The 2014 All-India Research Team: Consumer/Staples, No. 3: Sanjay Singh

< The 2014 All-India Research TeamSanjay SinghStandard Chartered BankFirst-Place Appearances: 0

Total Appearances: 3

Analyst Debut: 2012Standard Chartered Bank’s Sanjay Singh advances from runner-up to third place. For the past year he has maintained an underweight position on India’s consumer staples shares — the group lagged the domestic broad market by 16.2 percentage points over the 12 months through late October, rising 8.1 percent. Although investor interest has recently returned to defensives, including consumer staples, he notes that valuations are still at significant premiums to the historical sector median, demand is expected to remain feeble for the next two to three quarters and weak rainfall from a poor monsoon season is hurting agricultural earnings and rural spending. In addition, Singh anticipates that tax rate and excise duty increases will take a bite out of overall profit growth and earnings. Despite this generally cautious stance, in February 2013 the analyst named Calcutta’s Britannia Industries a top pick, and he has stuck with that position. Soft prices for milk, palm oil and sugar will boost consesus margins for the producer of breads, cakes, other baked goods and dairy products, he believes. In addition, new chief executive Varun Berry, who took the reins in April, has moved to aggressively launch new premium and value products, notes Singh. During the 12-month period ended in late October, Britannia’s shares shot up 55.1 percent, to 1,404.85 rupees. He also favors ITC, which is posting 15 to 17 percent earnings growth, he says, and a “valuation gap makes it an attractive bet in the near term.” The Calcutta-based cigarette manufacturer dominates the local market and is trading at a significantly higher discount than usual because of antitobacco comments made by nation’s health minister. However, “such issues are transitory,” he explains, “and the environment can be managed by ITC, as it has done in the past.”

RUNNER(S)-UP
Latika Chopra
J.P. Morgan

Rohit Chordia
Kotak Securities

Prasad Deshmukh
Bank of America Merrill Lynch

Sponsored

Arnab Mitra
Credit Suisse

Sunita Sachdev
UBS

Nillai Shah
Morgan Stanley

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