During the current upmove of the BSE S&P Sensex, Andhra Pradesh-based companies have managed to post healthy run-up in prices despite the state being buffeted by the Telangana statehood agitation, a 70-day strike by Government employees, power outages and cyclone Phailin.
Except for the cement and textile sectors and those with retail interface, stocks of companies across other industries such as pharma, IT, infrastructure and agriculture have largely moved in tandem with the Sensex. That most of these companies have a sizeable chunk of their business outside the State and the country, certainly helped them deal overcome the issues.
The Sensex moved up from about 18,600 levels in the beginning of September to over 20,882 by October 18, a rise of over 12.2 per cent.
Good show
In the pharma sector, Dr Reddy’s scrip moved to Rs 2,460.30 on Friday from Rs 2,293.25 on August 30, a rise of about 9 per cent. That of Aurobindo Pharma climbed to Rs 207.85 from Rs 181.65, a rise of about 14 per cent. Both the companies have significant manufacturing facilities in coastal Andhra.
Local IT stocks also mirrored a similar trend. Infotech Enterprises surged to Rs 232.05 from Rs 185.95, a rise of about 25 per cent, while Tech Mahindra rose to Rs 1,536.10 from Rs 1,376.75, a rise of about 12 per cent.
Infrastructure stocks too, were impervious to the agitations that have been raging across the State. Ramky Infrastructure, for instance, nudged up to Rs 42.90 from Rs 32.35, while IVRCL inched up to Rs 12.82 from Rs 10.38 and NCC to Rs 23 from Rs 17.45, a rise of nearly 30 per cent.
“In the case of pharma and IT firms, the impact is minimal and the positive growth on the scrip price is mainly due to their business being export driven,” says Satish Kantheti of Zen Securities. In the case of infrastructure firms also the effect is less, because of their diversified presence. Most projects under execution are spread across India and not restricted by geography to one State.
Cement stocks tank
The big losers are essentially those companies with a retail interface, consumer driven and demand originating from Seemandhra region or reeling under power cuts. The worrying factor was that “banks were showing reluctance to give loans to AP based companies, the overall investor confidence was dropping and even IT companies were not expanding Hyderabad facilities”, he told Business Line .
Cement sector tanked during this period, mostly due to tepid market growth and power blackouts that affected operations. For example, Sagar Cements, tumbled to Rs 181.10 from Rs 237.10, a fall of about 23 per cent.