NEW DELHI | THURSDAY, 3 JUNE 2021 THE SMART INVESTOR 11 . < Sumitomo Chemical: Small-cap funds deliver by reverting to mean The category is volatile; take limited exposure to funds with quality portfolios SANJAY KUMAR SINGH exposure to this volatile seg- Stock gets capex boost FIVE BEST PERFORMERS ment to 10 per cent of their Small-cap funds have enjoyed a Returns (%) 1 year 3 years 5 years equity allocation. “If the Revenue growth, higher share of specialty products to aid margins massive run-up over the past weight of small-cap funds has year. The category has turned risen above 15 per cent in an RAM PRASAD SAHU in an average return of 109 per existing investor’s portfolio, he 201.1 Mumbai, 2 June cent — the best-performing should book partial profit and fund has yielded a humongous bring it back to 10 per cent,” he Sumitomo Chemical 201 per cent. Many investors, 131.4 says Kumar. 118.5 113.3 India stock gained about 14 however, are concerned 115.4 New investors may enter 28.6 22.1 21.3 21.0 18.8 per cent on Wednesday whether the category has 16.5 17.4 16.7 these funds even at current lev- T NA NA after brokerages upgraded it on turned risky after such a sharp els. “Allocate to the large-cap the back of new order wins, prod- rise. Quant Kotak ICICI Prudential Nippon India BOI AXA and mid-cap categories first uct launches, and focus on higher Small Cap Small Cap Smallcap Small Cap Small Cap and then enter small-cap margin segments that are expect- View returns in perspective funds, provided you have a These are direct, growth funds. Returns above one year are compound annualised. ed to drive revenue and earnings. Small-caps and mid-caps did NA: Not applicable Source: MFI Explorer moderate to high risk The strong March quarter per- not perform in 2018 and 2019. profile,” says Harshad formance also boosted sentiment, They were recovering in 2020, returns are in line with that of investors are chasing,” says Chetanwala, co-founder, with some brokerages revising when the first lockdown began mid-cap and large-cap cate- Sandeep Daga, managing direc- MyWealthGrowth.com. their earnings estimates for finan- in March, triggering a correc- gories,” says Arun Kumar, head tor and CIO, Nine Rivers Only those who have a horizon cial year 2021-22 (FY22) and FY23 tion. Small-caps fell again from of research, Fundsindia.com. Capital. He manages the of more than seven years by 10-15 per cent. an already low base. “The Aurum Small Cap should enter. The key trigger for the stock strong performance of small- Performance can continue Opportunities Fund, a PMS If the market corrects, say, is the capex plan, which will cap funds has been driven by Experts remain bullish on this (Portfolio Management due to poor corporate perform- entail setting up toll manufactur- reversion to mean after two segment’s long-term prospects. Services) scheme that has deliv- ance in the first quarter of 2021- ing capacities with investment of STRONG MARGIN EXPANSION years of weak per- “India is structurally a ered a one-year return of 201 22, these funds could take a hit. up to ~220 crore over the next Q4FY21 % chg YoY FY21 % chg YoY formance,” says high-growth economy. per cent (as on May 31). “Avoid lump-sum investment couple of years. This is in addi- Sales (~ cr) 533.9 19.8 2,644.90 9.1 Vinay Paharia, chief Many smaller compa- According to Daga, there is still and opt for the SIP route tion to its regular capex of ~70-75 Operating profit (~ cr) 70.9 69.0 486.9 46.1 investment officer nies with differentiat- a lot of value to be found in the instead,” says Manish P Hingar, crore per annum. Margins (%) 13.4 400.0 18.4 470.0 (CIO), equity, Union ed or niche business small-cap segment in undis- founder, Fintoo. The company will manufacture Asset Management models, operating in covered ideas. When selecting a fund, seek five proprietary technical grade Net profit (~ cr) 54.2 136.7 345.4 46.6 Company. high-growth seg- To assess valuation, analysts a consistent performer—one active ingredients for the parent Margin change is in basis points Source: Company, analyst reports New investors ments, are bound to do compare the market capitalisa- that has done well across at Sumitomo Chemical Corporation entered the equity YOUR well,” says Paharia. tion of a segment with that of least one bull and one bear and its affiliates. The revenue Nufarm’s operations in Latin improved price for some products market in significant Valuations have the entire market. “If small- phase. A steep fall during a bear potential of these products are in America by Sumitomo Japan gave (gross margin up by 106 bps numbers