Any company will experience some turbulence during its growth phase and that is the current phase with Marico. This phase can last for a few quarters but if the management is smart enough it will figure out a way to keep growing. The main guy at Marico Mr Mariwala has created categories like saffola and parachute etc.
I think Marico will undergo some time correction till the time growth catches up. This is a company that should be kept in watchlist and bought at first signs of growth coming back.
What is your opinion about Aditya Birla Capital? I saw that you were evaluating its technicals during Nov 2019.
Aditya Birla group seems to have the knack of making sectoral leaders, viz. Vodafone Idea, Ultratech Cement, Aditya Birla Retail. Aditya Birla Capital already has large AMC & Life Insurance verticals. Do you think Kumar Mangalam Birla is capable of making Aditya Birla Capital as one of the largest and profitable NBFCs?
AB capital is present in some interesting areas in the financial segments. AMC remains an interesting business. But since it is a conglomerate, it might not get full valations.
Technically the stock price seems stuck in a range of 90-114.
Hello Dr. @hitesh2710, I would really like to know your views of Glenmark. The company seems to do a lot of things right (new launches, results beating estimates, balance sheet also seems decent to me), but stock keeps falling despite all the good news. The major negative point that i can see is the performance of US business (which you have also pointed out for a few other export-dependent companies as well). My question is, other than this US business disruption, is there anything else that Iām not seeing? And whatās your take on the future of the company?
sir what ur view on CARE Ratings and Indigo..both companies facing temporary hiccupsā¦
Indigo: recently impacted by Corona Virus and before that Engine issues
CARE: strict actions by authorities on rating companies after IL&FS issueā¦
sir what u think these are temporary hiccups or something structurally changingā¦?
Glenmark companyās products are top notch right from formulation to packaging and their sales force is quite incentivised. Thats all I can say about domestic business from personal experience.
Coming to company as a whole, I think a lot of these export focused (read US focussed) companies have sunk a lot of capital in the lure of pot of gold on the US side of generics. And this capital probably was invested considering much higher margins and now we find that there is intense price war in the US markets and hence now these capital allocation decisions in hindsight look poor. So along with de growth in profits, a lot of these have gone through /are undergoing de rating and hence the pain. Derating is a very painful thing to experience in investing just as re rating brings in multibaggers. Besides you never know which company is going to get slapped with form 483 and end up spoiling the whole picture. Hence my rantings against US focussed companies.
Most domestic companies are faring excellent both in terms of business and price appreciation. How long this music lasts needs to be seen but as of now a lot of them are doing okay.
@mparadkar Companies that keep delivering on market expectations can go up much beyond what a lot of investors think. And when there is added promise of future growth coming through, stock prices go up a lot. Same is the case with Bajaj F and Dmart. I personally find them expensive but after a chasm is crossed in stock prices, arguments about valuations hold no weightage. So who am I to question about the valuations? For those holding , its about enjoying and for those not holding its about trying to find the next winner.
@sanu1802 I dont track either indigo or care ratings.
@hitesh2710 bhai - in ref to your thoughts on Glenmark, donāt you feel market cap of about 10,000 Cr and current valuations are attractive enough to discount the negatives and offer a good risk reward?
Stock has already corrected a lot over last 2 years and Glenmark does have a very good and strong domestic portfolio too. I think pain for them has been USFDA issue and spending of money on NCEs.
@hitesh2710 Any views on P&G Health (Formerly Merck)? Trying to get some insight but latest AR isnt available and nor does they have con calls. I really dont know much but noticed that their India OTC portfolio is limited. Appreciate any information/views.
@hitesh2710@ayushmit
hi, after 2 bad quarters for roofing companies like everest, Hil, Vishaka etc do you see a turnaround coming in the business? as the monsoon was also very good rural demand might be back. and also they have corrected significantly from the top. your views would be helpful. thanks
Glenmark has been a laggard among other pharma names. The problem in pharma companies is that one has a list of big pharma companies to choose from depending upon individual triggers and I guess at current juncture it might be difficult for companies like glenmark to find favour with market participants.
Just to name a few, sun, lupin, alembic, torrent, cadila, dr reddys, aurobindo, glenmark, ajanta, wockhardt, alkem, all are fairly large companies. (I might have missed a couple of names but these are the ones that come immediately to mind) From among this group, Alembic, Torrent, dr reddys, ajanta (of late), alkem have managed to report flat/improving numbers. these would be first on the radar of investors.
