< The 2014 All-India Research TeamVivek MaheshwariCLSAFirst-place appearances: 0
Total appearances: 3
Analyst debut: 2012Marking his best showing to date on both consumer lineups, Vivek Maheshwari of CLSA rises from third place to second on this roster and from runner-up to No. 3 in Consumer/Discretionary. Although India’s consumer staples names climbed 8.1 percent over the 12 months through late October, they lagged the nation’s broad market by 16.2 percentage points. The sector’s performance will improve as the economy and consumer sentiment improve, Maheshwari acknowledges, but he notes that the purchase of staple items is more dependent on a recovery in rural consumption, since two thirds of the country still inhabits villages and smaller towns. As a result of the government’s withdrawal of subsidies targeted at rural areas and a poor monsoon season that yielded less rainfall than usual, he adds, “it’s difficult to gauge how much consumption from rural India there will be.” Moreover, says Maheshwari, even a pick-up in rural consumption will not have “an exaggerated impact,” because staples are defensive in nature. The analyst cites as additional concerns the sector’s record-high multiples, as well as increasing tax rates for companies such as Mumbai’s Colgate-Palmolive (India), a provider of oral and body care goods; and Hindustan Unilever, which operates in the household products segment. He prefers long-standing favorite Dabur India of Ghaziabad and Mumbai-based Marico, both makers of household and personal care products whose valuations are above average but “way below” those of Unilever and Colgate. At the same time, their tax issues are three to five years away, which means that, overall, the two companies “have a chance to still generate returns, which will be superior to Hindustan Unilever and Colgate for sure,” Maheshwari concludes.
