The 5 Biggest Gainers of 2022. Will Their Dream Run End in 2023?

Indian share markets were on a bumpy ride in 2022.

As the pandemic faded into the background, the Indian economy started recovering slowly.

However, as geopolitical tensions between Russia and Ukraine surfaced, unprecedented inflation and economic turmoil, markets were caught up in a sea of volatility. An increase in interest rates by the Fed also added to turbulence.

Despite choppy waters, the BSE Sensex and Nifty rose by 4.4%.

The Sensex also rallied over 1,000 points 14 times during the year taking higher many stocks with itself.

So, which companies delivered the highest gains to investors in 2022? And will they continue their dream run in 2023?

Let's find out.

#1 Adani Power (200%)

With a 200% rise in share price, Adani Power was the top gainer of 2022.

Power stocks were on fire this year with the BSE Power index being the best-performing sector.

7 out of 11 power stocks rose over 25% over the year. Adani Power as at the top of the list, followed by Adani Transmission and Adani Green Energy.

The stock of Adani Power shot past other contenders as it beat analyst estimates and posted strong top line and bottom-line growth for all quarters. This was on the back of strong demand for electricity and long-standing dues received from three Rajasthan discoms.

The rally in the stock was further boosted as MSCI (Morgan Stanley Capital International) included Adani Power in its global index.

During the year, Adani Power also announced an amalgamation scheme for the merger of its six wholly owned subsidiaries with itself and acquired Essar Power MP.

However, after a stellar rally the stock corrected in the last few sessions, signalling profit-booking towards the year-end.

For the upcoming quarter, the company plans to expand its capacity in Central India through the acquisition of DB Power.

DB Power has long and medium-term power purchase agreements for 923.5 megawatts (MW) of its capacity, backed by fuel supply agreements with Coal India, and has been operating its facilities profitably.

#2 Bank of Baroda (127%)

Shares of Bank of Baroda (BoB) were on a roll in 2022.

The bank's shares rose by 127% throughout the year on the back of an improvement in financials and prospects.

In 2022, while there were broad-based gains in the banking pack, it was public sector banks that stole the show. State-owned banks gave investors the best returns in a decade.

For the September 2022 quarter, most PSU banks reported stellar earnings coupled with improvements in asset quality and rising credit growth numbers.

Bank of Baroda was one of them. The bank reported a 59% YoY increase in net profit for the quarter.

The lender improved its asset quality, with the gross non-performing assets (NPAs) coming down to 5.31% of the gross advances by the end of September 2022, from 8.11% in the year-ago period. Net NPAs fell to 1.16% from 2.83%.

In the last couple of years, the bank had seen pressure on its profitability due to provisioning costs on the back of poor asset quality. However, in 2022, its earnings increased through improved collections.

The bank has reported a steady improvement in its return ratios, with return on asset (RoA) and return on equity (RoE) inching up to 1% and 14.7% respectively.

Moreover, it has been able to gain credit market share in the public sector banking space, which now stands at 6.4%.

Going forward, the bank stands to benefit from the rise in credit demand in the county on the back of the government's thrust towards reviving capital spending in infrastructure.

#3 Adani Enterprises (126%)

Third on our list is Adani Enterprises with gains of 126%.

The stock of the Adani flagship group company was on a steep rise in 2022 as shares of its subsidiaries skyrocketed. The company also made multiple acquisitions throughout the year which further fuelled the rally.

Adani Group had six listed companies at the end of 2021. The number hit double digits as the conglomerate, acquired ACC, Ambuja Cements, and NDTV later.

Five of Adani Group stocks turned multibaggers in 2022.

In addition to Adani Enterprises, Adani Power soared 200% while Adani Total Gas turned a multibagger with 115%.

Adani Wilmar, which got listed in February 2022, surged 170% from its issue price of Rs 230, adding to the group's market cap. NDTV also turned a multibagger after its acquisition.

The contracts aside, though, vast volumes of taxpayer money, both as debt and investment, have fuelled Adani's rise. So much so that shares of Adani Enterprises have risen over 3,000% in the last five years.

Going forward, the company plans to expand its existing businesses. It has undertaken various projects across businesses that entail large capex. In the airport segment, AEL is expected to incur capex of around Rs 322 bn during FY23-FY25.

