Tuesday, July 26, 2016

36 Better Performing Companies to Ride This Bull Run

Seasonal Magazine identifies 36 better performing companies in recent quarters, using 15 metrics. While the current bull run in Indian equities is largely a liquidity driven rally powered by FIIs, the momentum is likely to continue with only brief corrections, as the ongoing good monsoon and policy actions by the government are expected to grow corporate earnings starting from the upcoming quarter. It pays to be invested in better quality stocks during such extended bull runs, and Seasonal Magazine's research team deploys 15 performance and valuation metrics to pick the winners. These metrics include, Profit Growth, Profit Margin, Growth in Margin, Sales Growth, Respect for Equity, Return on Equity, Return on Capital Employed, Return on Assets, Debt / Equity, Dividend Yield, FII & DII Holding, Promoter Holding, Promoter Pledges, Price / Book Value, and Price / Earnings.

So, here are the 36 companies and their stocks that pass our tests for better performance:


8K MILES SOFTWARE SERVICES:

Growth is being powered by a string of unique acquisitions in USA.

The cloud services player's stock has surged nearly 145 times from Rs. 18 in late 2012 to Rs. 2550 in late FY'16, stunning most market observers. The market cap expansion was justifiably on fundamental growth, when 8k Miles' earnings soared by more than 11 times during these past 4 years. Still, the balance sheet remains small, and the base effect on the revenue side is still favourable for the Chennai based company whose operations are mainly in USA. The company also scores high in Respect for Equity, Profit Margin, and Return for Equity, among other metrics. However, 8k Miles is yet to provide dividends to investors, and the valuations are also steep for value investors to feel comfortable at this stage. There is a concern that the growth may be slowing down, but so far the company has been taking the right steps in USA for furthering its early mover advantage in cloud services. It has done a string of acquisitions overseas, and has also roped in an impressive panel of strategic advisors in its core market, which is surprising for its size. During FY'16, revenue has soared by 118% while net profit has surged by almost 109%. 

AVANTI FEEDS:

Support of world’s largest seafood processor is coming in handy.

A very niche player in the market for shrimp feeds and shrimp manufacturing, Avanti has been an investor’s delight for the past 5 years, when its share price surged by nearly 106 times. Powering the market cap expansion was its earnings expansion that was nearly 5 times in 5 years. The Andhra and Telengana based firm is noted for its small equity and low-debt model, and growing nature of the aquaculture market in India, especially after the introduction of the vannamei shrimps, is ensuring that the base effect will favour Avanti Feeds for a long time to come. The company also comes across as strong in several other core metrics like Sales Growth, Return on Equity, RoCE, Dividend Yield etc. Still, the stock remains attractive for value investors, trading at a cheap price-earnings (P/E) valuation of less than 15 times. While part of this low-valuation is due to the potential for adverse weather and diseases affecting shrimps to impact the demand scenario significantly, Avanti has been battling these problems with better processes and stringent quality control systems. World’s largest seafood processor Thai Union is a major investor in Avanti. FY’16 profit growth was over 36%.

BAJAJ FINANCE:

From TVs to e-com to now groceries, easy credit is the driver here.

From a captive lender for Bajaj vehicles, this NBFC has transformed into one of the most strategically diversified players within a short span of around 7 years. The share price speaks for itself during this period surging by 125 times, on profits that multiplied 14 times. Bajaj Finance also scores high in other core metrics like Respect for Equity, Revenue Growth, Growth in Margins, Return on Equity, Return on Assets etc. The NBFC’s success is largely based on its selection of two underserved markets – consumer durables finance and SME loans – and the dramatic way in which it has grown these markets with customer-friendly policies like zero-interest loans in the appliances market and rapid disbursal in the case of SMEs. Recently, it has taken its pioneering zero-interest model to e-commerce market by tying up with market leader, Flipkart, and to household / grocery market through Future Group (Central Mall / Big Bazaar). It is also continually expanding its product portfolio to include financing of lifestyle products, life care processes etc. However, this high potential for growth has made the stock trade at a high valuation of over 7 times its book-value. FY’16 profit growth is over 42%.

CAN FIN HOMES:

Very few HFCs have mixed growth and asset quality to this extent.

