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India Equity Research Reports, IPO and Stock News
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Taking Stock of India SMID coverage: We revisit our India SMID
universe following the recent market correction and as we field rising
queries from investors seeking ‘SMID babies thrown out with the
bathwater’. Our preferred stocks in our universe do not qualify, as most
of them have outperformed in the r ecent market correction. Having said
that, we are also not seeking stock under-performance as primary
selection criteria – stick with the winners. Despite the recent
outperformance, we continue with our top Indian SMID picks – Dish
TV, Havells and Sintex.
Investor meeting takeaways – ‘it’s not just about growth’: We
recently met 60+ investors based in Europe and the US. We saw good
interest in Indian SMID companies (mainly DISH TV, Havells, Sintex,
Apollo Hospitals and Jain Irrigation from our universe). Most investors
we met focused on balance sheet quality, cash flow profile and corporate
governance and bias seems high towards ‘businesses offering quality and
sustainability’ even at the cost of a ‘relatively lower growth profile.’
Esoteric valuation methods (SOTP etc.) did not find favor with investors
we met, nor did top down or 'concept' stock ideas
Stock performance divergence to intensify: We advocate bottom up
stock picking for Indian SMID stocks. We believe that broad based
outperformance for Indian SMID stocks seems unlikely in the event of a
market rally, nor do we expect blanket collapse in course of sharp market
correction. We are already seeing increasing divergence in stock
performance in the SMID space, and we expect this to intensify as
investor focus increasingly shifts towards quality.
Our top picks: We maintain DISH TV, Havells and Sintex as our top
picks. We see a near term trading opportunity in Jet Airways – the stock
is not discounting recent oil price correction and fare hikes affected in
May and we expect Apr-Jun Q results to surprise positively. We are
seeing increasing interest in Jain Irrigation (our top Underweight call)
post the sharp correction. We would look to become more constructive
on the stock in the event of a shift in management strategy geared
towards better balance sheet management and capital allocation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Taking Stock of India SMID coverage: We revisit our India SMID
universe following the recent market correction and as we field rising
queries from investors seeking ‘SMID babies thrown out with the
bathwater’. Our preferred stocks in our universe do not qualify, as most
of them have outperformed in the r ecent market correction. Having said
that, we are also not seeking stock under-performance as primary
selection criteria – stick with the winners. Despite the recent
outperformance, we continue with our top Indian SMID picks – Dish
TV, Havells and Sintex.
Investor meeting takeaways – ‘it’s not just about growth’: We
recently met 60+ investors based in Europe and the US. We saw good
interest in Indian SMID companies (mainly DISH TV, Havells, Sintex,
Apollo Hospitals and Jain Irrigation from our universe). Most investors
we met focused on balance sheet quality, cash flow profile and corporate
governance and bias seems high towards ‘businesses offering quality and
sustainability’ even at the cost of a ‘relatively lower growth profile.’
Esoteric valuation methods (SOTP etc.) did not find favor with investors
we met, nor did top down or 'concept' stock ideas
Stock performance divergence to intensify: We advocate bottom up
stock picking for Indian SMID stocks. We believe that broad based
outperformance for Indian SMID stocks seems unlikely in the event of a
market rally, nor do we expect blanket collapse in course of sharp market
correction. We are already seeing increasing divergence in stock
performance in the SMID space, and we expect this to intensify as
investor focus increasingly shifts towards quality.
Our top picks: We maintain DISH TV, Havells and Sintex as our top
picks. We see a near term trading opportunity in Jet Airways – the stock
is not discounting recent oil price correction and fare hikes affected in
May and we expect Apr-Jun Q results to surprise positively. We are
seeing increasing interest in Jain Irrigation (our top Underweight call)
post the sharp correction. We would look to become more constructive
on the stock in the event of a shift in management strategy geared
towards better balance sheet management and capital allocation.
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