Tag Archives: Power

Industries: Looking back and ahead

As the year 2010 coming to an end, reports on various industries appeared across the news papers. Here are the links to those reports on the sectors related to our investments.

PHARMACEUTICALS and HEALTH CARE

The pharma story: A decade of transition

The last 10 years were a crucial transition period for the Indian pharmaceutical industry. The next 10 years will be more crucial, predict industry experts. The period between 2000 and 2010 witnessed India’s top 10 drug companies growing from sales turnovers, ranging between Rs 500-Rs 800 crore, to professionally-run multinational generic companies with turnovers ranging from Rs 3,500 crore to over Rs 7,000 crore. If most of these companies earlier relied on bulk drug supplies, small exports to unregulated markets in Africa and Asia and formulation sales in the domestic market, the last 10 years saw them aggressively tapping regulated markets of the US and Europe and penetrating into newer and emerging markets. If the Indian industry had filed only three marketing applications with the US Food and Drug Administration (FDA) in 1998, that number swelled to 148 in 2009. http://www.business-standard.com/india/news/the-pharma-storydecadetransition/420227/

Pharma: Walking the tightrope between affordability, profits

It could well turn out to be a significant year for the over Rs 1-lakh-crore pharmaceutical industry, if clarity dawns on contentious issues facing the sector. Be it implementation of intellectual property laws, signing of free-trade agreements (FTAs), policy of price control on medicines or spate of mergers and acquisitions (M&A) – 2011 will have stake-holders looking to the Government for direction. It all boils down to how the Centre walks the fine line in balancing access to affordable medicines with encouraging industry to maintain healthy bottom-lines. http://www.thehindubusinessline.com/2010/12/31/stories/2010123151610300.htm

YEAR 2010: Acquisitions spurred Pharma, healthcare expansion

Looking healthier on booster dose of global alliances, the Indian pharma and healthcare sectors repeatedly hit headlines this year on account of M&As, but inbound buyouts by MNCs raised concerns over availability of low-cost drugs. Be it Sun Pharma’s victory in acquiring Israel’s Taro after a long drawn battle, or Piramal’s selling off its domestic formulations business to Abbott, or Biocon’s marketing deal with Pfizer, Indian drug makers sought strength from global play. http://www.business-standard.com/india/news/year-2010-acquisitions-spurred-pharma-healthcare-expansion/119573/on

Pharma: On a healthy wicket

The Indian pharmaceutical sector closed 2010 on a high note, what with an impressive stock market performance, driven largely by earnings growth and bettering prospects. And if the sector undercurrents are to be relied upon, good times are likely to continue this year as well. Strong demand growth in the US market, increasing generic penetration worldwide besides a robust domestic market, promise to keep the Indian drug makers in good health in 2011 too. http://www.thehindubusinessline.com/2011/01/01/stories/2011010151720200.htm

FMCG

2010 saw fastest FMCG launches, relaunches

2010 could well figure in the fast moving consumer goods (FMCG) annals as the year of product launches and relaunches. Indeed, the year saw almost every major player launching or relaunching as many as 10-30 products or their variants, either under existing brands or under altogether new brands and categories. http://www.dnaindia.com/money/report_2010-saw-fastest-fmcg-launches-relaunches_1488220

In demand: Iconic consumer brands

Good old brands are finding their way into the portfolios of some of the top FMCG companies in the country. They may be small but that hasn’t prevented them from finding their way into the product portfolios of some of the top fast moving consumer goods (FMCG) companies in the country. Iconic consumer brands are much in demand today. http://www.business-standard.com/india/news/in-demand-iconic-consumer-brands/419643/

Spate of price hikes spells good fortune for FMCG industry

FMCG players seem to be regaining their pricing power, with Hindustan Unilever taking price increases of 5-8 per cent in soaps and detergents, Dabur India hiking prices by 3-4 per cent and Britannia Industries 5-10 per cent on select brands of biscuits over the past six months. After dealing with rampant inflation, bruising competition and parsimonious consumers in 2009 and 2010, listed players in the fast-moving consumer goods (FMCG) segment can now look forward to an easier year ahead. http://www.thehindubusinessline.com/2010/12/27/stories/2010122751610100.htm

AUTOMOBILE

Car industry: Great hopes for 2011

The Indian car industry is looking forward to another promising year, even as the global car market struggles to find its feet after the economic slowdown. With car sales rising over 30 per cent in 2010, the momentum is expected to continue into 2011 on the back of new launches, rising income levels, and the continued availability of cheap finance. http://www.thehindubusinessline.com/2011/01/01/stories/2011010151810200.htm