Affordable home loan provider Can Fin Homes, promoted by public sector lender Canara Bank, has played the home loan business perfectly during the last 5 years, and is reaping rich dividends now. Share price has surged by almost 16 times within the last 4 years itself, driven by profit growth of 3.5 times within the same period. Can Fin Homes has fared excellently in core metrics like Asset Quality, Respect for Equity, Revenue Growth, Growth in Margins, Return on Equity, Return on Assets etc. Its NPAs are among the lowest in the home loan industry. Driving the asset quality is its robust loan underwriting policies and focus on conventional sector customers like government and PSU employees. Can Fin is known in the market for its proactive stance and rapid Turnaround Time (TAT). Legendary entrepreneur NR Narayana Murthy who co-founded Infosys is a major investor in the company through his Catamaran Ventures. Despite getting re-rated significantly in recent years, and despite its continuing growth potential, Can Fin Homes stock remains reasonably priced, at price-to-book of 3.7 times against, say Gruh Finance’s 10.8 times. FY’16 profit growth is over 82%.

EICHER MOTORS:

Attaining traction abroad will be the game-changer from now on.

Fortune continues its shower on Eicher Motors. Just when its Royal Enfield motorcycle division was showing the first signs of a slowdown from the astounding growth of the past 7 years, its commercial vehicles JV with Volvo has started showing improved growth. Share price is up by a shocking 94 times within the past 7 years, driven by earnings that expanded by 11 times. Eicher Motors comes across as strong in metrics like Respect for Equity, Low Debt/Equity, Sales Growth, Growth in Margin, and Return on Equity. While tempering of growth in Bullet motorcycles is happening now, this growth is still way above any of its competitors, driven also by the low base effect which is still in RE’s favour. The division is betting big on a cautious and calibrated push into export markets which has started showing results in recent months. For the 12-month period ending March 2016, profit has grown by over 61% over the corresponding period. Despite continuing fundamental outperformance, the stock has become range-bound after 7 years of market-leading growth, due to high valuations. Promoter group has also sold a 4.2% stake for Rs. 2100 crore.

FORCE MOTORS:

If Benz and BMW will grow in India, so will their engine assembler.

Force Motors has tried many vehicle lines and products during its many years of existence, of which only a few have been successful, but in those few it has been remarkably successful, like its Traveller range of LCVs, and its engine assembling facilities for German auto majors Mercedes and BMW. Stock price has surged by almost 69 times within the last 7 years. Still, Force Motors is not a very expensive stock, trading at 22 times its earnings, and market is waiting for steadier growth, after the Volkswagen fiasco’s shadow over Benz & BMW, as well as India’s tough stance on larger diesel engines used by the German duo. However, Force is seeing higher opportunities in the horizon and has recently opened a new Rs. 100 crore engine and axle plant at Pune for Mercedes. Force Motors also scores high on Respect for Equity, Sales Growth, Growth in Margin, and Low Debt / Equity. FY’16 profit is up by almost 77%. After a blistering run, especially during 2014 and 2015, the stock is taking a breather in 2016 and trading range-bound. A breakout is possible as the low base effect will be in Force Motors’ favour for a long time to come.

GIC HOUSING FINANCE:

The focus was on affordable, long before affordable became chic.

When housing finance stocks were on fire during the last couple of years, GIC Housing Finance stock participated only modestly. But when 2016 arrived, and most housing finance stocks turned weary, affordable home loan provider GIC Housing’s stock started performing admirably. On a longer duration, this joint sector home finance firm has been an outperformer with its stock price increasing 9 times within the last 7 years. Powering GIC’s market cap expansion was a high dividend yield that stood at nearly 11% around 7 years back, and is even now a decent 1.60%. The company fares excellently in Respect for Equity, Sales Growth, Dividend Yield, and Asset Quality. The positive re-rating in the stock which started in late February 2016 has taken the stock to a P/BV of 2.15, which still leaves room for significant price appreciation. The rerating has been triggered by a good performance in FY’16 that saw earnings expand by nearly 21%, aided by a strong Q4 where profit was up by nearly 35%. A core strength of GIC Housing’s operation is its decades’ old experience in serving suburban housing markets in Western India, nearby major metro cities like Mumbai.

