Information Madness

The Rupee’s slide has caught some companies and some sectors on the wrong foot. Some are looking up to the Reserve Bank of India to step in. For few companies with big exposure to the U.S. markets, the Rupee’s slide may work as a trigger. There are companies in India that sell products directly to retailers in these markets and they will earn good revenue. The five companies that are most likely to gain from such a situation are:

 

• ADF Foods – This is an FMCG Company that exports meal accompaniments and ready-to-eat foods to the U.S. and Europe. It has also acquired the U.S. - based foods company, Elena Foods that deals in ethnic Mexican food.
• Bombay Rayon Fashion – It manufactures fabrics and exports them to the U.S. and European markets. The Company has a low debt to equity ratio. This ratio helps to preserve its earnings since the interest expense is limited. Another factor that is working for this Company is its increasing realisation from fabrics. The fall in the price of cotton and the depreciation of the rupee will increase its profits further.
• Gitanjali Gems – This jewellery retailer has increased its position through acquisitions. It has acquired brands like Rogers and Samuels and it owns one hundred and thirty retail stores in the U.S.
• Gokaldas Exports – It manufactures garments and exports them mainly to the U.S. market. The appreciation of dollar against the rupee and the fall in the cost of material costs due to the reduction in cotton prices is going to help its revenue. The fall in the value of the Indian Rupee will give such companies a cost advantage over Chinese and Bangladeshi counterparts by about ten per cent.
• Lupin Laboratories – It is among the top ten pharmaceutical companies in India. It earns over 70% of its revenue from overseas. Majority of that comes from the U.S. where it has a generics business. It is the fifth largest generics company in the U.S. The future prospects look very good.