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No market hype, yet this sector delivered 51% return in last 1 yrKamal Gada, UTI MF, Mumbai

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While market narratives have been focused on infra, defense, railways, power and now on consumption, a silent performer has been the BSE Healthcare TRI index which has delivered a strong 51% return over the last 12 months.

UTI Healthcare Fund has benefited from the sector’s revival and is well positioned to continue reaping steady gains from a sector that now has multiple tailwinds from domestic and international markets.

Kamal believes that while a good portion of mean reversion has played out, there continues to be good scope from growth prospects of the businesses.

The core pharma business (domestic formulations and generic exports) should continue growing revenues at about 10% p.a. says Kamal, which sets a sound base for compounding at a healthy clip.

Between API exports and contract manufacturing (CDMO),Kamal believes CDMO is a more structural long term story, which is therefore also valued as such. API exports is a bit of a tactical play with many uncertainties as Indian players are competing against much larger Chinese peers.

Kamal is bullish on healthcare services – particularly the diagnostics players, who have exhibited margin resilience despite significant growth in competitive intensity. Hospitals too are attractive, but they are capital intensive, unlike diagnostic centres.

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Healthcare & IT are not attracting investors fancy currently due to the cacophony on Manufacturing [ PLI Linked], Business Cycle other themes and their hyped prospects. But the current out-of-favor categories would have silent march towards top-quartile performance taking everyone by surprise. Then again, the cycle starts rotating with both AMC s and Investors chasing these sectors. Having a balanced approach towards every investment ideas and keeping on rotating sectors at regular intervals may bode well for investors at large despite the hiccups like wrong entry-exit points or high cost of churning.

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