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  • G.Chokkalingam - Founder & Managing Director, Equinomics Research & Advisory

    G.Chokkalingam

    Founder & Managing Director, Equinomics Research & Advisory

    DATE: April 08, 2016, 12:00 PM

    SUBJECT: What to expect from March quarter results of India Inc

    MARKETS

CHAT CLOSED. READ TRANSCRIPT BELOW

  • MODERATOR:

    Hello and welcome to the webchat with G.Chokkalingam, founder & managing director, Equinomics Research to discuss India Inc expectations from March quarter results



  • S

    SELVA

    The ever green FMCG stocks are moving in a range bound manner. What is your outlook on these stocks? Recently, the government is focusing more on agricultural space, Do you I should buy Coromandel International? Please advice.

    G.CHOKKALINGAM

    Yes we are holding and buying Coromandel Interl. if monsoon is good, i beleive that it can give 30% t o 50% return. It is the most efficient producer of phosphatic/ complex fertilizer in the country. In the last 20 years cultivable land has come down in absolute term. it is only agri inputs like fertilizers which has helped this country to still more than double the food grain production. hence, efficient fertilizer companies will emerge as winners once again in the stock markets. also pl remember that tehre is hardly any greenfield fertiliser project in the country in the last 15 years


  • K

    KUMAR

    1. What trends do you see for the rupee against the US dollar in the coming months? 2. South Indian Bank is not at all moving. Is it worth holding the stock for long term? 3. What is your outlook on BBTC against the back drop of severe competition Britannia is facing from Patanjali?

    G.CHOKKALINGAM

    rupee is likely to remain firm now for another 9 months unless the world falls into severe deflationary situation. i have gone wrong choosing South India Bank as i failed to visluaize its NPA surge. However, those who bought can hold it. Otherwise fresh buy i would recommend in Karur Vysya Bank - it still maintains one of the best net NPA level in the industry. we are buying Bombay Burmah even now for our clients - we believe that it can double from this level in 2 to 3 years


  • P

    PRAKASH

    Sir, do you think cement-based company from South like NCL and Panyam will come out with good set of numbers. Also, is there any other chemical based company one can look out for after the recent run-up?

    G.CHOKKALINGAM

    I am not positive on both NCL and Panyam. Rather if KCP Ltd falls back to Rs.80 level one can buy. In my view this stock has huge potential for the long term. it has 5 sources of energy for its cement plant. Bith AP and Telengana states have healthy competition of achieveing over 10% GDP growth. KCP located in AP has historically catered to government demands for cement, apart from meeting the same for the private consumers. It has also a sugar plant in Vietnam which is making phenomela money. One can also look at OCL India and Ramco Cements. In chemical space, we prefer Savita Oil Tech and INEOS Styrolution - but both would not suit many investors, they remain boring stocks before rewarding the investors


  • P

    PUNEET ARORA

    What are your views on Banking NPA going forward? Has the market already factored in NPA news or we can expect some negative surprises?

    G.CHOKKALINGAM

    yes, my firm view is that the market has already factored in the worst to come in from Q4 results. After 2002, we are seeing the banks having even 50% discount to adjusted book value. Let us not forget the fact that the banking sector in India is perennially growth story - credit base was around Rs.7.5 lakh croe about 14 years ago - today it is Rs.72.50 lakh crore. even at 11% growth, it will make huge difference. I believe that in the next 12 to 18 months one can make big money if invests in relatively quality (net NPA less than or around 3%, more than 10% credit growth, dividend track record, making profits before provisions levels, etc) PSU banking stocks which are available at 30% to 50% discount.


  • R

    RASHI

    What your take on the equity markets? Which are some of the sectors that one can avoid as of now?

    G.CHOKKALINGAM

    i would avoid or give least exposure to large pharma companies after Q4 results announced. I do believe that the US FDA is not going to relax - more pain can be expected unless the Indian govt takes it up seriously with the US govt. Will avoid highly leveraged real estate, construction, capital goods and other mid sized companies with huge debt. In my view, till we get out of global deflationary fears completely one shouldnt opt for leveraged companies. Will also avoid many sugar stocks which are in buuble zone - of course will stay invested in sugar companies which have least debt, "high recover rate" and also have good track record of dividend payments. i believe some these companies can give another 30% to 50% return from this level. I will also void cement stocks which have nearly 20 pe on FY17 earnings. firmly believe that consumption vs capacity mismatch will apply a lot of pressures on them for 2 more years


  • M

    MALVIKA

    The market will start reacting to the Q4 results from April. Which are some of the sectors which are likely to positively/negatively surprise you?

    G.CHOKKALINGAM

    Large IT companies could give some positive surprise and to some extent large pharma companies. Otherwise, i do not see much diviations from Q3 results. In the short term once again the mid-sized companies would do well in relative terms


  • S

    SHEENA

    March has seen sizable Foreign Institutional Investors (FIIs) inflows amid favorable global cues. Do you see the pace of inflows to continue?

    G.CHOKKALINGAM

    Surely. If monsoon doesnt fail this time we should hope to a record high level of FII flows. Euro, Japan, Russia, Brazil, China, etc all competing economies have problems of slow grow growth or danger of recession. Indian corporate earning history shows that when our index earnings stagnate or show poor single digit growth for 3 years in a row, then if economy recovers these earnings show robust jump - i anticipate the same in the next 18 months if monsoon is good and global prices of resources and metals do not fall badly from the current level. in my view, this time monsoon is the most critical - water level above surface as well as under the ground have down quite badly. Rate cut also hings on heavily good monsoon


  • H

    HEENA

    What are some of the global events that one should closely watch that could adversely impact our markets?

    G.CHOKKALINGAM

    While Chinese and Japanese economic issues are quite clear to many of us, any sudden fall in GDP growth of the US and euro zone falling to less than 1% GDP growth and staying there for a while will be a big concern. they would accelerate global deflations


  • K

    KANIKA

    India has been the most attractive market in the region in recent years. Does this still hold true?

    G.CHOKKALINGAM

    certainly yes, after a gap. Normal monsoon forecast by the foreign agencies, saving on oil, strengthening of external economy (falling short-term external debt, CAD, FDI inflows, etc) except exports degrowth, rural spend, faster GDP growth among major economies anticipated, convergence of many initiatives of the govt (road projects, smart cities, rural spend, etc), FDI policies, strengthening relationships with Japanese govt (Japanese corporate hold over $2 trillion of cash pile), etc would lead to robust outlook for the domestic equity markets. we need to remain alerted on global deflationary press ures, however.


  • S

    SHIKHA

    Could you specify some of the factors that can drive India Inc’s earnings growth going forward

    G.CHOKKALINGAM

    I would bank on good monsoon, banking credit (which is now growing in double digits for the 6th fortnight in a row, FDIs and government push for plan spends. In contradiction to general belief, the capital expenditures budgeted to go only by 4% in the latest Budget. I hope the govet soon corrects its focus. FDI has grown 40% yoy - i believe that the govt is doing its best on bilateral FDIs - negotiations with UAE and Japan. Both committed a huge sum for India's infra. Japanese companies hold over $2 trillion of cash. if Indian companies and govt make more initiatives, the FDIs from these 2 economies can make a big positive dent on India's industrial economy. I remain optimistic


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