- Wealth PMS (50L+)
It was a pleasant, positive week for the markets with the Nifty 50 index inching up yet another percent and staying near the All Time High.
The geopolitical and economical dynamics of the world have revolved around crude in 2022. This week crude gained 3.7% and closed at 87. The volatility of crude can be gauged from the fact that it is up by 24% in the last 1 year while it is down by ~28% in the last 6 months.
With one more month to go in 2022, Nifty has gained 8% over the past 1 year with half of it coming in the last 5 weeks.
On valuations, the price-to-earnings (PE) ratio for the Sensex was at 24.1, and there’s a graph below for historical comparison.
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This week, we have a Noida-based power and agricultural equipment manufacturer in the spotlight: Honda India Power Products (formerly Honda Siel Power Products).
Until recently, the company was a joint venture between the Honda Motor Group, and Usha International. The JV agreement later stood terminated, Usha International’s shareholding was reclassified from the promoter to the public category, and at present, the company is a subsidiary of the Japanese company Honda Motor Co.
The company makes and sells portable generators, water pumps, general purpose engines, lawn mowers, brush cutters, and tillers among other products to domestic (45% of F22 revenues) and international (55% of F22 revenues, 35 countries) customers.
HIPP’s products enjoy the brand recall of “Honda”, aided by a distribution network of 600 dealers, and the technical expertise supplied by its global parentage. Given that dealerships which sell Honda pumps are hard to find, the company has recently launched an e-commerce platform to reach more customers.
Moreover, the company entered the marine outboard business this year, targeting to capture a 10% market share in the 4-stroke segment in the next three years. Lastly, the company crossed 5 million units in production (5.7% CAGR since 2018) earlier this year. The combination of recent developments seems to have instilled some investor confidence in the company.
It is worth mentioning that HIPP paid about 7.5% of its revenue to its parent company as royalties, technical guidance fees, and export commissions last year.
(Disclaimer: The information conveyed in this post is intended for informational purposes and shouldn’t be considered as investment advice. Please do your own research before making investment decisions)
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