Speciality chemicals space showing great signs of sustaining growth momentum: Dhiraj Sachdev, HSBC AM India

In a chat with ET Now, Dhiraj Sachdev, Senior VP & Fund Manager-Equities, HSBC AM India, talks about the midcap and small cap contrarian themes.

ET Now: Any contrarian themes, any less-talked-about sectors that you are betting on right now? Media, fertilisers, agri-related sectors — anything that is untapped in the market from a value perspective?

Dhiraj Sachdev: On the midcap side, we have seen speciality chemicals as one area which is showing very interesting characteristics, especially on the mid and small cap side.

We do not have too many large companies in the speciality chemicals segment. But whatever companies there are, they are showing the characteristics of pharmaceuticals business with very high return on capital employed.

It is partly driven by the fact that there has been environment or pollution norms that are very stringent in Europe and now also in China. This is leading to volume growth for the Indian companies on the export side.

So, these businesses have become scalable. They are export-oriented, are generating cash flows, and have high capital efficiency. All in all, this is one segment that is showing a decent trend on sustaining the growth momentum.

Therefore, this is one area that we like at the moment.