KEI INDUSTRIES:

Any voltage is carried and even in Middle East and Africa.

Electrical cables manufacturer and electrical EPC contractor KEI Industries ranks among one of the best turnaround stories since 2013. Within less than 3 years, KEI stock has appreciated by almost 20 times, driven by an earnings expansion of nearly 2.5 times. This maker of all kinds of electrical wires and cables from household wires to Extra High Voltage (EHV) cables, and all products in between, ranks high in metrics like Respect for Equity, Growth in Margin, and Return on Equity. In recent years, KEI has successfully strengthened its products for the household through a major rebranding exercise that sought to make KEI a household name. During FY’16, earnings are up by nearly 83%. KEI’s margin expansion is driven by focus on higher-margin products like EHV cables, better integration of its products in its EPC projects, and better positioning for the household market. KEI operates on reasonable debt levels (approximately a D/E of 1), and as such market is watching for either the resultant operational leverage to kick in or for the company to pare the debt on a longer horizon. KEI has significant and growing sales in several countries of the Middle East and Africa.

KITEX GARMENTS:

Future will hinge on how a sister firm is listed and merged.

Globally leading infant-wear manufacturer, Kitex Garments’ stock had a dream run in the bourses from 2011 to mid of 2015, appreciating by over 28 times within 4 years, driven by nearly 5 times expansion in earnings. But since then it corrected by over 68%, on the performance breaking the guidance. Since then both the performance and the stock have been improving slowly but steadily. The stock is up by 58% from the fall, driven by FY’16 profit growth of 14% and Q4 FY’16 sales growth of 17%. Kitex Garments fares high in certain core metrics like Respect for Equity and Low Debt/Equity. A dividend paying company, and that too rising dividends, Kitex Garments’ yield will, however, come across as high only for investors who have been holding for long. A major breakthrough in the company’s fortunes might happen when a plan by the promoters to list Kitex Childrenswear Ltd (owned by promoters) and to merge it into Kitex Garments Ltd, fructify. While this may entail dilution for existing investors, in the long-term the combined entity will emerge stronger as one of the world’s largest infant-wear manufacturers. The recent textile policy by Indian Government is also positive for Kitex.

LIC HOUSING FINANCE:

Expertise in property collaterals has been extended to other sectors.

The past 12-15 months haven’t been the best period for larger housing finance companies. While smaller HFCs caught up with biggies in market share as well as valuations, bigger players were hit by the large base effect to record significant growth.  Still, LIC Housing Finance, one of India’s larger HFCs, has executed an impressive performance with FY’16 profit up by nearly 20%, on sales that was up by 16%. Such potential for outperformance even under challenging situations, long understood by the market, was what had taken LIC HF’s stock price up by 3.5 times from 2013 to 2015. The housing finance major, promoted by Life Insurance Corporation of India, also scores high on a few metrics like Respect for Equity, Sales Growth, Profit Margin, Return on Assets, and Return on Equity. LIC Housing’s growth strategy to offset the large-base and grow has been to think outside of housing loans, and offer loans to secure entities like corporates, hospitals, professionals etc based on property collateral, cash flows, rental securitization etc. But the best is yet to come for LIC HF as India awaits a housing boom that will make large bases small.

V-GUARD INDUSTRIES:

A profit growth that is bigger than in any of the preceding 5 fiscals, changes fortunes.

After just one flat year in earnings, V-Guard has bounced back powerfully, recording nearly 58% growth on the bottomline in FY’16. The lull that was due to the unexpected crude price fall has been more than compensated with a profit growth that is bigger than in any of the preceding 5 fiscals. The market, ever ready to pounce on such opportunities, quickly took the V-Guard stock up by 45% post the annual numbers. This response is hardly surprising as except for the slowdown in growth during FY’15, V-Guard always had everything else going for it. The household electrical appliances and electrical cables maker scores high in several core metrics like Sales Growth, Growth in Margin, Debt / Equity, Respect for Equity, Return on Assets, Return on Equity, RoCE, and FII & DII Holding. It was that overall high-quality approach in management that made V-Guard stock multiply by nearly 21 times within a little over the last 8 years since its IPO. A 10:1 stock split has been recently announced. The firm is continually innovating on new products and solutions for the household and is most bullish about a solar solution for homes in Uttar Pradesh and eastern states.

