April 2004: The first month of the current fiscal turned out to be quite an eventful one. While corporate results continued to trickle in and impress all and sundry, it also had its share of unnerving moments on account of uncertainty over the outcome of general elections.

Amidst all this, the Sensex managed to close the month with gains and edged 2 per cent higher. However, there were certain stocks that were able to outperform the index by a handsome margin. Let us have a look at the top five gainers among the Sensex stocks over the past one-month.

-	30-Mar-04	3-May-04	% Change
SENSEX	5,520	5,629	2.0%
Cipla	1,140	1,372	20.3%
MTNL	124	147	18.5%
Grasim	1,035	1,220	17.9%
Gujarat Ambuja	287	331	15.3%
Wipro	1,377	1,556	13.0%

With over 20 per cent gains during the month, domestic pharma major Cipla, emerged as the largest gainer among the Sensex stocks. The buying interest was triggered following the company's strong performance during FY04.

Buoyed by a big exports push in the fourth quarter, the FY04 topline of the company increased by a strong 31 per cent YoY, while the bottomline grew at a slightly lower rate of 27 per cent.

The company's growth during the first nine months was rather sedate and net profits grew by a modest 6 per cent. However, on account of a strong 55 per cent YoY growth in exports during 4QFY04, the performance of the company received a big boost thus rekindling investor interest.

Going forward, we remain hopeful of the company's ability to capitalize on the growing market for bulk drug manufacturing and expect it to outperform the industry.

Fixed line telephony major, MTNL, gained nearly 19 per cent over the last one month and as a result emerged the second largest gainer among Sensex stocks. With the opening up of sector to private players, it was anticipated that companies like MTNL, with a predominantly PSU culture would face the heat and wilt under competition pressure.

The script went along as expected and as of October' 03, the company's total subscription numbers stood at a negative 1.1 lakh subscribers. In other words, it had lost 1.1 lakh subscribers to either competition or defaults of payments.

However, with the launch of a couple of new schemes (Rs 100 rental scheme for only incoming calls, separate phone lines only for the internet) and a perceptible change in the attitude of its employees, the company was able to stem the slide and when FY04 ended, its net subscriptions for the year were reported to be positive 10,000.

Although the numbers seem to be small, they are indeed lot better than the precarious situation it was into, a few months back. The company operates in markets where tele-densities are among the highest in the country. Moreover, on account of increased competition the incremental subscriptions will be hard to come by.

Therefore, much will depend on the company's ability to retain its existing subscriber base and at the same time increase its revenues through value added services like the Internet.

Occupying the next two slots on the list are cement majors, Grasim and Gujarat Ambuja. While the Sensex broke fresh grounds in FY04, cement players were not able to participate in the growth story, mainly on account of a modest 4.4 per cent growth in demand during 9mFY04.

The fall was mainly attributed to prolonged monsoons, which led to a decline in construction activity. However, on account of strong macroeconomic indicators, the demand picked up post monsoon (demand grew at a faster rate of 7 per cent during 2HFY04).

Grasim and Gujarat Ambuja, being the leading players benefited from this trend, as was evident from their financial performance. The fact that the realisations also improved, led to an even higher growth in their revenues. Grasim also benefited from a strong demand for steel as its sponge iron division led by strong rise in both demand as well as prices, witnessed a strong 57 per cent rise in YoY revenues during FY04.

Going forward, we remain positive on the cement sector expecting it to grow at a healthy rate of 8-9 per cent in medium to long term. Gujarat Ambuja and Grasim, on account of their leadership position should grow higher than the industry.

Wipro, the tech bellwether rounded off the list with a strong 13 per cent growth in market cap over the month. Increased tech spending by global players led to the company registering a strong 36 per cent growth in topline, while pressures on the margin front meant that the bottomline grew at a lower rate of 26 per cent.

The global IT business, which accounted for 74 per cent of the total revenues in FY04, grew by a healthy 42 per cent and accounted for bulk of the increase in topline. While the company continued to deliver on the topline front, pressure on margins remained a cause for concern.

Although the company has great technological expertise, the valuations are at the higher end of the spectrum and the investors need to exercise caution to that effect.

While the markets are likely to remain jittery over the next month or so on account of political drama, our longer term view (over 5 years) remains buoyant on India's prospects. Over the next one year, the indices are unlikely to show the kind of buoyancy witnessed in 2003.

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