Stock Fundamentals


RADHIKA MERWIN | Updated on December 29, 2012 Published on December 29, 2012

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The Sensex gained 25 per cent in 2012 aided by $24 billion capital inflows, notwithstanding economic slowdown and persisting inflation. Consumption themes and rate-sensitive sectors such as FMCG, media, banking, realty and consumer durables led the rally. But sectors with a global influence such as metals, oil and gas, power and IT were key laggards.

Mandatory digitisation helped players such as Den Networks (301 per cent), Hathway Cable (147 per cent), and Siti Cable (319 per cent). However, with earnings of print media companies being volatile to advertising and newsprint prices, and debt troubles dogging some players, stocks like Deccan Chronicle (down 84 per cent) felt the heat.

On the banking front, the much-awaited Banking Bill was passed last week, paving the path for new banking licences. NBFCs such as M&M Financial (84 per cent), Bajaj Finance (113 per cent) and L&T Financial Holdings (103 per cent) gained as likely candidates for new banking licences. Over the year, stocks like Chola Investment (136 per cent) and Gruh Finance (103 per cent) have also gained on sustained earnings momentum.

While the RBI hasn’t cut interest rates very sharply, banking stocks have in fact outperformed on expectation of economical recovery and rate cuts. Private sector banks like HDFC Bank (58 per cent), ICICI Bank (65 per cent), Yes Bank (94 per cent), and Axis Bank (67 per cent) gained on consistent performance and sound asset quality. Karnataka Bank (155 per cent) saw a frenzy of activity on rumours of its likely acquisition.

In the FMCG space, alcohol major United Spirits (283 per cent) and United Breweries (147 per cent) gained at the back of promoter’s stake sale to UK major Diageo.

While realty index was up 52 per cent, it is still 85 per cent down from the peak of 2008. Expectations of rate cuts saw stocks rally over the last 4 months. South-based players like Prestige Estates (158 per cent) and Sobha Developers (99 per cent) witnessed better revival of volumes driven by new launches. DB Realty (215 per cent), Peninsula Land (130 per cent), and Anant Raj (122 per cent), all topped the broader indices.

In the auto space, stocks like Eicher Motors (88 per cent) have outperformed, due to its strategic Volvo JV and ramp up of premium bike capacity ( Royal Enfield). Tata Motors (73 per cent) also gained through JLR volumes. Amara Raja Batteries gained 140 per cent due to market share gains in the auto replacement segment.

The BSE Healthcare Index has outperformed the Sensex over the past three years. Wockhardt stole the show with a massive gain of 457 per cent, aided by a complete turnaround in business. The other notable stock was Shasun Pharma (184 per cent) that gained on improved financial performance and reasonable valuations.

Cement stocks have also been on joy ride in 2012. Large-cap player Ultra Tech (69 per cent) was a key gainer. In the mid-cap space, both J K Lakshmi Cement and J K Cement, remained the top gainers with 331 and 256 per cent gain. J K Cement benefitted from improvement in realisation, and addition in capacity.

The FDI liberalisation in the aviation sector saw stocks of Jet Airways (230 per cent) and SpiceJet (165 per cent) shoot up post September. Even through the first half, stocks did well aided by shortage of capacity in the industry. Also the recent talks of Etihad to pick stake in either Jet Airways or Kingfisher Airlines has seen both stocks rallying on the news.

In the Indian oil & gas sector high global crude prices compounded by unfavourable rupee remained negative for Indian PSU oil companies. The top losers include Shiv-Vani (down 42 per cent), and Indraprastha Gas (down 34 per cent). IGL had corrected steeply post Petroleum and Natural Gas Regulatory Board (PNGRB) ruling. The outperformer in the pack has been BPCL (47 per cent), thanks to its gas discoveries in Mozambique.

The IT sector continued to reel under global uncertainty. Infosys (down 16 per cent) performed the worst on internal challenges. The outperformer in the pack was HCL Tech (61 per cent) re-rating with significant business visibility and market share gains.

Surprisingly mid cap players outperformed this year. Top gainers include Vakrangee Software (267 per cent) driven by its dominant presence in e-governance. Stocks like Geometric (115 per cent), MindTree (74 per cent) and Oracle Financial Services (75 per cent) all gained due to better operational performance.

Among the other top losers were Glodyne Technologies (down 89 per cent) and Zylog Systems (down 70 per cent). The huge sell-off triggered by lenders liquidating pledged shares after promoters failed to meet margin calls.

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Published on December 29, 2012
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