PAGE INDUSTRIES:

Growth has come down, and will valuations follow suit?

Growth at India’s licensee for Jockey innerwear has slowed from earlier highs, but the stock continues to be valued high due to the immense promise it holds. Also, FY’16 earnings growth of nearly 19% is not too low. The slowdown is attributed to various factors, including a larger base of revenue, a larger base of branded market-share, and availability of imported Jockey products over certain e-commerce channels. Page Industries stock has run up by 50 times from 2009, but due to the moderated growth, it has not been able to surpass its all-time high of nearly Rs. 17,000 achieved in May 2015. Continuous reduction of promoter stake to even slightly less than 50% was also a concern, though it was executed with full disclosures. The company scores high in core metrics like Respect for Equity, Return on Equity, Return on Capital Employed, Low Debt / Equity, and Dividend Yield. Going forward, the fortunes of Page will be determined by how well it can grow its additional licensed markets for Jockey like UAE, how well it can compete with other imported brands available in India, and also on how quickly it can scale up its second brand of Speedo swimwear.

WONDERLA HOLIDAYS:

Fast and cost-effective execution of future parks will be the key.

From India’s first imported reverse-looping roller-coaster, to its 1 MW of solar power generation facility, to its cashless RFID based transactions, everything is next-gen at Wonderla’s latest Hyderabad amusement park. Built prudently on a Rs. 250 crore budget, the park which spans 50 acres, is the facility that will determine the medium-term fortunes of this dedicated amusement parks company. With two parks, its first one at Kochi and its second at Bengaluru, Wonderla had done well at the bourses, rising by 2.75 times its IPO price within just two years, on profits that were up by 50% over the same period. Wonderla also comes across as strong in core metrics like Respect for Equity, Sales Growth, Profit Margin, Growth in Margin, and Return on Assets. FY’16 revenue is up by nearly 13% while profit is up by over 18%. While margins are likely to be under pressure in the short-term, due to the recent capital expenditure, the stock is expected to take it in its stride on rising footfalls in Bengaluru and Hyderabad, as well as higher ticket-rates. NR Narayana Murthy’s Catamaran Ventures has recently upped its stake in Wonderla. The next park is being planned in Chennai. 

CAPITAL FIRST:

The potential remains huge in target sectors like SMEs and two-wheelers.

The market has been bullish on NBFC stocks for a while now, as they stand to gain maximum from the void left by banks in extending credit. Nowhere else is this most felt than in the SME sector, and that is why Capital First has been on a bull run, up by almost 6 times within the last 5 years. Formerly named Future Capital Holdings and belonging to the Future Group stable, the control was taken over by a team led by V Vaidyanathan who was a top performer in ICICI Bank, and financially backed by Warburg Pincus, one of the world’s largest PE firms. Once a wholesale credit player, Capital First has effectively transformed to a retail player during this period, with major operations in SME financing, two-wheeler loans, and consumer durables financing. The new generation NBFC is noted for its urban focus, as well as its tech-driven loan appraisals that have won recognition in the market. It uses detailed algorithms to assess a loan applicant’s repayment capabilities and attitudes, even when regular credit scores are not available, and is therefore enabled to deliver rapid Turnaround Times (TAT).  FY’16 earnings were up by over 45%, and it scores high in Asset Quality. 

MANAPPURAM FINANCE:

Innovative strategies prove to be the game-changer.

Only when strategy meets fortune, Manappuram type turnarounds happen. The result is also for its public investors to enjoy, as the stock has multiplied by over 4 times within the last 10 months and over 8 times within the last 3 years. Starting in FY’12, it was challenge after challenge for gold loan players like Manappuram, when new regulatory hurdles as well as falling gold prices hit them hard. But Manappuram kept its faith and laid the foundation for a diversified asset model by starting operations in housing finance, microfinance, commercial vehicle finance, SME finance etc. But just when the new strategy of asset diversification was getting into momentum with around 10% of the consolidated loan book getting to be non-gold, fortune has showered on Manappuram in the form of surging gold prices. FY’16 profit was up by 30%, and better growth is visible on the horizon due to improving gold prices post-Brexit vote, and all its newer lending businesses growing admirably with the added advantage of lower bases. Manappuram also fares well in core metrics like Dividend Yield, FII & DII Holding, & Return on Equity. Its market cap had recently breached the $1 billion mark.  

