Six stocks — Asian Paints, Kotak Mahindra Bank, Hindustan Unilever, Lupin, Sun Pharma and Zee Entertainment — have consistently outperformed the benchmark Nifty in each of the last five years.
Six stocks — Asian Paints, Kotak Mahindra Bank, Hindustan Unilever, Lupin, Sun Pharma and Zee Entertainment — have consistently outperformed the benchmark Nifty in each of the last five years. In 2015, while the 50-share Nifty has lost 5% of its value, these stocks have clocked in average gain of 12%. In fact, the Nifty is poised to end the year with lowest returns in last five years following a 31% rise in 2014 when it put up its best show in five years.
Not surprisingly, the clutch of outperformers comprises primarily consumer-oriented stocks — capital goods and infrastructure companies have been laggards thanks to the severe slowdown in the economy.
While weaker consumer demand has started to reflect in volumes of both FMCG and durables manufacturers, HUL and Asian Paints have fared well thanks to better earnings visibility. Both firms have dropped prices to try and maintain market share. HUL, of course, has always been generous with dividends.
At a time when most sectors, including the automobile space, aren’t faring well, pharmaceuticals stocks have been sought after by investors. Despite several instances of action by the US Food and Drug Administration, drug companies have reported good numbers; moreover, a weaker rupee has helped exporters. That explains the presence of Sun Pharma and Lupin in the six outperformers. Lupin, in fact, tops this group of outperformers with an annual return of 26% in 2015 and an average return of 32% over the last five years.
Thanks to a stellar rally between 2012 and 2014, Sun has on average yielded 29% in the last five years even as it lost close to 4% of its value this year. Losses stemming from Ranbaxy, the pharma company it acquired last year, as well as US import bans on five of its manufacturing facilities have weighed on the company’s performance. Last week, the US FDA warned Sun for violating manufacturing standards from its Halol plant which accounts for about 15% of the company’s sale.