Introduction
The start of the new year has brought many new investment opportunities in the Indian market, especially when many experts are bullish on our economy and many economies around us are literally crumbling. According to the S&P forecast, it is projected that India’s GDP will grow at the rate of 6.3% through 2030 and is to become the third largest economy by then. Some sectors are expected to play a key role in the growth of the economy in the coming decade. The details of the top sectors expected to do well in 2023 and a few key stocks in these sectors are mentioned below.
Read More – Use Online Return on Investment (ROI) Calculator for informed investment decisions
Table of Contents hide
1 Introduction
2 Best Sectors to Invest in 2023 India #1 Healthcare
3 Best Sectors to Invest in 2023 India #2 Information Technology
5 Best Sectors to Invest in 2023 India #4 Automobile Sector
6 Best Sectors to Invest in 2023 India #5 FMCG
7 Conclusion
8 FAQs
9 Other interesting reads
Best Sectors to Invest in 2023 India #1 Healthcare
The healthcare sector has been in the news for quite a long time, especially since the pandemic. The healthcare sector is quite broad and includes various industries like the medical equipment industry, pharmaceutical industry, diagnostic industry, hospitals, medical tourism, clinical trials, health insurance, and more. This sector has seen a growth of 22% CAGR from 2016 and the pandemic gave it a boost to grow at 39% CAGR. The healthcare sector is expected to be worth US$ 372 billion by 2022 and it has also seen one of the highest FDIs of approximately US$ 19.90 billion from April 2000 to June 2022.
The Union Budget of 22-23 saw an allocation of US$ 11.28 billion (Rs. 86,200 crores) to the Ministry of Health and Family Welfare. The central government is also planning to introduce a credit incentive program to the tune of Rs. 500 billion (US$ 6.8 billion) to boost the healthcare infrastructure in the country.
Top stocks in the healthcare industry as per market capitalization
- Apollo Hospitals
This hospital was established in 1983 by Dr. Prathap C Reddy who is also known as the architect of modern healthcare in the country. Apollo Hospitals is a leading name as Asia’s foremost integrated healthcare service provider and has a presence in areas like the healthcare ecosystem, including Hospitals, Pharmacies,
Primary Care & Diagnostic Clinics, and several Retail Health models. The key details of the company are tabled below,
| Category | Details |
| Market Capitalization | Rs. 61,615 crores |
| PE Ratio | 73.4 |
| Return on Equity | 21.60% (March 22) |
| Debt Equity Ratio | 0.47 (March 22) |
| Promotor’s Holdings | 29.33% |
| Share price | Rs. 4,285 |
| Dividend Yield | 0.27% |
- Max Healthcare
This is another big name in the chain of hospitals across the country. Max Healthcare hospitals are primarily engaged in providing healthcare services through their multi-specialty hospitals, primary care clinics, medical centers, super-specialty hospitals, etc. The key details of the company are tabled below,
| Category | Details |
| Market Capitalization | Rs. 42,561 crores |
| PE Ratio | 45.1 |
| Return on Equity | 10.19% (March 22) |
| Debt Equity Ratio | 0.12 (March 22) |
| Promotor’s Holdings | 23.78% |
| Share price | Rs. 438 |
| Dividend Yield | 0.00% |
- Dr. Lal Pathlabs
Dr. Lal Pathlabs is a leading name in diagnostic services across the country. The company provides core testing, patient diagnosis, prevention, monitoring, and treatment of disease and other health conditions. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 17,553 crores |
| PE Ratio | 70.8 |
| Return on Equity | 25.1% (March 22) |
| Debt Equity Ratio | 0.24 (March 22) |
| Promotor’s Holdings | 55.23% |
| Share price | Rs. 2,105 |
| Dividend Yield | 0.57% |
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Best Sectors to Invest in 2023 India #2 Information Technology
The IT-BMP (Information Technology and Business Process Management Sector account for almost 9.3% of the Indian GDP and 56% of the global outsourcing market. This industry is ever-developing and shaping the face of the modern world. Today information technology includes wide areas like Artificial Intelligence, Data Analytics, Data Science, and Cloud Computing.
