Thursday, August 16, 2012
Q1 FY13 - Results Review
We have seen end of Q1 FY13 results season and now is time to look at sectors we track.
Export oriented - Pharma/Crop Science/Engineering/Defense:
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 has opened up probably new IT (a la year 1996-2000) like sunrise sector in above industries. We don’t want to miss this rally started in 2012 and probably continue up to 2016 so our strategy will be to Buy and Sell stocks in these sectors over next 4 years based on signals generated by our mathematical model to maximize returns. Those who do not want to continue to track like us can buy stock from these sectors and hold for 4 years - up to Q1 2016 and we hope we will see multibaggers. When we wrote buying Consumer Appliances and Agriculture sector in 2009 - See old post on ttk here and on coromandel here very few people could believe they could be multibagger :-)).
Ranbaxy/Hikal/AIA Engineering/Astra Micro/Vivimed/DIL etc. are some of the companies we track. All these companies have given good sales jump YoY in Q1 Fy13 results giving strength to our bullish outlook for this sector.
Agri Commodity (Tea/Sugar/Fertilizers/Agrochemicals):
Rising global population, increasing middle class consumption in EMs and extreme global weather patterns seen points to strong agri commodities prices worldwide over next 2-3 years. We are listening about Indian Tea prices to rise 40-50% in next 6-8 months. Similarly, Sugar prices have started rising even when supply is more than demand. Increasing productivity for Agro commodities will mean higher demand for Fertilizers and Agrochemicals.
Sugar stocks are overbought according to us so we will wait for them to cool down. Best 2 quarters of Tea sector are Q2 and Q3 so we may buy them ahead of Q2 results. Similarly, best quarter for Fertilisers is Q2 so we may also add them ahead of Q2.
Goodricke/Balrampur/Dhampur/Coromandel/PI Ind/Sabero etc. are some of the companies we track. Given seasonal nature of their results we are NOT going by their performance in Q1 FY13.
After holding for almost a year we sold Tyre Company we held as company did not declare result as per our expectations. However, We continue to hold Sheet Metal company we bought last quarter supplying to Non-Maruti Makers.
Automobile sales is zooming YoY since 2009 which is why we have lot of NBFCs financing vehicles showing solid growth in Q1 Fy13. We are yet to see peak in Auto sales, which means these NBFCs will continue to grow over next 1 year minimum. We also track NBFC focusing on Wholesale/Structured finance where NIMs are very high due to niche area they operate in. We think one can buy any one NBFC with good promoters and ride the boom for next 1 year.
Chola/Bajaj/MMF/Sundram Fin/Future Cap etc. are some of the companies we track.
Disc: We have vested interest in stocks/sectors mentioned above and have recommended to clients. Personal holding in Hikal, AIA Engineering, DIL. Our Firm's holding in Astra Micro and Saraswati. Family members hold Coromandel and Astra Micro as on day of writing.