Better Than Expected

It feels good when expectations are met. But that, of course, also depends on what you expect. Take for instance, the expectations that we have from our policy makers today. While we wait for all the talk to translate into action on the reforms front, there is hardly any tangible move that has happened until now. Even as I key in this edit, news reports are suggesting that some action could be expected on this front in the next week. Let’s hope for the best, as a lot of it would shape the future direction that the markets would take.

The reason why I began by saying that it feels good when expectations are met is the fairly decent, or rather the good performance that Corporate India has put up during the September 2012 quarter. Quarterly results have always been that one crucial trigger for the markets. Expectations, good or bad, about corporate performance have shaped the way that the equity markets behave. A performance in sync with expectations tends to bode well for the markets, and the same applies vice versa. In fact, it is not just the past performance but also the future trends that go a long way in aiding objective investment decision making.

So, how did corporate India fare in the quarter that went by? Was its performance good, bad or ugly, and more so, what can we expect going forward? In this issue, our editorial and research team has incisively analysed the performance of India Inc. for the September quarter for the benefit of our readers. The cover story (Pg 11) provides all the necessary answers to the questions above.

Despite all the odds that it faced, India Inc. has put up a rather good show during the September quarter of 2012. The topline growth for the 2125 companies that our team has looked at (we have considered only BSE ‘A’ and ‘B’ Group companies for the purpose of this study) stood at 9.85 per cent. Growth at the bottomline level came in at 8.41 per cent. This is certainly an improvement over the performance seen during the preceding quarter. Remember, for the June quarter of 2012, topline growth came in at over 12 per cent while the bottomline was up only 2.24 percent. This is certainly good, but what is more interesting is that it is far better than what was expected. While the economy (global as well as domestic) continues to face headwinds, this performance suggests that investors can look forward to better times ahead.

Indian pharma companies have done well following the patent expiry regime in the US. Frontline pharma companies have emerged as clear winners, thanks to their rigorous R&D approach. We are recommending one such company – Glenmark Pharma as our Choice Scrip (Pg 8) in this issue. Adding this fast growing and aggressively managed pharma company to your portfolio makes perfect sense. Read on to find out why.

When my team came up with the idea of recommending the stock of an engineering company which is in the business of completing a vehicle by building a body atop the chassis, it did not seem convincing at first. But a look at the fundamentals of Commercial Engineers and Body Builders Company (CEBBCO) threw up some very compelling reasons why we thought investors should look at picking up this stock for their portfolio. This scrip is our choice for the Low Priced Scrip (Pg 10) in this issue.

Our special report in the mutual funds section (Pg 68) tells you how to manage your risks while investing in mutual fund schemes by explaining the various parameters that are a perfect measure of risk. Investors should read the mind of fund managers and learn to think the way professional money managers do.

As always, there are a whole lot of our regular sections which complete this issue. Do let me know your thoughts on the content and help us improve upon our offering to you. After all, your perspective does matter to us. With that, I will sign off and leave you with the interesting investment ideas that our team has come up with. I hope that you do build wealth based on them.