Indian car makers likely to see slower growth in the new year

Even as global peers struggled with the after-effects of the 2008-09 economic slowdown, Indian car makers enjoyed double digit growth this year and saw their share prices outpace the benchmark market index. But as they enter 2011, they may have to get used to a new normal—slower growth and fiercer competition. http://www.livemint.com/2010/12/29214755/Indian-car-makers-likely-to-se.html?atype=tp

2000-2010: A decade of growth in the auto sector

The noughties or 2000-2010 will be remembered for the rise of Indian auto as a strong and lucrative domestic market. During this period, Indian manufacturers became bold and aggressive with global ambitions to boot in the in the second half. Read more at: http://profit.ndtv.com/news/show/2000-2010-a-decade-of-growth-in-the-auto-sector-132884?cp

INFORMATION TECHNOLOGY

Buoyant Indian IT industry rebounds but remains cautious

Recovering from global tech meltdown, the resilient Indian IT industry returned to high growth during a tumultuous 2010 but is cautiously optimistic about 2011 in view of the economic uncertainty in Europe and the US, which account for 80-85 per cent of its export revenue from software services and back office operations. http://economictimes.indiatimes.com/tech/ites/buoyant-indian-it-industry-rebounds-but-remains-cautious/articleshow/7190235.cms

Mid-size IT companies set to join the party in 2011

The demand for IT services remains strong due to better offshoring sentiment and increased spending by clients . A revival in discretionary projects, together with stable pricing, is likely to continue in the New Year as well. But experts caution that demand visibility has narrowed to only three-six months, given the uncertain economic scenario. http://economictimes.indiatimes.com/markets/analysis/it-mid-size-cos-set-to-join-the-party-in-2011/articleshow/7181987.cms

Infotech looks ahead to high growth, innovation

It’s been a happy 2010 for the tech industry. It ushered in glimpses of recovery, while the second half of the year brought in growth, hiring and resilience , pumping in a sense of confidence back to the markets which were shattered by the global economic meltdown. The highlight was the revival and the resilience it showed. IT companies posted good numbers clearly signalling that the risk of a double dip recession emerging and disrupting growth are now behind us. Besides, hiring plans and increments were back on board, demonstrating the feel good in the sector. So while 2010 was characterized by restructuring , consolidation, pragmatic learning and smart budgeting , 2011 will continue to build on that and move ahead, say industry experts. Read more: http://timesofindia.indiatimes.com/business/india-business/Infotech-looks-ahead-to-high-growth-innovation/articleshow/7170339.cms#ixzz19o9GYqMJ

CEMENT

Cement industry will be weighed down by excess supply

2011 could be a challenging year for cement manufacturers. Though demand for cement will reach higher double-digit growth, it will be insufficient to absorb the entire supply. Rising input prices and excess capacity (and resultant pricing pressures) will continue to depress margins for cement manufacturers. A higher growth in despatches (versus 7 per cent growth this year) will follow good housing demand and the Government’s thrust on infrastructure projects as the eleventh Five Year Plan comes to an end. With GDP growth estimates for 2011 coming at around 8.8 per cent, the cement industry can be expected to report a 10-11 per cent growth in consumption. http://www.thehindubusinessline.com/2010/12/30/stories/2010123052220200.htm

POWER

Power companies seen strengthening foundations for big plans in 2010

From disinvestment to cementing nuclear energy pacts, 2010 saw India’s power sector strengthen its foundations for the massive capacity expansion required to meet the growing needs of the energy-starved nation. The year also saw a shift in the process for awarding power projects to a tariff-based bidding system. These developments augur well for the sector, as India — which is eyeing a GDP growth rate in excess of 9 per cent — aims to add 1,00,000 MW of electricity during the XII Five-Year Plan (2012-17), with the major contribution expected to come from private power producers. http://economictimes.indiatimes.com/news/news-by-industry/energy/power/power-companies-seen-strengthening-foundations-for-big-plans-in-2010/articleshow/7189053.cms

MINING

Hunt for overseas coal assets to intensify

With the Indian economy back on the track after the slowdown, merger and acquisition (M&A) activities in the resource sector are likely to pick up momentum in the coming year. After establishing a foothold in the global oil and gas asset market, India now eyes coal assets. Meanwhile, the Indian government has proposed key changes in the existing mines and minerals development act (MMDR to allow trading of exploration and mining concessions to attract foreign investors. If the these legislative changes are approved, Indian mining sector, especially coal, might see a flurry of M&A activities. http://news.in.msn.com/business/article.aspx?cp-documentid=4742358


Weekly Portfolio Review: 26 December 2010

BSE Sensex ended the last week higher by 209 points to close at 20,074 and NSE Nifty 63 points at 6,012. Return on my portfolio in the past week was 1.76%. Hero Honda gained 15% in the past week. Other gainers in my portfolio were TIL, Graphite India, NIIT Tech, Divi’s Lab, and Swaraj Engines which gained from 5% to 8%. In the losers pack were Opto Circuits, Dr. Reddy’s Lab, and Crompton Greaves which lost 5% to 9%.

