The Economic Times daily newspaper is available online now.

    KR Senthilnathan on 2 chemical stocks that are still good buys

    Synopsis

    “We are trying to see structural change in the consumption pattern. So wherever there is a structural change in the consumption pattern, we will be a buyer of that. And that is where the wealth has been created in the past and we continue to believe in that.”

    KR Senthilnathan on 2 chemical stocks that are still good buysETMarkets.com
    “One of the stocks which has been classified as chemicals is Linde India. Linde India is primarily into air separation units. They are the leaders in oxygen and hydrogen air separation units and feature in our portfolio. Apart from that, there is another stock called Ultramarine Pigments, which is basically into pigments. They are trading very cheap and have a huge cash flow. That is why we are holding those companies in our portfolio,” says KR Senthilnathan, Director - Investments, NAFA Asset Managers

    What is the best way to play the entire consumption theme? The staple names were not doing too well earlier but have started showing a bit of momentum. There are very divergent views on urban consumption.
    These are all the short-term tactical things which will happen for any consumption but what we are trying to see is the structural change in the consumption pattern. So wherever there is a structural change in the consumption pattern, we will be a buyer of that. And that is where the wealth has been created in the past and we continue to believe in that.

    Unlock Leadership Excellence with a Range of CXO Courses

    Offering CollegeCourseWebsite
    Indian School of BusinessISB Chief Technology OfficerVisit
    IIM LucknowIIML Chief Executive Officer ProgrammeVisit
    IIM LucknowIIML Chief Operations Officer ProgrammeVisit
    Are you looking at pure FMCG names in terms of consumption? When I look at your portfolio, there seems to be a lot more B2B or industrials?
    We do have some kind of consumption. We have Mrs Bector Foods. But why we are playing on those things is because inflation has picked up and the trade is expected to be back to normal. That is when these guys will have the pricing power and the margin will go back to the higher levels or normal levels. That is the primary play on the consumption stocks which we hold currently.

    The sector allocation is largest when it comes to chemicals. Highlight some of the names that you believe are still good buys.

    One of the stocks which has been classified as chemicals as per the sectoral is Linde India. Linde India is primarily into air separation units. They are the leaders in oxygen and hydrogen air separation units and feature in our portfolio. That is why you can see our chemical weightage is on the higher side. Apart from that, there is another stock called Ultramarine Pigments, which is basically into pigments. They are trading very cheap and have a huge cash flow. That is why we are holding those companies in our portfolio.


    APL Apollo Tubes is also an interesting one. Would you want to talk to us about the rationale for this?
    Simple rationale is that they will be able to gain market share and today they are at 50% plus market share in the structural tubes. It is a low margin business, something like say 3 to 4% because being a converter but they are able to gain the market share and they are doing it without making any mistakes. And that is where wealth has been created as well.

    I also see allocation in excess of 5% when it comes to auto-ancillaries, plastic products as well in your books, stocks that you're betting on here?
    In auto-ancillaries broadly, we hold something like say tyre companies and plastic products, mainly because of Astral Poly. They have entered into segments like adhesives and faucets, etc. Those will feature under plastic products. This is the broad category we have



    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more


    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

    Stories you might be interested in