I got this list forwarded by someone and the write ups. Its a list of analysts who have been rated by Business Today (based on inputs from various fund managers) as the top ones in India today. They are believed to have a hand on the pulse of the stock market and the various companies.
Personally, I am not an industry or company type of guy – because then you are stuck. What you need to understand is the economy and which will be the best stock going forward given its price. Do you agree with list, btw? Have you interacted with any?
33, Senior Investment Analyst
Research House: CLSA
Sectors: IT Services, Education and Internet
He’s a star analyst who almost didn’t become an analyst to begin with. Until 2001, Bhavtosh Vajpayee was an investment banker at JM Morgan Stanley, happy doing deals for India Inc. Then, one day, “a Bschool friend who is also currently my colleague at CLSA recommended me internally,” and that’s how Vajyapee ended up trading his suits for smart casuals. Since then, there has been no looking back for Vajpayee, an alumnus of IIT Kanpur and IIM Ahmedabad.
Vajpayee’s best call last year was the downgrade of IT services sector, a move that, he says, “was a quarter too early but eventually turned out well”. Vajpayee also took on some unique themes, such as CLSA’s “Chain Reactions” project that quantified, for the first time, the impact of the IT sector on the broader Indian economy. “There is always something new to explore, understand and communicate,” says Vajpayee, father of two, about his job.
No doubt, it’s that spirit that makes him a favourite among fund managers.
Research House: Enam Securities
Sectors: Metals and Cement
In February this year, Jagdishwar Toppo tore through 1,500 km of southern India in just four days. No, the 38-yearold wasn’t doing a cross-country rally, rather he was trying to figure out how cement capacities were shaping up. To his surprise, most of the new capacity was behind schedule. That led him to conclude that till the end of March 2010, demand for cement will continue to outstrip supply.
Sure, Toppo, who also visits China at least once every year to get a bottom-up view of the global metals industry, had to put up with bad roads, poor infrastructure and unhygienic food, but his unorthodox research technique has huge pay-offs. “The management of a company may say good things, but to know the ground realities, I travel to their plants and meet industry people,” says Toppo, who was in BT’s Best Analysts list in 2005 as well.
Yet, even Toppo’s best efforts can be tripped up by powers that be. Take, for instance, his positive call on the cement industry. Soon after he advised his clients to buy cement stocks, the government cracked the whip on manufacturers, putting a ban on cement exports and asking them to rein in prices within the country. But for Toppo, who received his MBA from IIM Calcutta in 1994, such surprises are nothing new. In the 10 years that he has been with Enam, he has seen and lived through highs and lows of the metals and cement industries.
Now, Toppo is scouting for the next big thing. One such sector that he has zeroed in on is fertilisers. In fact, a report he wrote on the sector last year ended up putting most of the sector stocks on fire. “There is going to be a boom in agriculture, besides which new gas (from Reliance Industries) is coming in; this bodes well for fertiliser companies,” he says. However, Toppo was surprised that many of the fertiliser stocks moved far ahead of his price targets. “(But) you have to trust the market,” he says.
Even in these times, it’s hard to disagree with that.
33/ Equity Analyst
Research House: ABN AMRO
This 33-year-old chartered accountant and Cost Accountant is one of the youngest on this year’s list. Agarwal started his career at Man Financial (formerly Refco) and spent more than six years with it. Following a stint looking after international markets for a while, Agarwal graduated to covering the banking sector.
“For me, the markets have always been a passion. So, becoming a research analyst was not a tough choice,” says Agarwal, who joined ABN AMRO in November 2006. Agarwal says that he follows a “top down” approach to equity research. “Personally, I love macros. So I look at the marcos first and then the prospects of the industry, before I look at individual stocks. I don’t know if it’s the best process but it really works for me,” he adds. Among the really good calls that he has made in recent times was the “Sell” call he put out on State Bank of India when the stock was trading at Rs 2,200 levels in February. Last fortnight, he upgraded the stock to a “Buy” when the stock was trading at a little over Rs 1,200.
