The whole chemicals space esp the speciality chemicals space is revving up especially due to the Chinese disruption in chemicals space due to strict pollution control norms. Most chemicals companies have posted very good numbers continuing the results trend since past quarter.
You can have a look at Nocil in rubber chemicals (q2 presentation and q2 concall available on researchbytes gives a good idea about the business), deepak nitrite (phenol plant has started production since 1 nov 2018 and shouldl reflect in strong numbers for 5 months of fy 19 beginning nov.) Besides these aarti has posted quite good results and stock price has gone up in tandem with that.
Another alternate safer way to play the theme I think is to go for an ancillary play GMM Pfaudler. It supplies glass lined vessels to pharma, speciality chem and agrochem and has its order book filled to the brim. (again q2 concall gives an idea about their order book status) While individual chemicals prices may be difficult to track and predict the capex going on in the sector due to strong sectoral tailwind would benefit GMM atleast for next 2 years or more. I attended the fy 18 AGM and was quite impressed with the management. I have invested in it during past few months and it features in my buy list on declines.
The speciality chemicals space is a sector having a good time due to various factors and it should not be construed as a buy and forget kind of space. If and when China makes a comeback in the space, some amount of fancy in the sector can ebb away. Besides that we seem to be on a weak wicket in terms of overall market scenario as I have been re iterating time and again. So one has to be careful about making too many bullish projections in any sector and chasing prices.
PI Inds has reported decent topline growth for q2 fy 19. But looking at overall markets and the valuations, it seems most of the numbers seem to be priced in currently. There might be some minor moves up or down but overall I expect the stock to remain largely range bound.
Valuation wise I cant see too much re rating happening in PI. So from here on returns can mirror earnings growth and one should position oneself accordingly.
A good company to compare with PI could be Bharat Rasayan which too seems to be posting decent numbers of late. I dont hold either of them. (I hold very little these days so that would be standard disclosure to lot of companies. )
I would like your views on the following companies from a 7-10 year perspective. Along with your views on valuations taking into account the long time horizon:) and of course assuming no black swan occurs with regards to the businesses.
Hi Hitesh ji
What are your views on manappuram finance
It doesnāt have asset liability issue
It showed good growth in last quarter
Itās microfinace has turned around
Itās available at single digit Pe of 9
Management is expecting 20% growth
Good dividend yield
Good management track record
But market is not ready to give higher valuations
Am i missing anything
I am holding it since 1 year with loss of 15%
Itās 18% of my portfolio
I would highly appreciate your views
Thanks a lot
All the three companies listed namely wabco, havells and cera have created tremendous wealth over the past few years and remain great companies. Coming to the query about 7-10 years I think there is a high probability of them surviving for more than these many years and thats all I can say about them.
Looking so much into the distant future is beyond me especially in such disruptive times.
Of the 3, Havells seems to be the best placed looking at the B2C business and management smarts in introducing newer range of products and making them suceed.
Cera and all other tiles manufacturers are suffering from increased input prices which a lot of them are not able to pass on to end customers. And to top it all, there is a real slump in real estate which could get even worse with the funding issues going on and the huge unsold inventory everywhere.
Wabco I dont track too closely so not much idea about it.
Regarding valuations and prospects I think beauty lies in the eyes of the beholders especially if one has a horizon of next 7-10 years. I dont track the fundamentals of any of these too closely but have always admired the way Havells has grown its business after a brief misadventure in the form of Sylvannia acquisition.
I had earlier too given my views on Mannapuram. With better results and microfinance turning around maybe its time I should have a relook. If facts change I change my views and stance. There is no place for an investor to be too rigid in his views.
At the current juncture my preference in financials is for well managed private banks which I think would benefit from the current imbroglio in the NBFC sector. But there too I feel its no use being too hasty. I am in observation mode only currently and keeping tabs on few banks where I feel there is a possibility of rerating and earnings growth both. DCB bank looks quite good but again as said before its only in my watchlist. The recent concall and the consistent results over the past few quarters and years provide some confidence in the bankās prospects. disc: no holding in any banks.
@hitesh2710 Sir, your views on Galaxy Surfactants Ltd. Made a huge buzz at the time of subscription and listing. From there on it has seen downhill and trading sideways ~1150-1200.
I couldnāt find a topic on this stock to have a discussion. Hence asking here
Thanks Hiteshi for your opinion.My current plan is to give one more year to manappuram as I think next few quarters will be better and it may go back to its initial high .And thereafter it will depend on the growth .Recently I visited few small towns in Maharashtra for family function and was surprised to see manappuram stores there .I asked local farmers and they mentioned that they are always in need of money before the crop is ready
Most of them take gold loans from manappuran or local gold lenders .The rate of interest from local non branded lenders is high but most of them donāt understand much about the interest rate complexity and they prefer the lender who can give more money for their gold .
Also they donāt like much paper work and wants quick money .I guess gold loan in India has a place unlike western countries.
The recent turmoil in nbfc has taught me that any business model can be disrupted and fear intensifies multifold in BEAR market .But on positive note this creates lot of opportunities as good companies also crashes with bad ones.
I learnt a lot of lessons in my short period in equities.I started in bull run and thought equities always go up .In just around one year I saw both bear and bull run .
We are lucky to have u all experienced and intelligent guys who are guiding us in the learning process and giving us a neutral unbiased opinions and views .
No one has a crystal ball view and no one knows all the pieces of jigsaw puzzle
Hence this forum helps in joining those pieces and make an attempt to solve the jigsaw with teamwork
Thanks again
U r a legend
Hi Hitesh, I have below 3 companies in watchlist. I have to rate them by some metrics in order to choose one of them for investment. Hexaware, Shaily engineering plastic and Garware technical fibers are the 3 companies. Thought they are not in same domain, I would like to understand from you what kind of metrics you would be choosing to compare them. Thanks in advance.
I dont have much idea about hexaware or garware technical fibers.
I had been to shaily engg factory around 2 years back and was impressed with their outfit. They manufacture top notch quality products for the likes of Ikea and others. They are in the process of expansion according to recent concall and have an ambitious growth target going ahead. For further details you can go through the concall details and annual report. Its one company where I feel runway for growth is quite long.
Hi missed your post but except the last 2 I strongly feel itās a buy And forget portfolio construction for next 5 years and your portfolio will more than double without calculating the dividend. Ideal way will be to distribute equal amount in all those stocks. Hope you had done it.
Hdfc amc and hdfc life are very exciting but not tested ones. I prefer gruh over them.
Any views on INTELLECT DESIGN, it seems at inflection point along with tailwinds like rupee depreciation. I remember Ajit Jain saying couple of years back, once company reaches 200mn USD revenue per annum( around 50mnUSD per Querter) it will be in Auto run and no looking back. They achieved this in Q2FY19, 50+ MN USD and most of the increase in revenue is going to the bottom line now. They seems to be entering the big league in this business winning big deals with long term contracts. Stock also hitting 52 week high in weak market any technical thing to particularly look into here.
I dont track Intellect too closely. I track Nucleus and it seems after a long time the company seems to be posting some growth. They recently did buyback too. And in last concall some investors were after the management for a repeat buyback too. If it can continue its growth numbers it can be very interesting looking at cash on books and the valuations on price to sales basis. No holding in nucleus as yet.
One query on technicals. If Nifty turns downward from this level of 10950, can we consider H&S pattern being formed on Nifty as complete or is it necessary for Nifty to reach previous shoulder of about 11100 or so for completeness of H&S pattern?
so that would be standard disclosure to lot of companies. )