India will become a pharma hub as we have the most FDA approvals outside America. 4-5 companies will be multibaggers from this domain, Pritam Deuskar, Founder of Wealthyvia.com, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) Nifty traded mostly in the green in the week gone by and managed to hold on to 11,450-11,500 levels, what led to the price action on D-Street?
A) The initial wait was for the US Fed policy and the outcome was very positive for markets as interest rates will not be going up for the next 3 years or so.
Valuations of largecaps are still higher at a time when consumption and branded growth is not easy to come back.
Opportunities in the market are sector and stock specific. Uncertainty around banks and finance on actual defaults is going to be there till January 2021.
Investors should focus on the stocks they hold and not worry too much about Nifty correction unless something changes drastically and creates great worry.
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Q) What is your view on the upcoming IPOs which are scheduled for the week – CAMS, Angel Broking, and Chemcon?
A) CAMS is going to be another platform type IPO where the company is a service provider to MFs with 70 percent market share. It fits margins, volumes, sales, market share, and profit growth as 5 growth criteria.
The company has been consistent in delivering high operating margins and return on equity. Here earning is relational to MF AUM.
In the very long-term, household participation in MF should grow in India which is merely 7-8 percent while in the US it is 45 percent.
The risk lies in client concentration and also AUM fees of MF which over a period of time may come down. It's good that the company has forayed well in insurance, banks, and digitalisation in KYC and others.
It has its own market size to grow. The current mood of the market and better prospects will work for it even though valuations are a bit high.
Chemcon is also in a unique position to have benefited from pharma. Almost 62-65 percent of its revenues are from the pharma space as their CMIC is used in antiretroviral and anti-HIV drugs.
Q) Small & midcaps outperformed – does it looks like smart money has already started flowing in the broader market space?
A) Yes. We talked about how it has been the case in many comeback rallies of markets. Midcap and small-cap are comparatively showing high growth in some special pockets and have the headroom to grow.
FIIs also increased their holding in about 100 mid and smallcap stocks. While shortlisting a stock, investors should check factors like- Sales, Profits, Volumes (of products/services clients/territories/ transactions), margins, and market share.
Q) In terms of sectors – IT and Healthcare were the top two sectors – is it the currency factor that is adding to the tailwind?
A) The currency is surely helping but it's not the main factor in both. For IT companies, many have proven double-digit growth mettle for many years.
Also after each crisis, Indian IT companies benefit from projects of automation, cost savings, efficiency improvements from western clients.
With current COVID problems, brick & mortar brands are facing issues and trying to adapt digital and online platforms.
Migration to the cloud is clearly evident during the economic downturn. The Cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025, at a Compound Annual Growth Rate percent.
Healthcare is a big beneficiary sector:
Pharma companies that bottomed out in 2019 with all data integrity issues getting solved are now thriving with countries that were spending less % of GDP on it are now doing it and storing drugs.
API companies' order demands are very high till Dec Jan and may continue even further. The Pharma tailwind is supposed to last beyond 2022.
The industry can grow to 100 billion USD from 45 billion currently with many generics going off patent. India will be known for pharma just like the IT hub. We are the largest FDA approved outside America. 4-5 companies will be multibaggers from this domain.
Q) Any short term technical trading ideas for the coming week?
A) Our time horizon for investments are at least 9-10 months to even some years. For any stock purchase to have great realisation of profits. It must continue some 6-7 quarters to 12-14 quarters of high growth periods.
Trading can earn some and lose some or may give earning if you are rare good at it. Investments create wealth.
In the coming times, we see agrochem space doing great. September is anyway their greatest quarter and policies, orders from outside, monsoon, June results have been fantastic. Indian agrochemical industry to double to $8.1 billion by 2025. Some players have been consistent compounders in this space. Also, pharma companies will continue to lead.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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