The surge in Hero Honda was after the Hero Group management allayed fears that there won’t be any impact on minority shareholders in Hero Honda after its split from the Japanese auto major Honda. The official disclosure of details of the parting of the joint venture with Honda ended all rumours that were going around for sometimes now.

NIIT Technologies acquired an electronic health records and referral management platform called “Preferr” to initiate its foray into the lucrative healthcare segment in the US. In another tragic incident, 2 persons died after inhaling poisonous gas at a manufacturing facility of Dr. Reddy’s Laboratories.

Good buys in my watch list

Script Sector 3 Years Target Current Price Expected Margin
KSB Pumps Engineering 1,072.00 521.95 105%
Zensar Tech IT 318.00 159.85 99%
Tata Sponge Iron Metal 700.00 357.10 96%
Oil Country Tubular Metal 173.00 90.70 91%
Graphite India Engineering 200.00 105.40 90%
Divis Laboratories Pharma 1,095.00 635.95 72%
Honeywell Automation Engineering 4,100.00 2,398.05 71%
Tractors India Ltd Construction 1,150.00 683.00 68%
Swaraj Engines Auto Ancil 850.00 505.95 68%
Amara Raja Batteries Auto Ancil 301.60 182.00 66%
Bharti Airtel Telecom 551.00 348.50 58%
BHEL Engineering 3,567.00 2,284.75 56%
Tech Mahindra IT 1,074.00 688.10 56%

I will be buying Zensar Technologies, Oil Country Tubular, Divis Laboratories and Honeywell Automation in this week. KSB Pumps and Tata Sponge Iron are already within my top 5 holding.

My plan is to limit number of companies in my holding to 30. At present I have 32 companies and when I buy Zensar Tech and Oil Country Tubular this week, it will reach 34. In order to align my portfolio with my plan, I will be selling shares of four companies in coming weeks.

I will sell Glenmark Pharma and Dr. Reddy’s in this week. My return on Glenmark Pharma is 47% in 9 months and on Dr. Reddy’s Laboratories is 23% in 4 months.

News Update

I am discontinuing this part from my weekly portfolio review. However I will share on twitter any news on companies that has been mentioned in ‘good buys in my watchlist’.  You may follow me on twitter at www.twitter.com/mvalappil

Interesting Read

Margins to remain under pressure at consumer goods firms

In a year during which food inflation stayed stubbornly high for the most part, packaged consumer goods companies engaged in a pitched battle for market share, driving up volumes with price wars, new launches and increased spending on high-decibel promotions even as margins got squeezed. http://www.livemint.com/2010/12/21045902/Margins-to-remain-under-pressu.html?atype=tp

Tariff-based bids to hurt power PSUs

Competition among power companies could become fiercer soon, with the Centre all set to introduce tariff-based competitive bidding for the allocation of projects from January 6. Consumers can rejoice as the new regime would bring down electricity tariffs across the country. Private sector players like Reliance Power, Tata Power, Sterlite, JSW Energy, Adani and Lanco Infratech, who are well-equipped to negotiate prices with vendors and also have access to secure fuel supplies, would be at an advantage when it comes to grabbing projects under the new regime. However, NTPC, despite its unmatched project-execution expertise, is expected to face the heat, at least initially. http://www.indianexpress.com/news/tariffbased-bids-to-hurt-power-psus/728274/

My Portfolio

Return

My Portfolio BSE Sensex NSE Nifty
This Week 1.76% 1.05% 1.06%
This month 1.55% 2.82% 2.53%
This Year 10.72% 14.94% 15.58%
Since 1-1-2009 126.71% 108.08% 103.16%
Since 1-1-2008 52.38% -0.66% -1.12%
Since 1-4-2007 89.31% 53.56% 57.31%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 8 3 Years 102
Graphite India Telecom 6 2 Months 9
HUL FMCG 5 5 Months 12
KSB Pumps Engineering 5 3 Months -6
Swaraj Engines Auto Ancillory 5 2 Months 9

Shares I bought this month

Company Average Cost
Tata Sponge Iron 364.43
Graphite India 95.62
BHEL 2,339.58
HUL 302.01
Tractors India Ltd 690.22
Swaraj Engines 491.85
KSB Pumps 506.95

Shares I sold this month

Company Average Price

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 218 2.6 Years
Dabur India 152 4.6 Years
Tata Global Beverages 111 2.0 Years
Berger Paints 168 3.8 Years
Infosys 102 3.0 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
Opto Circuits -14 2 months
Honeywell Automation -10 1 month
Tata Communication -25 11 months
Mangalam Cement -17 2 months
Divi’s Laboratories -10 2 months

Archive of previous portfolio reviews