Agarwal feels that he missed an opportunity when he “played safe” in February 2008, and did not “downgrade” the banking industry. For now, he believes that the macros for the industry look challenging and considers the current oil prices as a “big delta for a country with a high current account deficit”.
As for weekends, Agarwal loves to spend time travelling down the countryside around Mumbai and catching up on his reading, which largely revolves around investments. “I never plan for the future. I just go with the flow,” says Agarwal. Considering that he is among the best equity analysts in the country at 33, that approach seems to be working for him.
37/ Principal Head of Research
Research House: Credit Suisse Securities (India)
The mood in the stock market has changed dramatically from the time Nilesh Jasani came back to India in September 2006. The euphoria that prevailed till January this year has given way to extreme pessimism. Yet, this analyst at Credit Suisse is excited by the diversity of themes, sectors, and interplay of policies that drive Indian stock markets. “This market doesn’t run on a single or a few parameters. There is so much to learn from people and policymakers around,” says Jasani, who returned to India after working for 11 years in various markets in Asia Pacific.
Even though he hasn’t been tracking Indian markets on the ground for a long time, Jasani has quickly earned a reputation among fund managers for his original thinking. Earlier this year, when the Sensex was at 20,000-21,000 levels and most analysts had only a bullish view, Jasani’s reports highlighted the downside risks also. In one of his reports, he busted the de-coupling theory and rightly so. He was also among the few analysts who had been issuing warnings since March 2007 about a slowdown in corporate earnings.
For Jasani, the challenge began when he had to set up a team of 21 analysts for Credit Suisse’s India operations after he came back in September 2006. “It wasn’t easy to find people in a raging bull market and it’s definitely challenging to bring out some new thinking in your research, when you have so many talented people in the industry,” says Jasani. What about the challenges in a bear market like the one India is currently experiencing? “We have seen the extremes in this market. The biggest challenge in a market that is moving one way is to see how to take a call on the direction,” he says.
Challenges apart, the IIT Bombay and IIM Calcutta graduate is happy to be back in India, as he is able to catch up with his family and friends. In his free time, Jasani loves reading about -no prizes for guessing-the history of global stock markets.
36/ Director, India Asia-Pacific Equity Research
Research House: Citigroup Investor Research
Sectors: Telecom, Oil & Gas
He has been through the tech crash of 2000, so the current market meltdown isn’t the worst he has seen. Yet, for Rahul Singh, who has made it to this list for the third time, it is a humbling experience. “The job of an analyst is to keep thinking ahead of others in rising as well as falling markets. Within a span of six months, we have had to change our thought processes drastically,” says Singh, Director, India Asia-Pacific Equity Research, Citigroup Investor Research. For him, the challenge is to find stocks that have already discounted the worst-case scenario.
“In a rising market, the analyst and his recommendations tend to become irrelevant. It is in times like this that investors tend to question our assumptions and earnings estimates. We add value by factoring in the negative scenarios and communicating the same to them,” says Singh, an alumnus of IIT Bombay and IIM Lucknow.
He did something similar in early 2008, when the valuation difference between two telecom companies widened on the expectation of one of them expanding into new business areas.
Singh took a contrarian call, highlighted the execution challenges such an expansion would entail and took a call that the high valuation wasn’t justified. Indeed, the stock has corrected sharply since then.
Singh first featured in BT’s Best Equity Analysts list in 2005, when he was with SSKI Securities. He returned to the list in 2006 and by that time he had joined Citigroup Investor Research.
32/ Senior Investment Analyst
Research House: CLSA
Sectors: Power, Engineering and Construction
Rajesh Panjwani likes his job, especially the intellectual thrill and the opportunity of meeting some of the brightest people-entrepreneurs, heads of businesses and outstanding fund managers. “A research analyst gets an opportunity, if he wants to take it, to go beyond the obvious and study businesses in depth,” he says.
That’s precisely what Panjwani does, and that is just one of three reasons that make him one of India’s best equity analysts. Apart from the ability to look beyond the obvious, he feels analysts need to put themselves in fund managers’ shoes while taking stock calls. And lastly, independence in making stock calls is critical. Then, he believes that in the final count, luck also plays an important role.
