“While things continued to be muted for the chemical stocks, we are seeing an uptrend in the export volumes for the pharma-oriented companies which is a positive sign. Furthermore, while there is uncertainty surrounding the interest rate cuts by the Fed, any positive development on this front can result in significant improvement in consumer sentiments and augur well for the stocks with global market exposure,” Mukherjea told investors in a note.
Also read | Saurabh Mukherjea on 3 ways 2024 will be different from 2023
New small cap stock picks:
1) Everest Industries
50% of its revenue comes from roofing, 20% from cement fibre boards and 30% from prefabricated steel buildings. “We expect the roofing business to improve profitability on the back of the launch of innovative products and operating efficiency initiatives around manufacturing processes & logistics,” the PMS said.
2) Control Print
The company is the 3rd largest player in the Indian coding & marking industry. “We expect CP’s growth to accelerate led by an uptick in Industrial activity and market share gains in Industrial and Packaging space helped by consistent R&D spends, improvement in management bandwidth and lower consumable prices v/s MNC peers,” Team Mukherjea said.
3) Ami Organics
Marcellus said its key investment thesis surrounding the Surat-based pharma intermediates and specialty chemicals manufacturing company is based on its wide chemistry skillset, diversification and resilient financial track record.
4) Shanthi Gears
Shanthi Gears is an Industrial Gearing Solutions company supplying gears and gearboxes to different industries. The company has a major market share for industrial gears used in Vande Bharat trains.
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Mukherjea, whose smallcap portfolio underperformed in 2023, told ET Now earlier that incrementally they are becoming more comfortable in the sector which gave them the most pain in 2023.”We have been large investors in speciality chemicals for several years now. It worked for us for three years. Last year, we were absolutely hammered in speciality chemicals because the Chinese dumped chemicals all across the world and India. From May through to October, the Chinese dropped prices of chemicals by anywhere between 30% to 50%,” he said, adding he would rather keep loading up on speciality chemical names at very attractive valuations, rather than wait for the uncertainty to abate.
Other smallcaps in his portfolio include Fine Organic, Alkyl Amines, GMM Pfaudler, PDS, RHI Magnesita, Tarsons, Vijaya Diagnostic, among others.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)