The dominance of artificial intelligence is fast increasing in every field whether it is education, healthcare, the Banking sector, insurance, e-commerce, the auto sector, etc. The Indian IT Industry’s revenue reached the US$ 227 billion mark in FY 22 growing at a pace of 15.5% YoY.
his sector has seen increasing demand for AI in the domestic as well as international markets. 14.91% of the FDI investment in the country between April 2000 and September 2022 was attributed to this sector.
Top stocks in IT industry in terms of market capitalization
- TCS Limited
TCS is the biggest company in the Tata Group. The company was incorporated in 1995 and is the biggest company in the sector with the highest market capitalization, being one of the top companies in the country. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 12,30,576 crores |
| PE Ratio | 30.2 |
| Return on Equity | 43.6% (March 22) |
| Debt Equity Ratio | 0.00 (March 22) |
| Promotor’s Holdings | 72.30% |
| Share price | Rs. 3,363.10 |
| Dividend Yield | 1.28% |
- Infosys Limited
Infosys is a name that resonates with the face of the Indian IT industry on the global platform. This company was incorporated in the year 1981 and is the second-largest information technology company in the country. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 63,7,190 crores |
| PE Ratio | 26.9 |
| Return on Equity | 29% (March 22) |
| Debt Equity Ratio | 0.00 (March 22) |
| Promotor’s Holdings | 15.16% |
| Share price | Rs. 1,526 |
| Dividend Yield | 2.03% |
- HCL Technologies Limited
HCL is among the top 5 names in Indian IT services and was incorporated in 1999. The company is engaged in computer programming, consultancy, and related activities. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 3,00,620 crores |
| PE Ratio | 20.8 |
| Return on Equity | 22% (March 22) |
| Debt Equity Ratio | 0.06 (March 22) |
| Promotor’s Holdings | 60.72% |
| Share price | Rs. 1,107.80 |
| Dividend Yield | 4.33% |
Best Sectors to Invest in 2023 India #3 Banking Financial Services & Insurance Sector(BFSI)
The Banking, Finance Services, and Insurance sector in the country has been in the news due to many reasons like the rising NPAs, inflation, and the possibility of a recession in major economies across the world. Amidst all this grave news, the Indian BFSI sector is like a beacon as the monetary policies in the country have been able to manage inflation without damaging the growth of the economy.
At the same time, the NPAs in the country have been largely reduced with robust RBI policies and various legislations. Moreover, there has been a significant increase in growth of the bank credits. During FY 16-22, the bank credits increased at 0.62% CAGR while in September 2022 and October 2022, bank credits grew by 16.5% and 18%.
Top stocks in BFSI Sector in terms of market cap
- HDFC Bank
HDFC Bank is the largest bank in the country and was incorporated in 1994. The bank is engaged in many banking and financial services including retail banking, wholesale banking, and treasury operations. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 9,26,271 crores |
| PE Ratio | 21.1 |
| Return on Equity | 16.6% (March 22) |
| Debt Equity Ratio | – |
| Promotor’s Holdings | 25.60% |
| Share price | Rs. 1,660.95 |
| Dividend Yield | 0.93% |
- Bajaj Finance
This is a leading NBFC company that is engaged in the business of lending. The company has a diversified lending portfolio that includes retail lending, SME lending as well as to commercial customers. They have a huge presence in urban as well as rural areas in India. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 3,54,806 crores |
| PE Ratio | 35.8 |
| Return on Equity | 17.5% (March 22) |
| Debt Equity Ratio | – |
| Promotor’s Holdings | 55.91% |
| Share price | Rs. 5,860.40 |
| Dividend Yield | 0.34% |
- SBI
SBI is the largest public sector bank and the third largest bank in the country as well as the oldest bank in India with a history of over 200 years. The key details of this bank are tabled below.
| Category | Details |
| Market Capitalization | Rs. 5,28,516 crores |
| PE Ratio | 12.8 |
| Return on Equity | 12.2% (March 22) |
| Debt Equity Ratio | – |
| Promotor’s Holdings | 57.50% |
| Share price | Rs. 592.20 |
| Dividend Yield | 1.20% |
Best Sectors to Invest in 2023 India #4 Automobile Sector
Auto stocks constitute to be approximately 6.4% of the GDP but were one of the worst-hit sectors even before the pandemic. The pandemic added to its woes and even major companies saw a sharp decrease in their sales. However, this sector is now seeing a steep recovery and the demand for automobiles is fast improving.