The company's total debt stands at nearly US$ 20 billion (bn). Of this, more than 30% of the loans are from state-owned banks. If the group ever goes into a default, it could wreak havoc on the banking system.

#4 The Indian Hotels Company (76%)

Fourth on the list is the Indian Hotels Company as it rose 76% in 2022 on the back of strong earnings and expansion plans. The company was the biggest beneficiary of the unlocking theme.

In the June 2022 quarter, Indian Hotels reported a consolidated net profit of Rs 1.7 bn as compared to a loss of Rs 2.8 bn in the year ago quarter.

The improved performance showed was amid a surge in demand as the occupancy and rates exceeded pre-Covid levels. The annual results also showed that losses were narrowed amid surge in revenues.

This further improved in the September 2022 quarter. The Tata Group-backed company reported a profit of Rs 1.2 bn, compared with a loss of Rs 1.2 bn in the same period last year. Strong demand in India and other key markets made the company return to profitability in the industry's traditionally weakest quarter.

IHCL has been implementing an aggressive growth strategy-Ahvaan 2025-that has seen the hotel major sign new hotels at a record rate while also trying to expand its margins at the same time.

In the financial year to date, the hospitality network has added nine new properties to its portfolio, including the recently inaugurated Sawai Man Mahal in Jaipur, Taj Wayanad Resort & Spa in Kerala, Vivanta Meghalaya in Shillong, and Vivanta in Ahmedabad.

It has also signed seven new hotels in the last three months.

On the back of this strategy, the management expects the company's stellar performance to continue in the coming months.

However, on the off chance, Covid-19 rears its ugly head again for a prolonged period, it could be in deep trouble.

#5 Federal Bank (67%)

Fifth on the list is Federal Bank.

The bank's stock price rose more than 60% during the year as its quarterly results beat analyst expectations. For the June 2022 quarter, the company reported a 64% YoY increase in net profit.

Then in the September 2022 quarter, the company reported its strongest quarter ever. The company's net profit rose by 53% YoY to Rs 7 bn on the back of healthy growth in both interest and other income streams.

Net interest income grew by 19% YoY and net interest margin (NIM) was at multi-quarter high of 3.6%. The company has given a loan growth guidance of 18-20% for the financial year 2023 while it has raised its NIM target by 5-10 basis points to 3.3%.

Its credit quality also remains resilient with one-time restructuring pool performing well.

In its recent business update, it said that its deposits have crossed a milestone of Rs 2 tn in the December 2022 quarter.

It has also redesigned its growth strategies and now is planning to change itself into next-gen private sector bank with digital tie-ups across assets, liabilities, and payments segments.

The bank's FinTech partnerships are in line with its branch-light, distribution-heavy strategy, which is expected to improve productivity.

Here are the top 20 gainers of the BSE 100 index.

Top Gainers in 2022 (BSE 100)

Adani Power Ltd.	200%
Bank Of Baroda	127%
Adani Enterprises Ltd.	126%
The Indian Hotels Company Ltd.	76%
The Federal Bank Ltd.	67%
Coal India Ltd.	54%
ITC Ltd.	52%
Mahindra & Mahindra Ltd.	49%
Bharat Electronics Ltd.	43%
Cholamandalam Investment and Finance Company Ltd.	39%
Ambuja Cements Ltd.	39%
Axis Bank Ltd.	38%
IndusInd Bank Ltd.	38%
NTPC Ltd.	34%
State Bank Of India	33%
Trent Ltd.	27%
Bharat Forge Ltd.	26%
AU Small Finance Bank Ltd.	26%
Eicher Motors Ltd.	25%
ICICI Bank Ltd.	20%

Source: Ace Equity

What does 2023 hold in store for Indian markets?

Indian share markets could continue to be volatile in 2023 as inflation, liquidity tightening, geopolitical tensions and rising Covid-19 cases continue to weigh on global equity markets.

However, Indian markets this year will be particularly influenced by a combination of factors like the impact of the pandemic and policy initiatives in the Union Budget.

If you plan to invest, be sure to invest in fundamentally strong stocks. Timing the market perfectly is nearly impossible, so the best strategy is to invest in stocks with good financials and prospects. Also ensure you have a margin of safety.

If you follow the tenets of value investing, you should be able to sail through the volatility.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation service here...