Consumer durables, a key consumer category, bore the brunt of Covid as companies lost two business seasons in FY21 and FY22 to lockdowns and supply disruptions. As demand took a hit, the sector lost its sheen, especially white goods and small appliances, leaving investors disappointed over the last 2 years amid a soaring market.
Apart from corporate capex, production linked incentive (PLI) of the government and China-plus-one strategy, the manufacturing space is also undergoing a transition. Companies that have already invested or are now investing to meet the above demand triggers are readying themselves for future growth. This capital goods stock is one such superior player.
The stock has corrected 15% since our recommendation. We initiated our call just a day before the Q4FY22 results when the industry scenario was getting significantly better for the General Insurance companies post Covid.
In India too, industrial sector stocks have been doing much better in the recent past despite a sharp market correction, on the hope of an investment-led growth. We are picking up a major player from the industrial space that has its share of business from the US market as well, while transforming itself to a products and technology player.
A few weeks ago, Warren Buffett’s Berkshire Hathaway announced the acquisition of Alleghany Corporation with a $11.6 billion deal, its largest buy-out deal in six years. The decision has come at a time when the general insurance industry has faced headwinds in the last 2-3 years. But there is no one better than Buffett to understand the prospects and valuation of an insurance company. Berkshire Hathaway owes its long-term wealth creation success to excellent underwriting skills in its insurance subsidiaries and clever usage of the float from insurance to build a long-term equity portfolio.
This is an update on a stock that is in our Buy list, owing to recent developments.
India’s credit growth remains in single digits even as the economy is recovering from the pandemic. This poor credit growth comes on the back of prime borrowers migrating to bond markets and retail depositors and borrowers finding fintech alternatives attractive. These are but some indicators that India’s universal banks are set to face considerable disruption going forward.
If you screen for this stock under the capital goods sector in any screener, chances are that you will miss it. Because it is not your regular capital goods company. Some databases classify it under ‘consumer durables’, while others called it a ‘computer and electronic manufacturer’. This company is none of these entirely but still some of these. But this outlier stock is a worthy one in the capital goods space. Here’s why.
Specialty chemicals and API makers are the flavour of the season. Here is a lesser-known niche bio-tech player in the enzymes and probiotics space that is worth looking at. The world is becoming increasingly aware of the harmful effects of chemicals on health. Natural alternatives to boost the immune system are gaining traction…
Sugar stocks have been fired up lately on expectations that the industry is set to turn a corner. While the sector has seen many false dawns on reform hopes in the past, the changes we are seeing this time around could turn out to be the real deal.
Mobility powered by electricity is fast becoming a reality. And one space that is expected to see accelerated adoption of electric vehicles is the basic commuter space, made up of 2- wheelers, particularly scooters. Scooters are mostly used for short commutes, their electric versions have a more affordable purchase price after FAME II (Faster Adoption and Manufacturing of EV) subsidy and they have lower running costs than petrol scooters. With almost 40 lakh scooters sold in India in a year, annual sales of 40,000 units for high-speed EV scooters look small. There is scope for faster adoption driven by basic commuting, e-commerce, and low speed mobility needs.
Last month, we reviewed a lesser-known a consolidation play in the commodity space play as a story fitting a ‘special situations’ theme. We now issue a ‘buy’ call on this stock and recommend accumulating the stock in phases, preferably adding on dips, if opportunities arise.