Panjwani, an alumnus of IIM Ahmedabad, joined CLSA straight from campus in 2000, and tracks the power and engineering sectors. His finest call? He says he was glad he did not get swayed by the excessive bullishness on the power sector. Panjwani downgraded NTPC, Power Grid, ABB and Suzlon at significantly higher prices than today. CLSA was one of the few houses not to have a positive rating on Reliance Energy, which, in retrospect, proved to be prescient.
A family-oriented person outside of work, Panjwani spends most of his spare time playing with his oneand-a-half-year-old son and reading “an eclectic” range of books.
37/ Associate Director-Research
Research House: Macquarie Capital Securities
For somebody who has been an equity analyst for just over three years, 37-year-old Rakesh Arora’s presence on this list will hardly raise any eyebrows among those who keep an eye on the metals sector. As Associate Director for Research (Basic Materials) at Macquarie Capital Securities, Arora has put out some incredible calls including “Buys” on Tata Steel, JSW Steel, Gujarat NRE Coke, and India Cements.
Take the case of Gujarat NRE Coke, the largest independent producer of metallurgical coke. Macquarie had initiated coverage of the company with a “Buy” call in August 2007, when the stock was priced at Rs 58. In less than a year, the stock price almost tripled to touch Rs 180. Currently, it’s trading at Rs 120 levels.
What helps Arora take such calls? For one, a first-hand experience of how some of these sectors work. Arora is a mining engineer by training and almost joined Coal India, before he decided to pursue the more lucrative career of stock picking. For another, Arora employs two simple steps for his research.
“One, it’s important to know which way a sector is headed in terms of business outlook,” he says. “If the business outlook for a sector is positive, stock valuations are high,” summarises Arora. “Step two, at a company level, I look for companies that are competitive, have cheap growth options and good management.”
As for the metals sector, Arora believes that over the next 2-3 quarters, the steel and coal sector will do well. In the medium term, Arora is also bullish about aluminium, as he sees India becoming a hub for its manufacture.
39/ Co-Head, Institutional Equities
Research House: Kotak Securities (Institutional Equities)
Sectors: Oil & Gas, Strategy, Media
He is the Amitabh Bachchan Or the Shah Rukh Khan of the analysts’ community. Sanjeev Prasad has made it to this list for the fifth year in a row. When BT asks him how he feels about this, he says: “You can now put me in the Hall of Fame list.”
But the last one year has not been easy. He kept recommending a “Sell” on Reliance Industries, but the stock continued to rise. Then, soaring crude prices made it difficult to predict the earnings of state-run oil firms. “One doesn’t feel good, but you have to live with it,” says Prasad.
When BT asked a fund manager how Prasad maintains his popularity despite such wrong calls, he said: “He knows his subject very well and we find out what’s happening in the sector (oil & gas) from him.” Moreover, the fund managers say many times markets become irrational, something like what has happened in January this year.
Prasad, who studied Chemical Engineering at IIT Delhi and management at IIM Ahmedabad, foresees troubled times for the Indian stock markets. “There is too much of negative news and there is possibility of further fall,” he says.
In May last year, Prasad predicted that the Sensex would be in the region of 15,500 in 2008. The bellwether is already way below this level. He will need all his acumen and knowledge to steer his team out of this turbulence.
31/ Senior Analyst
Research House: Motilal Oswal
Sectors: Engineering, Infrastructure and Utilities
Tracking a sector in which every stock participates in the bull run makes it easy for an analyst. He can recommend a “Buy” on any stock and it will go up. But it’s only when the going gets tough-as it has in the case of engineering and infrastructure sectors-that analyst recommendations come under investor scrutiny, and the best analysts stand out. That is the reason why Satyam Agarwal, the 31-yearold analyst at Motilal Oswal Securities, features on our Best Equity Analysts list.
When the valuations of the engineering and construction sector were at their peak during October-December last year, Agarwal was perhaps the only analyst to downgrade the sector from “Buy” to “Neutral”. Until the market slide that started in January this year, this sector was among the top performing sectors; but it is now one of the worst performers. “We could see that the price-earnings multiples and earnings estimates of companies in the sector were at their peak in the last quarter of 2007.