last year. MONEY turned expensive, but caps’ share rises above 15 per phase indicates poor risk man- the ~200-250 crore range on an the latter the leadership position sequentially), and synergies from “This segment’s per- only in pockets. “Many cent, it indicates they have agement. Look for funds with annual basis (9 per cent of FY21 in the LatAm generic market. the Excel Crop Care merger. formance can also be attributed fundamentally sound compa- turned expensive. At the start quality stocks in their portfo- revenues) with gross margins of 37- Analysts at ICICI Direct Margins are expected to to the exuberance of these nies in the small-cap space of 2018, it stood at around 19 lios. Sound portfolio quality 38 per cent, which is in line with Research say the increased capac- improve on the back of specialty investors,” says Paharia. have robust business models per cent. At present it is at 11-12 will give you the confidence to the company average. ity of the fungicide tebuconazole, product focus, with these prod- The small-cap category’s and strong balance sheets. per cent. So, they are still not hold on to your fund during the Given that the products are in along with supply of other mole- ucts’ share rising 300 bps in FY21 returns are not steep when They are gaining market share too expensive,” says Kumar. inevitable bear phases. Finally, demand globally, there is a possi- cules, will likely aid LatAm to 32 per cent. Analysts at Antique viewed over a longer horizon. at the expense of their weaker avoid funds that chase momen- bility that additional capacities and growth. The company is planning Stock Broking expect the company “Over the three- and the five- peers or the unorganised sec- Book partial profits tum and stick to those with low new products could be added in to nearly double the capacity of to post strong growth and year period, this category’s tor. These are the stocks Most investors should restrict portfolio turnover. the medium to long term. This con- tebuconazole from 750 to 1,350 outperform the Indian agrochem- tract manufacturing adds an addi- tonnes per annum, which coupled ical market, given its distribution tional revenue stream and offers with the order from the parent strength, rising share of revenue visibility over the medium company, was the key reason for exports, innovative product to long term. Nirmal Bang Research raising its launches and gains from the par- Over ~14,000 cr returned to unitholders: FT MF Rising exports to Latin earnings estimates. ent’s R&D portfolio. American (LatAm) are also expect- While its revenue outperfor- Given the growth prospects and CHIRAG MADIA schemes as on April 23, 2020 — Franklin India Short Term Income ed to drive revenue growth. mance in March quarter (up 20 per balance sheet strength (cash of Mumbai, 2 June the day the fund house decided Plan, Franklin India Income Revenues from this market grew cent year-on-year) was driven by ~532 crore), brokerages believe the to wind up the debt schemes, cit- Opportunities Fund, Franklin India 68 per cent in FY21, with the LatAm strong growth across categories, stock should trade at a premium to Franklin Templeton (FT) Mutual ing liquidity constraints. Credit Risk Fund, and Franklin revenue share doubling to 4 per margins expanded about 400 its peers. After the surge in Fund on Wednesday said it has FT said it had another India Dynamic Accrual Fund. cent of overall revenue. This was basis points to 13.4 per cent. Sumitomo’s stock price, it is trad- returned ~14,572 crore to ~2,642 crore of cash available for The amount distributed as on aided by the ramping up of existing Margin expansion, according to ing at 20-30 per cent premium to unitholders of its six shuttered distribution. May 31 ranges between 26 per products and new product regis- Sharekhan, was supported by peers such as Bayer CropScience schemes. This amounts to The six schemes were Franklin cent and 87 per cent of the AUM trations. The acquisition of operating leverage (volume and BASF India. Investors can con- 58 per cent of the assets under India Ultra Short Bond Fund, of the schemes before the wind- Australian agrichem major growth across products), sider the stock on dips. management (AUM) of the six Franklin India Low Duration Fund, ing up decision. LOST & FOUND Original Property Documents in the name of Mrs. Nalini Chandra & Mr. Prabhash Chandra are Lost/Misplaced by Union Bank of India, ULP Noida, B- 14, 2nd Floor, Sector 16 Noida 201301, Uttar Pradesh. Description of the lost document:- 1. ORIGINAL ALLOTMENT LETTER DATED 23/09/2009 ISSUED BY M/s GRANITE GATE PROPERTIES PVT.