SOUTH INDIAN BANK:

Retail focus and powerful communications have helped it to outperform.

South Indian Bank has followed a good fiscal – FY’16 – with an excellent quarter, Q1 FY’17. In almost every performance metric, Q1 has seen commendable growth, even while asset quality remained stable on a sequential basis. On a YoY basis, deposits are up by nearly 11%, advances are up by over 8%, total business is up by nearly 10%, and most impressively, net profit is up by 46%. During FY’16, net profit was up by almost 8.50%, and compared with most of its traditional private sector peers, it was a commendable performance in a difficult year. More than that, FY’16 performance was powered by an excellent last quarter (Q4) performance which saw profits jumping four-fold on a YoY basis. Now, SIB has followed up that performance with an impressive Q1 on overall basis. The private lender also consistently excels in certain core metrics like Dividend Yield, Return on Asset, Respect for Equity, and FII / DII Holding. During the 5 years between 2009 and 2014, SIB stock was an excellent wealth creator, multiplying in value by nearly 8 times. Based on recent performances in Q4 & Q1, the stock will attempt to regain its glory, and it’s low valuation by P/BV makes it attractive.

SHILPI CABLE TECHNOLOGIES:

Success is about extending and dominating a niche.

The expertise was cables and it remains cables. But the masterful strategy was extending that expertise to any industry where cables are used, starting from telephone cables, to automotive cables, to networking cables, to electrical cables, to solar cables, to around 17 categories and several countries in the Middle East and Africa. Result is a profit growth of nearly 6 times in 4 years that drove stock price by 42 times within last 5 years. Now, the momentum is set to get better with a new $150 million plant in Abu Dhabi.

SIYARAM SILK MILLS:

Now getting into a more premium brand play.

From yarns to retail, and everything in between like fabrics, home furnishing, & ready-wear, Siyaram has come a long way in three decades. But what added value was the creation and deployment of 13 brands on which Siyaram crafts over 60 million meters of fabrics annually. Profit has grown nearly 7 times within the last 7 years, and the Siyaram stock has gone up by 28 times during the same period. The company is upping the premium brand play by bringing in Italian fashion label Cadini, and focusing on Exclusive Brand Outlets (EBOs) for driving growth.

MAYUR UNIQUOTERS:

Success of the new plant will be a key driver.

Leather is great but challenging, and that is the reason why artificial leather use has been on the upswing, taking the fortunes of Mayur Uniquoters to a new orbit since the last four years. Profit is up by 2.5 times within this period, while stock has soared by over 13 times. Mayur has systematically penetrated all the sectors needing artificial leather like automotive, footwear, furnishing, leather goods, and leather fabrics, and not just in India, but abroad. Mayur Uniquoters supplies even to luxury auto majors in USA. A new plant coming up with improved products is a trigger.

PI INDUSTRIES:

A rare agri play with insurance for bad monsoon.

Since monsoon 2016 is raining cats and dogs, the fortunes of PI are looking up, like most agrochemical industries. But the beauty of PI Industries is that it can grow reasonably even on bad monsoons due to its Contract Research and Custom Synthesis services for global chemical majors. That is how despite two bad monsoons straight, PI has grown its profit by 3 times within the last 4 years. The stock is up by nearly 10 times within the same period. While monsoon doing better than expected will be a boost, it also has a healthy overseas order-book in CRM to fall back upon.

SAMKRG PISTONS & RINGS:

If bike sales vrooom, so will their pistons maker.

A good monsoon changes fortunes in rural India, and two-wheelers are destined to be rain’s biggest beneficiaries. While the stocks of two-wheeler biggies will move up, so will the stock of key parts suppliers like Samkrg Pistons & Rings, which supplies critical engine parts to large manufacturers like Bajaj, Honda, & TVS. Profit has nearly doubled during the last three years, while stock price has gone up over 6 times in the same period. Future growth will also be powered by diesel engine parts to Tata Motors, Force Motors, Piaggio, Greaves etc, as well as exports to over 15 countries.

