Tough stocks that outlast tough times to retain investors

Investors’ interest is likely to sustain in companies such as Varun Beverages, Endurance, Amara Raja, Bata, PVR, Gujarat Gas, and Asian Paints that have been able to improve financial performance in the second quarter despite the challenges in the economy. These companies were successful in reporting better business growth than their respective sector averages.

Varun Beverages, one of the largest bottlers of Pepsi, reported 60 per cent growth year-on-year in volume at 124 million cases in the September quarter helped by recent acquisition and growth in the rural market following greater availability of electricity.

Amara Raja Batteries, a supplier of batteries to auto companies, reported 24 per cent growth in the operating profit following a double digit revenue growth from the replacement market, which offset the pressure on earnings from sales to automakers. Also, a change in revenue mix in favour of high value products resulted in 370 basis points (bps) margin expansion to 17.2 per cent.


Endurance Technologies, an auto ancillary company, outperformed the industry growth on account of increasing volume from new automakers, 10 per cent growth in the replacement market and increasing content per vehicle from the existing customers.

India’s largest paints maker Asian Paints had double digit volume growth in seven quarter in a row after the company enhanced focus on low margin, low end products. It has recently launched an ultra-economy emulsion which is priced 20-25 per cent below its regular economy emulsion to maximise benefit of the cut in the GST rate.

Domestic and foreign investors have increased holding in these companies. For instance, Sundaram MF, Blackrock and William Blair raised holdings in Varun Beverages. UTI Asset Management and L&T MF added some of these companies in their portfolios, according to Bloomberg data.