Analysis: Nomura report on Indian Companies
Nomura released "Titans- Heroes- Mortals" report on Asian Companies which will give an idea about the future growth prospects of the Indian Companies.
Blog readers should treat it as another aid in their research to pick good companies but not as an investment advice. In stock markets, entering at right price is also important along with picking a great stock. I am bullish on IVRCL Infra and Glenmark but am waiting for right price.
Research firm followed the Graham and Dodd approach of value investing in picking Titans and Heroes. Company released similar report on China (7 titans and 12 heroes), Korea (2 titans and 2 heroes only), Malaysia (2 titnas and 2 heroes), Singapore (7 titans and 3 heroes) and Taiwan (7 titans and 2 heroes) Companies.
Nomura views on economy and stocks:
1. Asia is in a best position than America but few companies tend to have control over their own destiny and equities will perform relatively badly against bonds.
2. There have been no signs of a turnaround during the past quarter in purchasing management indices or export orders to suggest that Asian equity markets will sustain a rally on the back of changing growth expectations. Companies appear to be locked in a classic inventory build-up, since the demand shock did not allow them to adjust their production schedules quickly enough. Moreover, working capital requirements have tightened and trade finance remains difficult to obtain for exporters.
3. We entered the second half of 2008 with an Overweight stance on China and India, since both countries had low export-to-GDP ratios and were prime beneficiaries of falling commodity prices.
4. We continue to have a bias in the short term toward value, since we can still find financial assets trading below intrinsic value or creditworthiness, such as convertible bonds. We would look to re-weight growth stocks as 4Q08F earnings are released and as companies guide down expectations further during 1Q09F.
5. Our favoured sector is infrastructure.
My view: India is in best position to take the leadership position in economy but lack of great political leadership and corruption are our main problems. India needs a visionary leader to steer us through the current troubled waters.
Titans-Heroes-Mortals report:
Titans: Best Indian Companies in their sectors and will use the current opportunity to strengthen their position in their segment.
1. Reliance Industries : I have some doubts over the company performance over short term.
2. Larsen and Toubro: I already said enough about this Company.
3. NTPC: Good stock but what about stock market returns.
4. Hindustan Unilever: Good sales but what about valuations.
5. Sun Pharma : Best Pharma stock and will continue to announce bumper results in the coming quarters.
Heroes: Future stars- favorite stocks for growth investors.
1. Tata Power: Positive growth prospects but I have some doubts on financial front.
2. Maruti Suzuki: More clarity is needed.
3. IVRCL Infra : Rare infra company which is not facing any financial troubles. IVRCL is a must buy when markets correct in the coming months.
4. Marico: Good Company but I always try to accumulate growth stars.
5. Piramal Healthcare: Company is making strategic moves but take time.
6. Glenmark: Company will outperform other Pharma stocks if market conditions improve. This is a must buy when market corrects to reasonable levels.
Mortals: Never become leaders
1. Unitech
2. TVS Motors
Stock market news:
1. Indraprastha Gas Limited (IGL) will continue to enjoy monopoly in the National Capital Region (NCR).
2. Cement stocks will be in limelight for some more days due to better than expected results estimates.
3. Tata Communications is the dark horse, according to many analysts.
4. Hats off to Narendra Modi for announcing new industrial policy for Gujarat. We need such concrete measures at centre to face current slow down.
5. I am positive on growth prospects of Mundra Port but current valuations are not sustainable.
6. Best auto companies by sales are Hyundai in 4-wheelers and Yamaha in 2-wheelers. Unfortunately, both Companies are not listed in the Indian stock markets.
GDP estimates by Goldman Sachs:
1. GDP growth in 2007-08 was at: 9% and expected to cross 10% in 2008-09 (at that time).
2. (Now) GDP growth estimate in 2008-09: 6.7%. My estimate is 6.2-6.5%. Fiscal deficit is expected to touch 6-8% of GDP in this financial year. Just imagine what will happen to our economy if the money from the stimulus packages will not be used in a proper way. Do you know why these politicians prefer real estate and infrastructure? Not to build India but to build their coffers in the election year which is very easy for them in these 2 sectors?
3. GDP growth estimate in 2009-10: 5.8%. My estimate is around 5%.
Special mention: Hats off to Brokers for successfully creating a "feel good atmosphere" in a gloomy economy. Politicians need to learn some tricks from these stock brokers.
Special thanks to Mohit Singhania and Ramakrishna (NRIs).
Recession news:
1. Sweden based Software company UIQ, jointly owned by Sony Ericsson and Motorola filed for bankruptcy.
2. U.S. jobless rolls reached a 26-year high in the week ended December 20. 20 lakh Americans lost jobs in 2008.
3. GM'a U.S. sales plunged to a 49-year low in 2008.
4. What will happen to economy?
5. Indian Companies are set to announce worst results in 6 years. ICICI Bank, Bajaj Auto, Tata Motors, Ranbaxy and ONGC are some of the poor candidates.
6. BPO Companies may create 1 lakh jobs in the next 3 months if Obama will not create any hurdles.
7. Indian IT companies will announce worst results in the recent years.
8. Germany set to announce grand stimulus package with tax cuts. US may soon follow.
9. Barack Obama is seeking Congress support to announce $800 billion bailout package with more stress on tax cuts ($300 billion) to improve the consumption power of people.
10. Madoff scam is worsening day by day.
11. Construction activity reached worst ever recorded levels in England.
12. What can happen to American Banking sector in 2009?
13. 10 best economic books of 2008.
Source: Stock Market Guide (Dr. Krishna)
CHECKOUT MORE:
Best Stocks For 2009 - Stocks To Buy Now
Value Stocks To Buy In 2009
Best stocks to buy in Indian telecom sector
Indian Stock Markets : Which Stocks to buy in 2009
Best FMCG Companies - Stocks to Invest in 2009