GRUH FINANCE:

Valuations that are shareholders' pride, peer companies' envy.

When it comes to the affordable home segment, Gruh Finance continues to be the benchmark to beat. The niche home financier belonging to the HDFC stable continues to outperform, with profit doubling during the last 4 years, and stock price expanding by 8 times. Gruh’s loan-book still has immense room for growth as the base effect remains very much in the company’s favour. Gruh is also a valuation leader when it comes to NBFCs, trading at over 43 times its earnings and over 11 times its book value. That is the premium any company gets for being a leader in its sector.

GLENMARK PHARMACEUTICALS:

Gearing up with fund raising and a pipeline of approvals.

Glenmark continues to be one of the most promising mid-cap pharma promises in India, and not without reason. FY’16 consolidated net profit is up by nearly 52%. The stock had a dream run of 3.75 times within the last five years. During the past year, dullish sentiment regarding FDA actions on Indian pharma companies have affected the counter, but Glenmark Pharma is gearing up to make many fundamental improvements including fund raising, recent FDA approvals, and a further pipeline of expected approvals. Its small equity gives it enough room to raise funds.

STRIDES SHASUN:

Market is keenly watching whether the merger benefits will accrue as promised.

Strides Arcolab has merged with Shasun Pharmaceuticals during the past year, and even when comparing with both their profits of last fiscal, the new company Strides Shasun has done well in FY’16. But more is yet to come, as the combined entity works on synergies and cost-cutting, as well as leveraging on Shasun’s pipeline in the US, and Strides’ growing African and Australian businesses. Strides has also done a string of strategic acquisitions in India and overseas, the benefits of which will appear in the coming years. Its Bengaluru plant has recently completed FDA inspection successfully.

TANLA SOLUTIONS:

The company needs to find more new avenues like A2P.

Tech companies rarely re-invent themselves to survive. Tanla has done just that, from a massive loss-making entity just 3 years back to a thriving operation that is growing its profits at a brisk pace. Once it was the leader in payment platform for Nokia phones worldwide, and when Nokia failed, it reinvented itself within years to emerge as a leader in the booming A2P (Application to Person) messaging business. During the downturn too it maintained its Respect for Equity and Low Debt / Equity. FY’16 profit is up by 4.6 times over the previous year. Stock is up by 22 times within 3 years.

NIIT TECHNOLOGIES:

Soundly managed, what it needs is a niche to dominate.

Among many mid-cap software companies, NIIT Technologies has proved to be an outperformer in recent years. Net profit has rebounded by 2.5 times in FY’16 from the temporary setback it had in FY’15. Revenue has been steadily inching up, up by 70% during the past four years. Stock is up by nearly 4 times within the last five years. Its performance has also helped its promoter company, NIIT Ltd which holds nearly 24% stake in the software firm. NIIT Technologies has a small equity, negligible debt, and offers a dividend yield of nearly 2%.

NBCC (INDIA):

Remarkable performance for a PSU, but it needs to survive open competition too.

Post 2012, we haven’t seen any PSU company’s stock rising by nearly 14 times within 4 years. NBCC (India) went for its listing in 2012 at Rs. 20 a share, and has seen its price touch Rs. 267 recently. Profit has grown by 2.6 times within the last 6 years. Formerly known as National Buildings Construction Corporation, it does a turnover of nearly Rs. 6000 crores on a modest equity of Rs. 120 crores and zero debt. Spanning verticals like project management, realty, & EPS, its order book has been swelling steadily and stands at Rs. 36,000 crore as of March 2016. NBCC is a Navratna Enterprise of GoI

SALZER ELECTRONICS:

Fresh thinking to look beyond L&T's support is needed.

Focus on a niche brings success, and Salzer Electronics has proved it by focusing on switches. It is a leader in rotary switches, and has a marketing tie-up with L&T, which is also a former equity partner. The company also manufactures Automobile Switches, Limit Switches, Load Break Switches, Modular Switches, and Proximity Switches. Profit has jumped by over 42% in FY’16. Stock price has soared by over 9 times within the last 3 years. Salzer also manufactures Cable Channels, Electrical Relays, Energy Saving Devices, Switch Plates, Terminal Connectors, & Toroidal Transformers.

