The 5 Biggest Gainers of 2023. Will Their Dream Run End in 2024?

It would be an understatement to say that the Indian stock market has been volatile in 2023.

After the carnage of 2022 triggered by the war in Ukraine and followed up with the fastest interest rate hike cycle in the US, investors had hoped for a more peaceful year.

Well, 2023 has been less harmful to portfolios of retail investors compared to 2022 but it has not been a pleasant year. This is despite the index soaring to new highs and midcaps and smallcaps breaking records on their way up.

The main reason why things haven't been pleasant in the market this year boils down to one word: Unpredictability.

While handling volatility is difficult, it's possible to adapt to it and formulate strategies to counter it. Indeed, some shrewd traders made a ton of profits in 2022 correctly riding the waves of the market.

But 2023 has been different. It's been next to impossible to figure out what the market will do next.

At the start of the year no one predicted the Hindenburg-Adani saga. No one predicted the US banking crisis. No one predicted the sharp recovery in the stock market. No one predicted the latest war in the West Asia. And no one predicted interest rates would remain in a state of 'higher for longer'.

2023 has been a tough year to make money in the stock market for most investors. But for some investors there is a silver lining. This is in the form of spectacular returns from specific stocks that have provided relief to their portfolios.

In fact, some opportunistic investors have taken the risk to remain invested in these stocks and make them a large part of their portfolio. This strategy, though very risky, has paid off big time as these stocks have soared to new highs.

In this article, we will look at the top five of these stocks from the BSE 100. This is to emphasise the fact that these are not smallcaps or penny stocks. All five are very well known names.

#1 Zomato

We willing to stick out neck out and say that the number of people last year who predicted Zomato would make this list is close to zero.

Back in 2022, this was perhaps one of the most hated stock on the market, if not the most hated. It had become a dreaded meme stock.

Fast forward to October 2023 and the stock is up 84% since the start of the year.

Zomato's share price performance reminds us of the following quote...

• Many shall be restored that now are fallen and many shall fall that now are in honor.

Zomato had fallen and has now been restored but what about 2024?

The key to answering this question will be in the company's improving operating performance.

If that is affected then watch out. The stock could fall again.

#2 Cholamandalam Investment and Finance Company

This is another unlikely name on this list. Not that it's a bad company. Quite the contrary.

It's just that among the list of popular stocks in the NBFC space, Cholamandalam Investment and Finance is a recent entrant. The stock is up 74% since the start of this year.

The company was in the news recently for it's fund raising plan. Cholamandalam Investment and Finance initiated a Rs 40 bn QIP, with Rs 20 bn in equity and mandatory conversion. This shows the company is ready for its next leg of growth.

It's certainly on a roll at the moment. In FY23, it's net interest income was up 22.1% YoY and it's net interest margin climbed to 6.6%. It's net profit was up 23.7% YoY.

The company had a good capital adequacy ratio of 17.1% at the end of FY23. However, it's advances for the year was up 41.4% YoY. No wonder it's raising capital for more growth.

What about 2024?

Well it's continued uptrend will depend how it handles growth from here. It's NPAs have been declining steadily but they aren't yet at a very comfortable level.

Any deterioration on this front will be a negative for this stock.

#3 Tata Motors

It's the darling of Dalal Street at the moment.

The stock has been on an up trend for quite a while. In fact, Tata Motors is up 63% since the start of this year. There are three main reasons for the stock's performance.

First, the company continues to dominate the Indian EV space.

We believe it's now safe to say that Tata Motors is slowly but surely changing how the world looks at India when it comes to technology.

As the world transitions from conventional vehicles to EVs, Tata Motors will make a name for itself globally, just as it has already done in India.

Second, we have the improving fundamentals of the company.

The company become profitable again in FY23 after posting what seemed like never ending losses.

The sales growth has been solid over the last few years. It's operating margins have also been improving steadily.

The cash flow from operations, which is close to double the number it was just four years ago.

The only concern is debt. The company's debt to equity is 2. But that won't be a problem as long as the cash keeps flowing in

Third, is the Tata Technologies IPO. It's the key short term trigger for the stock. The company recently issued an addendum to the IPO.

What does 2024 have in store for the stock?

Well it's hard to argue against the bulls in the case of this stock. But it's important to not get carried away with the euphoria.

One bad quarterly result and sentiment could change for the worse.

#4 Lupin

Lupin is one of India's biggest pharma companies and is among the top 10 generic companies in the world.

It's recent performance on the bourses has been excellent. The stock is up 58% since the start of this year. For a technical perspective on the stock read this article.

It started its business in 1968 and a rich history over five decades. Lupin has established itself as a global player in the industry.

The company's focus areas are research, development, manufacturing, and marketing of a wide range of generic and branded pharmaceutical products. Through its robust distribution network, it serves patients in over 100 countries, providing affordable drugs.

The major reason for Lupin's stock price performance in 2023 boils down to what is known as revision to the mean. You see back in 2022, almost everything that could go wrong did go wrong for the stock.

The covid boom was over. It made a loss in FY22. FIIs were selling. There was a senior management change. The USFDA sent a warning letter. And there was the case of the recall of Rifampin Capsules.

Things have improved since then and those investors brave enough to take the plunge are laughing all the way to the bank.

What about 2024?

Well, the company will have to keep up with the recent good results if it has to maintain the momentum of the stock.

Pharma is an inherently unpredictable sector. It's possible the company could find itself in trouble as it did last year.

Otherwise, the stock is clearly on its way up.

#5 Trent

The Tata group's retail stock is up 56% since the start of this year.

Trent operates retail stores under the brand names Westside, Zudio, Star, and Landmark.

There's no way to sugarcoat this. It's one of the most overvalued stocks in the market right now with a PE ratio of 197.

The reason for the stock's popularity is the strong quarterly results it has been delivering and the company's ambitious expansion plans. It's revenue and net profit growth CAGR was 26.3% and 32.9%, respectively, over the last five years.

Although the company's financial performance is improving, it is important to keep an eye on the debt, given Trent's rapid expansion plans.

Can the bull run continue in 2024?

This will all depend on the company delivering on its promises on the financials as well as it's expansion plans. And it needs to do this without straining its balance sheet.

Investors are expecting the moon from this stock. It's best to exercise some caution.

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 services here...