Source: Dhruv Saraf
(From Arihant Superstructures – Q2 FY’18 Conference call)
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Category: ConferenceCall
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Murthy’s address to shareholders
[pdf-embedder url=”https://alphaideas.in/wp-content/uploads/securepdfs/2017/08/NRN-Investor-Conference_August-29-2017_final.pdf” title=”NRN – Investor Conference_August 29 2017_final”]
Attended the Kotak Mutual Fund Conference Call today where Nilesh Shah,MD,Kotak Mutual Fund spoke on the Market Outlook.
Key takeaways:
- Major fears/overhangs on the market
- Farm Loan Waivers-Feels the impact won’t be much despite the scary headline numbers
- NPAs-Feels a beginning has been made to end this problem.But there is a long way to go.Narrated a humorous anecdote where the MD of a PSU Bank told him: “If RBI wants me to make so much provisions, they should provide the capital also else they should run the Bank”
- Geo-Political Risks- Border fight with China & North Korea may impact EM flows
- MSCI Index Changes-Addition of Chinese mainland stocks can reduce India’s weightage impacting ETF flows
- On GST
- Feels the initial implementation has been very smooth
- Q1 will be impacted as companies have reduced their inventories, compensated dealers and cut prices
- On interest rates
- Feels markets have priced in a rate cut
- Expects RBI to cut rates by 25 bps in August 2017
- On political risk
- Feels markets have priced in a Modi re-election in 2019
- Expects BJP to continue winning in 2017 Karnataka & Gujarat elections
- On fund flows
- Continues to be strong-Kotak has crossed 1L Crores AUM this month
- Says an IPO can be fully subscribed by going to Bandra-Kurla,Lower Parel and Nariman Point (Different locations in Mumbai) .No need to go to New York,London and Singapore !
- Believes 3 Themes are playing out
- Movement from Unorganized to Organized
- Movement from Physical Savings to Financial Savings
- Govt spending on Infrastructure
- Bullish on the following Sectors:
- Cement/Capital Goods/Autos/Auto Components
- Private Sector Banks
- Consumer NBFCs
- Bearish on the following Sectors:
- Export Based Companies (Including IT/Pharma)
- Telecom
- Commodities
- Real Estate
Attended the Reliance Pharma Conference Call where Sailesh Bhan, Fund Manager of Reliance Pharma Fund spoke on the Sector Outlook.
Key takeaways :
- Pharma Sector consists of two plays-India domestics & US Generic Exports
- India Domestics consists of India Generics,Diagnostics,Hospitals etc
- Sees growth in India Domestics as fairly robust…can grow 15% p.a on a value basis
- GST will impact India Domestics over a 2/3 Quarter Period
- Doctors prescribing Generic Names vis-a-vis Brands may impact India Domestics but it is too early to tell the exact impact
- The other category are companies whose sales are 60-65% US Generic market
- Their sales and earnings have been badly hit due to three reasons
- Very competitive pricing in US generic markets
- FDA regulatory issues on their manufacturing plants
- Lack of new launches due to point # 2
- It will take at least 18-24 months for earnings to recover for these companies
- These companies are using their super profits of the past to invest in R&D…some companies have 8-10% of sales invested in R&D
- Valuations of the Sector have corrected significantly and the market is pricing in zero earnings growth
- This sector is one of the most competitive sector out of India with exports to more than 100 countries and as such has a lot of promise
- One may look at this sector from a 2/3 year horizon and do a SIP