This sector includes the automobiles as well as auto components sector which is also a growing market on the backdrop of growing demand for automobiles, especially due to the growing middle-class income and the young population of India. Furthermore, India’s push into the EV sector in the country is also fuelling the demand for the sector as a whole.
Top companies in auto sector as per market capitalization
- Maruti Suzuki
The company was established as a joint venture between the Government of India and Suzuki Motors Corporation (SMC) in the year 1981 and became a subsidiary of SMC in 2002. The company is involved in the manufacture, purchase, and sale of motor vehicles and their components and parts. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 2,54,949.48 crores |
| PE Ratio | 42 |
| Return on Equity | 7.25 (March 22) |
| Debt Equity Ratio | 0.01 (March 22) |
| Promotor’s Holdings | 56.37% |
| Share price | Rs. 8,439.80 |
| Dividend Yield | 0.71% |
- M & M
Mahindra and Mahindra Limited is the second-largest company in terms of market capitalization. The company has its presence in many segments like 3-wheelers, 2-wheelers, passenger vehicles, commercial vehicles, tractors, and earthmovers. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 1,63,486.95 crores |
| PE Ratio | 1936 |
| Return on Equity | 14.2 (March 22) |
| Debt Equity Ratio | 0.17 (March 22) |
| Promotor’s Holdings | 19.38% |
| Share price | Rs. 1315 |
| Dividend Yield | 0.88% |
- Tata Motors
Tata Motors is a very well-known name in the auto industry and has a huge global presence. The company is part of the Tata group and offers a wide range of vehicles ranging from passenger cars, SUVs, trucks, buses, and defense vehicles. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 1,44,669 crores |
| PE Ratio | – |
| Return on Equity | -22.3 (March 22) |
| Debt Equity Ratio | 3.14 (March 22) |
| Promotor’s Holdings | 46.39% |
| Share price | Rs. 403.15 |
| Dividend Yield | 0.00% |
Best Sectors to Invest in 2023 India #5 FMCG
The FMCG sector is one of the most resilient sectors of the economy. It is also known as the defensive sector that one can bet on even in times of recession. India’s FMCG sector is the fourth largest sector in the economy and comprises three main segments namely, food and beverages (19% of the sector), healthcare(31% of the sector), and household and personal care (remaining 50% share of the sector).
This sector is expected to grow at a CAGR of 14.9% to reach up to US$ 220 billion by FY 2025. The demand for this sector is now coming from the remotest parts of the country which has led to huge investments by industry giants like Dabur, Britannia, Nestle, etc. in Tier 4 and Tier 5 regions. The growth in this sector may be relatively slow but this sector is a reliable bet to have more or less stable returns in a long-term portfolio.
Top stocks in FMCG in terms of market capitalization
- Hindustan Unilever
HUL is a very well-known name in the Indian FMCG market. A few key details of this industry giant are tabled below.
| Category | Details |
| Market Capitalization | Rs. 6,04,315 crores |
| PE Ratio | -61.1 |
| Return on Equity | 18.4% (March 22) |
| Debt Equity Ratio | 0.00 (March 22) |
| Promotor’s Holdings | 61.90% |
| Share price | Rs. 2,548.75 |
| Dividend Yield | 1.32% |
- Dabur
Dabur is a huge company that has a diverse range of products from the FMCG category. The key details of this company are mentioned below.
| Category | Details |
| Market Capitalization | Rs. 1,00,406 crores |
| PE Ratio | 56 |
| Return on Equity | 22.5% (March 22) |
| Debt Equity Ratio | 0.11 (March 22) |
| Promotor’s Holdings | 66.24% |
| Share price | Rs. 566 |
| Dividend Yield | 0.92% |
- Nestle
Nestle is one of the largest food companies in the world when measured in terms of revenue or other parameters. The company is a Swiss conglomerate having a worldwide presence. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 1,85,196 crores |
| PE Ratio | 79.0 |
| Return on Equity | 113% (March 22) |
| Debt Equity Ratio | 0.02 (December 21) |
| Promotor’s Holdings | 62.76% |
| Share price | Rs. 19,200.05 |
| Dividend Yield | 1.04% |
Conclusion
Sector and industry analysis are one of the most critical factors while evaluating a stock and also part of the fundamental analysis of the stock. There have been many cases where fundamentally strong stocks have performed poorly due to the sector as a whole not performing well. Therefore, understanding the future of the sector and its contribution to the economy can help investors create a profitable portfolio in the long term.
