Stock Selection - India
Transcript of Stock Selection - India
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The Top 20 Stocks
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Company CAGR Sales CAGR PAT P/E Ratio Ent. Value Retention R
Mahindra &
Mahindra Ltd.22% 23% 24.5 8,20,742 75%
Motherson Sumi
Systems Ltd.62% 37% 56.0 3,23,684 69%
Eicher Motors Ltd. 31% 51% 443.5 2,62,664 87%
Amtek Auto Ltd. 26% 24% 16.1 1,01,236 97%
Lupin Ltd. 24% 30% 19.2 5,59,398 84%
Aurobindo Pharma
Ltd.21% 63% 15.7 2,65,598 83%
TorrentPharmaceuticals Ltd. 20% 29% 16.8 1,40,475 48%
Ajanta Pharma Ltd. 28% 56% 22.8 56,606 85%
Adani Ports & SEZ
Ltd.34% 32% 33.1 7,00,155 86%
J S W Energy Ltd. 37% 23% 17.8 1,70,229 58%
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The Top 20 Stocks
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Company CAGR Sales CAGR PAT P/E Ratio Ent. Value Retention R
Bajaj Holdings & Invst.
Ltd.66% 23% 20.0 1,04,530 -28%
Godrej Properties Ltd. 42% 26% 35.9 54,570 81%
Titan Company Ltd. 23% 35% 43.1 3,21,794 70%
Godrej ConsumerProducts Ltd.
40% 36% 56.5 3,15,853 77%
United Breweries Ltd. 21% 38% 86.1 2,05,752 86%
Astral Poly Technik
Ltd.42% 41% 54.2 47,848 95%
Tata ConsultancyServices Ltd.
24% 29% 24.6 46,78,316 64%
H C L Technologies Ltd. 20% 25% 18.7 10,91,089 76%
Tech Mahindra Ltd. 33% 25% 23.9 5,16,103 91%
Persistent Systems Ltd. 23% 30% 20.4 45,190 78%
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Final Shortlisting Criteria
From the Top 20, stocks were individually
studied on parameters such as
Growth opportunities & Likelihood of growth
Earnings quality
Return on Equity & Its de-compisition
Relative performance to peers in the industry
Stock price trends
Risk associated with the stock
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Stock Price Movement
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Companies Not Selected
Company Reason for not selectingTata Consultancy
Services
-Growth expectations are already very high
and built into the current stock price
Persistent Systems -Outsourced Product Development a major
revenue contributor is very competitive
market & overall spend on OPD likely to
reduce
-Stock price doubled in past 1 year. Maybe
overvalued
Tech Mahindra -Growth in Sales not translating into
corresponding growth in PAT
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Adani Ports & SEZ Ltd
Logistics venture of Adani Group (Mundra Port& SEZ)
Strong earnings quality (34% CAGR in Sales &
32% CAGR in PAT)
~85% of profits retained for growth
Mar 14 Mar 13 Mar 12 Mar 11 Mar 10
Net Worth 39.28 28.41 21.61 23.11 18.45
Sales 29.30 35.42 31.66 35.37 22.68
PAT 14.94 49.01 19.38 40.69 52.02
Rate of Growth
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Stock Price Movement
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Companies Not Selected
Company Reason for not selecting
JSW Energy - Very high sales growth but not translating
into corresponding PAT growth
Godrej Properties -Relatively small player in the industry.
Unlikely to outperform industry growth
Bajaj Holdings &
Investment Pvt Ltd
-Slow growth in auto industry
- High dividend payout (low growth
opportunities)
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Godrej Consumer Products Ltd.
Low Beta Value: Indicates The Stocks Are Less Risky
Dividend Yield Is On The Higher Side
An equitable increase in Pat corresponding to an increase in Sales
MPS Is High But So Is EPS And DPS Indicating Value For Money
Growing Rapidly: The Company's Revenue Has Doubled To Rs 7,823 Crore In
2013/14 From Rs 3,643 Crore In 2010/11 Innovation And Expansion: Almost 30 Per Cent Of Gcpl's Revenue In The Past Year
Has Come From New Products
Future Plans: We Want To Be 10 Times Our Current Size 10 Years From Now
Nisaba Godrej
P/E Beta Alpha Div Yield dps EPSValue 56.46 0.38 0.73 0.54%. 5 16.99
Year Mar 14 Mar 13 Mar 12 Mar 11 Mar 10 Mar 09
PAT 8193 8454.3 7512.4 5147.1 3395.9 1732.6
Sales 78229.4 66244.1 49866.1 37758.9 20842.8 14391.7
Rate of Growth
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Stock Price Movement
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Companies Not Selected
Company Reason for not selecting
United Breweries Ltd.
-High Beta (0.91) but significantly low dividend yield at
0.12%.
-High PE ratio of 86.13
-High risk
-Negative sentiments
Astral Poly Technik Ltd.Highest Beta (0.99) but significantly low dividend yield at
0.08%
Titan Company Ltd.
-A good Company to Invest in but Beta is quite high as
compared to GCPL with a marginally high Dividend Yield
hence Godrej was more secure
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Motherson Sumi Systems Ltd
High growth potential industryAuto Anciallary
Stock P/E Values close to industry P/E values
Debt/EquityNot highly leveraged companies
The dividend yieldSimilar as compared to Peers PAT and Sales CAGR for last 5 years
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Stocks Price P/E P/B Beta Div Yield EPS
MothersonSumi 358 56.01 15.76 0.64 0.56% 6.4
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Stock Price Movement
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Companies Not Selected
Company Reason for not selecting
Eicher Motors - Very high Stock Price considering future
growth prospects
Mahindra &Mahindra Ltd
- Hasnt achieved the kind of growth in
others have achived.
Amtek Auto - Fluctuating Stock Prices
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Thank You
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