We have been reading the latest Annual Reports of the companies we are tracking.

This is our third post where we’re sharing our notes on  Annual Reports of the stocks from our watchlist. Please don’t treat this as a buy recommendation. We find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in the future. The purpose of this post is to bring clarity to our understanding of the businesses we are tracking. Putting it up here makes it easier for us to refer them at a future date.


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Please click on the read more button for more details on each stock.

Galaxy Surfactants

Galaxy Surfactants is a preferred global supplier of surfactants and other specialty chemicals to leading FMCG MNCs and caters exclusively to their ‘home and personal care’ (HPC) segment. It is a perfect proxy to play the secular FMCG sector. While it does not deserve the valuation that FMCG companies (FMCG companies are B2C businesses, while Galaxy is a B2B business), it enjoys the consistency in demand. Presence across the globe helps them to mitigate geographical risk. Volume growth in the last few years has been steady. They have been able to pass on the hike in raw material prices to the consumers to some extent. This is the reason, the gross margin has been steady and upwards of 30% for the last ten years. Given the steady growth opportunity for the company going forward, the current valuation does not look very expensive. Hence, Galaxy Surfactants presents an interesting investment opportunity in the FMCG chemical space.

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HDFC Asset Management Company

HDFC AMC is the leading mutual fund house in India. It is the market leader in actively managed equity funds space and a trusted mutual fund provider for individual investors which is evident in their high individual account numbers and AUM. The company is also going well in the liquid funds’ space where it is steadily gaining market share and rising to the top of this segment. But like any other mutual funds house, the company is vulnerable to volatile markets and general investment sentiments. Nevertheless, given the trust shown in the company’s products and the under penetration of mutual funds and general investment in the country as compared to other major economies, HDFC AMC seems like a solid bet for anyone looking to invest in the theme of increasing investment and mutual funds. However, the valuation of HDFC AMC at CMP appears to be very steep compared to their near term earnings.

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Mahindra Holidays Resorts India Ltd

Mahindra Holidays has been a consistent player in the hospitality segment for a long time. Considering the long term nature of their unearned revenue which is set to grow considering the change in accounting changes, the company seems to be set on making the most of the situation and enable long term value creation by improving margins using innovative operational initiatives and rigid cost control. The company has seen its highest ever occupancy rate along with its highest room capacity and their Holiday Club subsidiary is on its way to turning profitable in FY20.  It remains to be seen whether they are able to continue the same performance standards that they envision in the near future. Nonetheless, based on their current performance, their strong cash position, revenue book, and their increasing member count, MHRIL remains a prime stock to watch out for any investor banking on the theme of holiday and tourism.

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PI Industries

PI Industries has been one of the most consistent performers in the agrichemicals business. They have performed reasonably well despite the slowdown in domestic business from the delayed monsoons due to the export growth of the company. The company is on schedule for its massive CAPEX plans and intends to continue this yearly schedule even in FY21. Furthermore, they have indicated that they are willing to increase their CAPEX from current should the need arise or undertake any new acquisitions should such an opportunity arise. The company’s stance as such is very aggressive and it remains to be seen whether they will be able to achieve their guidance as smoothly as they have in the recent past. Nonetheless, given the company’s stellar record, their expansion into new markets for existing products and their robust future product pipeline, PI industries deserves a good look for any investor interested in investing in Agrichemicals.

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