That prompted us to change our recommendation for the sector,” says Agarwal, who started his career 10 years ago at K.R. Choksey Securities. From there he moved to Khandwala Securities and then Motilal Securities. In between he had a brief stint with a foreign brokerage house, but returned quickly to the home-grown players. The IPO of Reliance Power in January was another “exciting period” for this chartered accountant, who has been tracking the sector for seven of the 10 years he has been an analyst.
Although the Reliance Power stock, like all the others in stock market, is down, Agarwal likes engineering and infrastructure in general because they fit nicely with the India growth story.
Research House: Citigroup Investor Research
Sectors: IT, Technology and Media
Surendra Goyal has seen the game of stock research from both sides-as a buy-side analyst at SBI Mutual Fund, and a sell-side analyst at SSKI Securities and, now, Citigroup. Among others, this, says Goyal, is the reason why he’s successful at stock picking.
“Once you move from buy side to sell side, you are in a better position to understand what is expected out of an analyst report,” says the 33-year-old engineer and an MBA from IIM Lucknow.
Fund managers will vouch that Goyal is good. Among them, he is known for his in-depth understanding of the information technology sector, although of late he has started covering media as well. Never mind the current market meltdown, the IT sector has disappointed investors several times over the past few years. Apart from the rupee appreciation in 2007, the risks of a slowdown in the US economy have made investors dump IT stocks time and again. This has made the job of analysts more challenging.
Goyal recalls that one of his major challenges was to take a call that Tier-I IT companies will do better than Tier-II firms, even though the latter were trading at a discount. Today, he stands vindicated. The large-cap companies have weathered the market storm better than the smaller ones. That said, Goyal-and his team that covers 17 IT stocks- isn’t infallible. Last year, he and his team recommended a “Buy” on a Tier-II stock, but a few months down the line, reversed their stance to “Sell”. Since then, the stock has dropped more than 50 per cent. “If you think you have gone wrong, it’s better to go out and communicate it to investors,” says the John Grisham fan. Needless to say, fund managers respect him for that.
41/ Associate Director
Research House: Kotak Securities (Institutional Equities)
Sectors: Banking, Financial Services
Tabassum Inamdar isn’t the only female equity analyst on D-Street, but she’s the only one to have made it to BT’s coveted listing in the five years it has been around. Her reaction to the distinction when BT tells her about it? A gentle smile. But then, keeping her head in good times and bad is absolutely critical to what Inamdar does, which is to keep an eagle eye on banking and insurance industries.
An analyst for the last 15 years, Inamdar started out at auditors Haribhakti & Co as part of her articleship for a degree in chartered accountancy. After a short time spent doing research for foreign firms partnering in India, Inamdar joined Jardine Fleming and covered select companies such as IFCI and ICICI, and certain NBFCs. Unfortunately for her, though, the NBFC sector was soon mired in bad loans and strict regulations, and most of the NBFCs died a slow death. “Tough times teach you a lot,” she quips.
Inamdar claims to be early in identifying trends in the banking sector. The first trend she spotted early on, she says, was the use of technology in banks in late 1998 followed by retail banking (2000-01) and insurance in 2004 (there is no listed company yet in this industry). Currently, she is working on identifying a trend that could last for the next 15-20 years in banking. But her compliance rules prohibit her from speaking about it to BT.
Fund managers still remember her call on ICICI Bank in 2002, when it had just emerged in its new avatar as a bank from a developmental finance institution earlier. “I thought the restructuring would be very positive for the company,” she says. But to her dismay, the stock kept falling for a year, even as Inamdar stood by it. She was vindicated when a year later the bank stock started climbing. Today, of course, ICICI Bank is a top pick for all institutional investors.
What’s her take on the banking industry in these times of turbulence? Thanks to high inflation, increasingly dearer oil and rising interest rates, she expects a 10-20 per cent decline in net profit of banks in 2008-09.
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