When we thought all event risk was behind us, when the market all thought the market should fly, the price action on mid-cap stock and small-cap stock yesterday was not so encouraging . So I look at the market and say that any market is ok that is tense about Trump’s tariffs, budget, MPC, revenue, anything is fine, the event is far better than fear.
Dipan Meta: The key issue here is the slowdown in GDP and slowdown in revenue and high valuations, and all of these events do not change that particular aspect. But with every day pass and a clever 100 points decline, I’m more and more hopeful, optimistic and positive. I was negative in many quarterly markets. But I think a lot of ratings are in a reasonable zone after such a sudden revision. And we’re seeing some improvements here and there. The budget in particular is very good, and interest rate reductions are measures taken in the right direction to avoid further slowing down GDP and company revenues, which will reflect better performance next 2-3 quarter. So, although I’m not as negative as weeks or months ago, we’re not out of the woods. There are more modifications available. But basically, things become more stable quickly.
So, what is the best way to scatter this kind of volatility and just sit and shuffle your portfolio?
Dipan Meta: First of all, this volatility and this fix we saw is really walking around the park. In other words, it’s very easy to process and manage. And if you’ve been on the market long enough, you should expect you to see this kind of period as well. The market has not always risen unilaterally. There is this revision period and they are great in terms of understanding the stocks you have purchased, correcting mistakes, restructuring your portfolio, and getting the balance right. So, from that point of view, I don’t think investors should be confused at all. This is essentially a learning experience for new investors and older investors like us.
Let’s come specifically to the sector rather than the sector and look at stocks. Stocks that are expensive and do not pass revenue should be sold even if they are revised about 30-40%. Otherwise, in this revenue season, look for gems that are surprised by the positive aspects and consider buying them with a reasonable rating.
So, where do you find these opportunities that have become more comfortable with ratings after the recent revisions game, following the ongoing growth in revenues?
Dipan Meta: Of course, that is one investment theme to follow, but the fact that consumption will undoubtedly improve also repeats the kind of tax cuts given to middle and low incomes. From that point of view, it is very positive for companies engaged in criticising spending like electrical appliances, such as air conditioning companies. Bluestar, Volta, Amber and Epak all had very good numbers and I thought every summer was warmer than before. You can also add a symphony to it, India’s largest air cooler company. Again, disclosure, we and our clients are invested in it. Even other appliances should do very well, given that it is a kind of discretionary spending from that perspective.
Travel and sightseeing are interesting. We saw what was going on in hotels and hotel companies in India. I thought the lemon tree came with a very good number of sets. There are great expansion programs that give you very high revenues, primarily through management agreements.
The Indian hotel also offers a very good number of sets and a very aggressive expansion plan. I like the numbers that come from Indigo, the airline, India’s largest airline.
When we remove the kind of damage given by forex losses, the underlying growth is largely intact and the capacity is expanding.
Most of them will be streaming in the next 12 months or so. So, like that, there are lots of pockets. From a safety standpoint, insurance and pharmaceutical companies also analyze it, and it is worth overweight.
So, if you go from sector to sector, there are many interesting stories, interesting stocks that are now coming with reasonable ratings, and growth could still be above the benchmark of 15-20%. Investor’s perspective.
Is it enough to say that Pharma was really a hit this revenue season?
Dipan Meta: Absolutely, it has been the best performance sector for the past 12 months, not just this revenue season. The numbers for the last two or three quarters were very impressive.
There are slight structural changes in the strength of competition in the US generic market. The industry’s overall compliance performance has certainly improved.
A few years ago, the US FDA took some action and it was easy to see the pharma stock dropping by 10%, 15%, and 20%.
All these events certainly came down. So I think compliance has improved. Many Indian pharmaceutical companies will also focus on the domestic health sector, which is very robust, as health costs within India are improving. I’m guessing it. Therefore, you are also banged in the middle of that particular stage.
Also, Indian medicines have gained market share and our competitiveness is clearly unfolding. So it definitely needs to be overweight and there are so many categories within it.
There are large formulations, CDMOs, companies focus on domestic formulations, and API players. And surprisingly, all these sub-segments of the Pharma industry have done everything, including APIs, when looking at it all in full this revenue season.