FAQs
1. What are the steps involved in evaluating a sector?
A. Some of the crucial steps involved in evaluating a sector include the past performance of the sector, the size of the sector and its contribution to the economy, the nature of the sector (defensive or high beta stocks), key developments in the sector, government policies, etc.
2. Can a stock perform better even if the sector as a whole may be underperforming?
A. Yes, there may be a case of a particular stock performing better despite the sector it belongs to underperforming. This can be due to factors like favourable news related to the company that pushes demand for the product or strategic alliance with significant partners that project a favourable long-term view for the company’s business, etc.
3. What are the components of analysing a company?
A. The key components of analysing a company include analysing the company profile, key financial ratios, demand and supply factors of the company and the sector as a whole, sector analysis, competition in the sector, and economic analysis.
4. What other sectors can investors bet on in 2023?
A. The other favourable sectors that investors can bet on in 2023 include defence, renewable energy sector, infrastructure, and capital goods.
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I'm an enthusiast with a deep understanding of the Indian market, particularly in sectors like healthcare, information technology (IT), banking and financial services, automobile, and fast-moving consumer goods (FMCG). My expertise is grounded in both theoretical knowledge and real-world application, making me well-equipped to guide you through the nuances of the investment landscape.
Healthcare Sector: The healthcare sector in India has witnessed substantial growth, especially post-pandemic. With a Compound Annual Growth Rate (CAGR) of 22% from 2016 and a boost to 39% CAGR during the pandemic, it is projected to be worth US$ 372 billion by 2022. The Union Budget of 22-23 allocated US$ 11.28 billion to the Ministry of Health and Family Welfare, with plans for a credit incentive program of Rs. 500 billion (US$ 6.8 billion) to enhance healthcare infrastructure. Top stocks in this sector include Apollo Hospitals, Max Healthcare, and Dr. Lal Pathlabs.
Information Technology (IT) Sector: The IT-BMP sector contributes almost 9.3% to the Indian GDP and dominates the global outsourcing market with a 56% share. Revenue in FY 22 reached US$ 227 billion, growing at a pace of 15.5% YoY. The sector has seen significant demand for Artificial Intelligence (AI) in both domestic and international markets. Key stocks include TCS Limited, Infosys Limited, and HCL Technologies Limited.
Banking Financial Services & Insurance (BFSI) Sector: Despite global economic challenges, the Indian BFSI sector stands out with effective management of inflation and reduced Non-Performing Assets (NPAs). Bank credits have grown, and top stocks in this sector include HDFC Bank, Bajaj Finance, and SBI.
Automobile Sector: Constituting about 6.4% of the GDP, the automobile sector faced challenges, especially during the pandemic. However, it is now experiencing a recovery, driven by increased demand, especially in the electric vehicle (EV) segment. Key companies include Maruti Suzuki, Mahindra and Mahindra Limited, and Tata Motors.
Fast-Moving Consumer Goods (FMCG) Sector: The FMCG sector is considered resilient and defensive, comprising segments like food and beverages, healthcare, and household and personal care. Projected to grow at a CAGR of 14.9% to reach US$ 220 billion by FY 2025, top stocks include Hindustan Unilever, Dabur, and Nestle.
Conclusion: Sector and industry analysis are crucial for evaluating stocks and forming a profitable portfolio. Understanding a sector's past performance, contribution to the economy, and future prospects is essential for informed investment decisions.
FAQs:
- Steps in evaluating a sector: Past performance, size, nature, key developments, and government policies.
- Stock performance vs. sector performance: Yes, a stock can outperform despite sector underperformance due to specific factors.
- Components of analyzing a company: Company profile, financial ratios, demand and supply factors, sector and economic analysis.
- Other favorable sectors in 2023: Defense, renewable energy, infrastructure, and capital goods.
Invest wisely in 2023!
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