We have been writing about our bullishness on Pharma/Agrochemicals exporting sector over next 4 years. We wrote Depreciation of Rupee, Cheap labor, India’s natural strength in knowledge-oriented sectors, Generics encouragement by world governments and intense pressure on innovator pharma/crop science companies to reduce cost are macro reasons for bullishness in this sector.
However, remember that we are strictly a stock picker and want supporting data to prove our macro case. This means impact of macro should also be seen on the topline and bottomline of companies operating in that sector otherwise any macro view is useless :-). So, we picked 10 companies from this Pharma/Agrochemicals exporting sector and checked growth they showed in Sales, EBIDTA and EPS for Q1 FY13 over Q1 Fy12.
We present below our finding.
If we check above table (arranged in order of sales growth) we note that positive macro is indeed getting reflected in results and sector may be getting ready for good growth in next few years.
Disc: We have vested interest in stocks/sectors mentioned above and have recommended to clients. Personal holding in Hikal and DIL.
Posts
7 comments:
The agrochemicals market (industry) is an important industry for the Indian economy. India has to ensure food security for population of 1.21 billion while facing reduction in cultivable land resource. With increasing population, demand for food grains is increasing at a faster pace as compared to its production. This necessitates the use of pesticides.
Moreover, every year, significant amount of crop yield is lost due to non usage of crop protection products. So the industry is bound to experience healthy growth rate in the years to come.
India is the fourth largest producer of agrochemicals globally, after United States, Japan and China. The Agrochemical Industry accounts for ~2% of the total Indian Chemical Industry.
industry report
jigs Hikal is having dream run. I must salute you for your unmatched capability to pick best promoters no wonder lot of my friends consider you encyclopedia of Indian stock market. But I do miss your stock specific recommendation on this blog :-(.
Bhavesh
Bhavesh,
Thanks but let me tell I did not do that well between Oct 2011 to Mar 2012 but all stocks I picked from Pharma/Agri outsourcing sector has given terrific return in last 6 months. Watch this sector over next 4 years and I am willing to bet this is next consumer like theme giving 5-10 times returns by 2016.
Because of regulatory and confidentiality reasons we can NOT discuss in detail about stocks :-(.
Jigs,
Congrats on your great picks n conviction.
I am keeping a close watch on Hikal n waiting for price to fall to 350 to load it in.
What's your take on Kaveri seeds post it's superb results.you wud hv definitely tracked this co.the promoter is from Velama community which is primarily an agricultural community of Telengana n as such shud be passionate towards his seed business. How is his reputation ,track record n future prospects of the company?
Pl advice urgently.
I'm a relatively new reader of this blog but want to say thanks for all your work and wish you every success in your new direction. Your thoughts and insights will be missed but the archives will continue being a valuable resource.
There is a large development prospective of international investment strategies in India’s Agrochemicals industry and the worldwide organizations managing in the industry can witness 5 to 10 annual growth in Indian as compared to that in other nations thereby making Indian an international hub for Agrochemicals.
Interesting Blog
Post a Comment