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The 2014 All-India Research Team: Consumer/Discretionary, No. 2: Prasad Deshmukh
Total appearances: 2
Analyst debut: 2013
Bank of America Merrill Lynch’sPrasad Deshmukhclimbs from runner-up to second place on this list and earns a runner-up position for his coverage of Consumer/Staples names. Deshmukh foresees possible upside for India’s discretionary consumer stocks, which jumped 34 percent year to date through late October, against the domestic broad market’s gain of 21.5 percent. He points to key leading demand indicators that bode well for discretionary purchases in India’s urban centers, including real gross domestic product growth, a rise in disposable income, jobs with better wage hikes in urban areas, higher consumer confidence and stabilizing consumer inflation. “This is coupled with our on-the-ground channel checks that support our view of a potential pick-up in discretionary demand,” the analyst adds. Regarding specific stocks, he maintains a buy rating on Bangalore-based Titan Co., a specialty retailer of eyewear, jewelry and watches, because management’s business model is focused on procuring gold in a way that minimizes inventory carrying costs, as well as highlighting premium watches and breaking even in the eyewear segment. “A possible jump in cash flows raises the likelihood of better payouts, in our view,” says Deshmukh. “Further, exports and the online channel could open new revenue streams.” He also recommends that investors buy Jubilant FoodWorks, a Noida-based fast-food company that operates Domino’s Pizza, Dunkin’ Donuts and other restaurants in India. With its “proven supply chain, strong balance sheet and growth through internal accruals,” the researcher explains, Jubilant is best placed to take advantage of the fast-growing quick-service restaurant category in India.