Let us just talk about New Year, new horizon theme. The Indian economy has been performing much better than other emerging markets. The market has been closing at new highs day after day. What is the story one should watch out for in 2024 in the Indian markets? Is that something that we should see that this run is going to continue for us?
Neeraj Chadawar: We are ending 2023 with a positive note and with the New Year, new horizon we are entering in 2024 with again a positive note. We continue to believe that the Indian economy will be in a bright spot of growth and continue to be a star performing economy in the emerging market basket. Adding to that, the entire corporate India balance sheet has improved significantly. All these events will have a bearing on the equity market. In any case, we firmly believe that the Indian economy is rightly placed and continues with the growth momentum and we continue to believe in double-digit returns. Given the valuations are stretched at current juncture, we believe that bottom-up theme is the best place to identify the stock based on the old economy plus export-oriented stock, so that is why we projected five different themes for 2024, which will have a bearing on the equity market.
You said five themes. Could you name some of the themes? What are you finding attractive in these five themes?
Our first theme is the manufacturing theme. We believe that India is on the cusp of the manufacturing upcycle and based on the policy continuity, the scenario of policy continuity has emerged in the last one month and we continue to believe that in the formation of the new government based on policy continuity, the capex theme will get more thrust. Based on this manufacturing theme, we identified four stocks for 2024. These are Pitti Engineering, Archean Chemical, Sansera Engineering and Amber Enterprises.
Our second theme is PSU banks. We believe that PSU banks are in a bright spot and they will continue their growth momentum in 2024 also and under the PSU banking theme, we like SBI. SBI is right place for growth lever along with that the asset quality trend has significantly improving and along with that, the bank foresees a good return ratios in upcoming years with the ROA, ROE of 1% and 16%, the stock is trading at a very attractive valuation. There is a huge amount of headroom available for the valuation to go on upside. So, we set a target of Rs 800 for SBI.
Along with that, we continue to believe in the NBFC space and under NBFC, we are recommending Manappuram Finance. Right now, the gold financing space is a very attractive space. As gold prices are up, end users of gold financing are also doing well. A good amount of AUM growth is visible in gold financing. Along with that, in Manappuram, the company is also de-risking their cyclical gold business to the non-gold financing business and we believe that this year the AUM growth will be in double digits.
Given the growth trajectory for next couple of years, the stock is trading at a very attractive valuation, so that is why we put this stock in our theme as an NBFC gold financing play with a target price of 205 in next one year.
Another theme is the consumption theme also which you are talking about. I believe you have picked out Westlife Foodworld. Would you be skewed towards something more on the luxury side or something more like Titan?
Neeraj Chadawar: Yes, consumption demand was weak in the last couple of quarters and we have not seen the recovery signal but the demand is expected to improve in 2024. Under this space, we like QSR as it is the fastest growing space under which Westlife Food falls. The company has set a vision to open close to 600 stores by FY27. Currently, they have 370 stores which majority of the stores are in tier I and metro cities.
Along with that, they are driving the agenda of premiumisation by launching their fried chicken and McCafe by increasing their average value per ticket size from 200 to 250 to more than that level. We believe that right now, valuations are very attractive to take a view of next one year, one can make a good amount of money in Westlife Food. We set the target of Rs 1000 for Westlife Food and we believe that in 2024 demand will revive as compared to what we have seen in the muted demand in 2023.
