New year picks-2014 by Religare Retail Research
Indian equities have seen a liquidity driven rally in the year 2013. During the year BSE Sensex jumped 9 percent or 1700 points and Nifty has seen a rally of near to 7 percent or 400 points. FIIs inflow was strong during the year and they have pumped more than Rs 1.13 lakh crore in Indian equities.
The market performed well and now the investors are underpinning hopes for 2014. General elections are the major trigger for 2014 and investors’ community expects that the new Government will take strong decision for the growth of Indian economy.
The important factors that may affect the stock market in the year 2014 are global and domestic market environment, Inflation, interest rate scenario, fiscal/trade scenario in India and policy actions from the next government etc.
We believe that the equity market volatility may continue as the US Fed decision for QE will play a major role. However, the volatility should be used to pick strong fundamental stocks for long term.
We have selected following four stocks for the year 2014; where we believe that the strong growth potential and robust business model of these companies could be rewarding for investors.
The Company expects sustained growth of both the bakery and dairy segments in FY14-15. Its growth to be driven through heavy investment in advertising & promotions as well as infrastructure investments to build scale and support new introductions, both in the premium and discount segments. The company expects that it will continue to drive profitable growth in an extremely competitive environment with focus on consumers, customers and cost effectiveness.
The product pipelines of the company for FY14 are strong and resilient. This fiscal could witness some more positive action during second and third quarters of FY14 as the out licensed deal signed with Sanofi could show a pleasant progress. The company has also received approval from the US Food and Drug Administration to launch Crofelemer, a drug used for HIV-associated diarrhea. The company is currently preparing to file for approvals to launch this medication in 140 countries.
The company has revitalized its flagship brand and also restructured its detergents portfolio acquired from Henkel. It is likely to launch new products in the personal care segment. To increase the awareness of its brands the company is focusing aggressively and has identified 7 power brands which will be marketed aggressively. Now the company aims to increase its turnover 3 times to Rs. 3,000 crore in the next 3 years.
The company believes that there is a big opportunity exist in Indian agrochemical industry as the usage of pesticides in India is one of the lowest in the world with 0.48 kg/ha whereas average world consumption is around 3 kg to 5 kg/ha and only 35-40 percent of the farmland is under crop protection. The company is now strengthening its organic portfolio and focusing on Agro-chemicals which account for about 85 percent of its business. It plans to increase its presence in the seeds business and focus on exports.
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