At some point of time, glenmark with all its attributes might become a value buy but its difficult to accurately value pharma companies based on value investing. There its all about growth.
@btunuguntla Every time I have tried my hands at investing in these roofing sheet companies, I have burnt my fingers and hence have given up altogether on looking at these companies. At the most I look at charts of these companies to see any strength and trend change but as of now companies in the sector look weak.
Whatever I wrote for glenmark applies to most US facing pharma companies barring a few which also I enlisted. Same is the case with Sun Pharma.
I have been writing since more than 2 years now and sound like a broken reed to avoid the pharma sector particularly those having more revenues and profits from US geography and still I keep getting these queries. I think as long as people stop asking about these companies, they wont start performing.
All this gyaan aside, I think investors need to focus on which sector is in favour in the markets and try to find out good companies in the sector. Or else get the hands dirty and go for a bottoms up approach and find out companies which will perform so well (be it in any sector) that we get decent returns.
A stock that has gone down 30% or 50% or even more from its top is not necessarily a great stock to buy even if it is a sectoral leader. Once a sector loses its market favorite status, it often takes many years to make a comeback. Just have a look at the fate of infra, real estate, pharma etc to get an idea about the same thing,.
The really evergreen companies in India as of now are the top private sector banks, top NBFCs (read bajaj finance), consumer durables and FMCG. And we dont know when the music in these also is going to stop but as of now in the near future for next few years these seem okay.
To many friends stuck in such non performing stocks who ask my advice , I often tell them to just go ahead and buy hdfc bank and hope to recover losses or try and make profits. This is for those guys who dont track companies on a consistent basis and are buy and forget types. Some day this thesis also will fall flat but as of now it seems okay.
@hitesh2710 Hiteshji, Thank you, I enjoy reading your reply. If we look at the recent numbers by pharma especially domestic focused pharma, most of them reported solid numbers. If we look into each segment, the API division is the clear winner for most pharma companies registering robust growth. In fact some companies have benefited from supply side constraint (sartans). So my question is how much of the reported earning is sustainable earning and how much is one time kind of opportunity ? Isnāt it difficult to gauge the normalized earning stream of these drug companies and assign them multiple?
Dear Hitesh ji,
What is your view on Indian Hotels Company after recent result. To me, the result seemed very good but the market doesnāt seem to think so.
Hello @hitesh2710 Sir,
What are your views on Cochin Shipyard? Company has been posting robust results and seems like it is available at a discount when compared to its peers like Garden Reach which has runup quite a bit after its listing.
The growth in a lot of domestic pharma companies is due to higher sales of brandedformulation segment. You can see the data in results of alkem, jb chem, ipca, fdc etc. Most of these companies are growing higher than the Indian pharma market (IPM) which itself is growing at 8-10% currently. The companies listed have grown from 14-25% and outperformed the IPM growth. And hence the market fancy for them. (there will be other companies as well doing well in domestic space but i track these)
The benefits of sartans is for those companies which are largely into exports of APIs where again the NDMA issue has plagued a lot of producers.
Regarding the sustainability of growth in domestic pharma space, I think it will continue in near future because of all the govt schemes like ayushman, bharat, etc and higher affordability of patients who no longer sit at home waiting for their diseases to heal on their own, but promptly go to doctors and seek treatment. But here too market is very fragmented and there is intense competition but the companies doing well have done so because they have invested a lot of resources and manpower in the domestic business over past few years and now are reaping the benefits.
I would suggest you listen to or go through concall of these companies and you would get a sense of how the business is panning out.
@sarthakkumar19_ The changes implemented at Indian hotels in view of its vision 2022 are causing positive results but I think the kind of numbers it should have reported till date have not come through and this probably has caused market apathy. When I can get other companies growing at 15-25% or more consistently with much more asset light models why would I look at Indian hotels? I too was invested in it and it provided good protection during the market carnage as it did not fall much but once markets turned I exited it and got into other more interesting opportunities.
In relation to the auto cycle,what are your thoughts on Fiem industries vs varroc or minda?It is a smaller player and relatively undervalued compared to others.It does not face any EV threat(a part of Endurance faces EV threat).As the cycle turns would it not be a source of higher returns compared to other players like minda or varroc?
Or is its relative undervaluation justified due to the overhang of LED division?
Thanks
to avoid the pharma sector particularly those having more revenues and profits from US geography and still I keep getting these queries. I think as long as people stop asking about these companies, they wont start performing.