q25. This timing of rate cut is dependent on domestic growth-inflation dynamics and global interest rate cycle.
Experts believe that new-age tech companies will take some time to show good set of numbers. In the previous year, there was a Euphoria in private and new-age IPO markets. These companies were listed at expensive valuations. That being said, such valuations were not sustained and some companies saw significant corrections.
However, in past couple months, there are some changes in new-age businesses. There are companies who have now started focussing on profitability instead of sheer scale. For example, Zomato and PayTM have posted strong set of numbers but PolicyBazar has disappointed its investors while reporting its numbers.
It seems that retail investors are now attracted to equity markets. Data suggests that SIP contributions have increased INR15,000 crore and new SIPs continue to get registered every month. Retail investors are getting attracted and they are understanding power of equity investments. As retail investors continue to gain confidence in Indian market, experts believe that they should trust and believe money managers to manage their money. Increased government support and new-age money managers are also helping retail investors to put money in equity market.
Top 3 Atmanirbhar theme-based stocks to buy
Since defence, capital goods & infrastructure industries are expected to lead the show, let us have a look at the stocks from these areas.
1. Hindustan Aeronautics Ltd. – Defence Space
Hindustan Aeronautics Ltd. is the first stock in our list of “Top Atmanirbhar theme-based stocks to buy for rest of 2023.”
During FY23, the turnover of the company grew by 8% to INR26,36,056 lakh from INR24,36,166 lakh of prior year. PBT for the year saw an increase of 24% to INR6,49,294 lakh from INR5,23,115 lakh in the previous year. The company’s PAT increased 14% to INR5,81,117 lakh from INR5,08,650 lakh in the prior year. Hindustan Aeronautics Ltd. bagged contracts for production and supply of 70 Nos. of HTT-40 Basic Trainer Aircraft on March 6, 2023 and 6 Nos. of Dornier 228 Aircraft on March 10, 2023. Order book position of the company came in at INR81,78,400 lakh as on March 31, 2023.
Under Atmanirbhar Bharat initiative, government continues to facilitate development of the Indian industry to reduce defence import and dependence on foreign OEMs. In medium term, the company plans to diversify and increase presence in UAV, Civil MRO & allied operations, Digital Solutions and new space segments as strategic initiatives.
2. Mazagon Dock Shipbuilders- Capital Goods Space
The company is one of the leading shipbuilding yard in India. During FY22, the company saw revenue from operations of INR5,733.28 crore in comparison to previous year figure of INR4,047.82 crore. The PBT and exceptional items came in at INR786.66 crore for 2021-22 against INR756.06 crore in the previous year.
In 1Q of current fiscal, net profit grew by 40% to INR314.3 crore against INR224.8 crore in corresponding quarter of the previous year. Revenue grew to INR2,405 crore in 1Q against INR2,366.5 crore revenue in the June 2022 quarter. Recently, the company’s share price reacted positively to the news that shipping firm was in race to win INR40,000 crore ($4.8 billion) order to build submarines in India.
The company focuses on setting up green field shipyard at its Nhava Yard in phased manner with short-term and long-term developments plan subject to better visibility regarding large ticket orders. To take up construction of advanced and next generation vessels, the company plans to build New Floating Dry Dock of 15000T capacity.
3. GMR Airports Infrastructure Limited- Infrastructure Space
GMR Airports Infrastructure Limited (formerly GMR Infrastructure Limited) in alliance with Megawide Construction Corporation of Philippines operates Mactan Cebu International Airport – the second largest airport of Philippines.
GMR Airports Infrastructure Limited ranks third on our list of “Top Atmanirbhar theme-based stocks to buy for rest of 2023”
In 1Q24, the company saw strong performance at Hyderabad & Delhi Airports, with Hyderabad airport handling highest-ever quarterly Pax traffic in 1Q24. Total Pax traffic grew 26% year-over-year to 27.0 million in 1Q24 and gross revenue was up by 40% year-over-year to INR2,018 crore in 1Q24.
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