When Vijay Kedia announced in an interview that his focus is now on finding “safe” stocks, I remarked that the emphasis on “safety” does not mean that Vijay Kedia is no longer seeking bumper gains from his stocks.
I was absolutely right in my assertion because Vijay Kedia’s so-called “safe” stocks like Repro India, Sudarshan Chemicals, NIIT, TCP Packaging etc have all yielded bumper gains and thrilled their shareholders.
Panasonic Energy, Vijay Kedia’s latest stock pick, is in the same mould. It promises safety of capital coupled with the possibility of a hefty gain. Kedia bought 93,004 shares of Panasonic Energy in the July-September 2015 quarter. The investment is worth Rs. 3.24 crore at the CMP of Rs. 347.
The first notable aspect about Panasonic Energy is that it is a subsidiary of Panasonic Corporation, the Japanese electronics behemoth. This implies that the Indian subsidiary will never be starved of innovative products and cutting-edge technology.
The second notable aspect is that the company is debt-free and also offers a dividend yield of about 2%+. This provides the much needed downside protection.
The third notable aspect is that while the performance of the Company has been somewhat sluggish in the past, that may be about to change in a dramatic manner.
According to a report in the ET, Panasonic Corporation plans to start an acid battery factory and explore more opportunities for manufacturing under Prime Minister Narendra Modi’s “Make in India” campaign. Manish Sharma, Panasonic’s top brass, was also quoted as saying that the Indian arm would clock “30 per cent revenue growth each year” till 2018. He also stated that the contribution from sales to enterprises over the next three years is likely to double and boost growth primarily in the areas of energy storage and security. He repeatedly emphasized that the Indian business of Panasonic would grow at a “30 per cent CAGR (compounded annual growth rate).”
This is also supported by a presentation that Panasonic Corporation has prepared. The report sets out the “global vision” of the Japanese conglomerate and places a lot of emphasis on how the market in Asia has to be tackled.
Panasonic Corporation’s President, Kazuhiro Tsuga, was quoted as saying that “India is a high growth market for us globally hence we are planning investment in this region on products, talent, marketing and manufacturing. There will be a sound focus on local manufacturing and expansion of production processes and the company will continue focusing on developing India-specific product innovations as well as Eco and Smart Solutions catering to domestic needs”. He also stated that an investment of Rs. 1,500 crore would be made in India in a phased manner.
So, it does appear that Vijay Kedia has invested in Panasonic Energy with an eye on the explosive future growth that it is expected to witness.
In these circumstances, we have to accept that Vijay Kedia has again chosen his stock well. Panasonic Energy is in the unique position today where it offers safety owing to its reasonable dividend yield coupled with the prospects of high growth. That’s a winning combination indeed!