HINDUSTAN MEDIA VENTURES:

The cash reserve needs to be effectively utilized for growth.

Print is dying, and Hindi print is long dead, right? Wrong, and Hindustan Media Ventures Ltd (HMVL) of the Hindustan Times stable proves that. Profit is up by 2.75 times within the last 4 years, and stock price is up by 3 times within the last 3 years. Hindustan Media Ventures’s flagship brand is ‘Hindustan’ which is not only one of the largest Hindi dailies, but a fast growing one. The balance sheet has only a small debt, and the company is cash rich too. HMVL proves every idea about media profitability wrong with its margin, RoE, & RoCE in high teens.

SINTEX INDUSTRIES:

Too many promising diversifications, but some need to be hived-off for unlocking value.

Sintex does a lot of things in a lot of industries, and it has been difficult for many analysts to get a grip on its operations and numbers. It has sizeable operations in three broad divisions – building products, custom moulding solutions, and textiles. In each of these divisions, it has numerous products and under its custom moulding division, it has sizeable operations in Europe and USA. In recent years, it has been most bullish on expanding its textiles division. Profit has doubled during the last 4 years, and stock is up by over 7 times in 3 years.

DIC INDIA:

Consistency in performance would change fortunes here.

DIC India is one of the leaders in printing inks and allied materials in the country, and rightly so, as it is part of DIC Corporation of Japan, the world’s largest in this segment. DIC India serves the printing, publishing and packaging industries, and has grown along with these segments. Profit has more than doubled over the last two years, and stock price has gone up by 5 times within the last 3 years. DIC India is known for its clean balance sheet, with a tiny equity and near-zero debt. While printing was said to be in a slow demise, the success of DIC India shows print has few alternatives in many cases.

SKM EGG PRODUCTS:

Growth has hit the roof, now time for a jump in capacity.

One of Asia’s largest egg powder and liquid egg processors, SKM Egg Products Export (India) Ltd, is almost a fully export-oriented unit catering to markets like Japan and Europe. A loss-making company five fiscals back, SKM swung into profits in FY’13 and has grown remarkably, with bottomline surging 25 times within 3 years. However, SKM is operating near to its capacities, and need to grow organically via capex, or do an acquisition to sustain this growth momentum. The stock which went up by 45 times since 2013 has recently corrected on this concern.     

VIDHI DYESTUFFS:

The promise remains enormous, but consistency will be the key.
  
Colours can be manufactured by many, but colours that can be eaten are only the forte of a few companies. This is especially so if the food colours need to pass the stringent quality standards in the developed world like HACCP, not to mention religious conditions like Halal and Kosher. Vidhi Dyestuffs Manufacturing Ltd is a company that has mastered all that, and the results speak for itself. Profit is up by nearly 4.5 times within the last four years, while stock price has surged by nearly 35 times within 3 years. Vidhi’s manufacturing unit is US FDA audited, and its products are used in 80 countries.

ASHOK LEYLAND:

A remarkable turnaround to profits, and more is in the works.

From a loss-making giant two fiscals back on consolidated basis, Ashok Leyland has come back into the growth game in remarkable style. From a loss of Rs. 214 crore in FY’15, it has swung into an impressive profit of nearly Rs. 1100 crore in FY’16. India’s commercial vehicles space has turned around, and as one of its leading players, Ashok Leyland won’t look back again for many years to come. It is a leader when it comes to supply of buses to India’s various state transport corporations, and is all set to deliver 3600 buses. Stock is up by nearly 10 times within 3 years.

YES BANK:

Solving the one issue facing one's industry is the recipe for success.

Yes Bank has been steadily growing its bottomline with profits doubling over the last 3 years. Even in FY’16 when growth stalled at some of its peers, profit has grown by nearly 27%. The bank’s biggest achievement has been how it steered clear of the NPA crisis that has been plaguing most lenders. Both its Net Profit Margin and Return on Equity have improved during the year and are in high teens now, thereby warranting a re-rating during the past 12 months, doubling Yes Bank stock. The stock has grown almost 30 times since 2009.

INDUSIND BANK:

Asset quality improvement will jump performance here.

The outperformer among private lenders during the last four years has been IndusInd Bank which tripled its profits since FY’12. Even during FY’16, IndusInd has maintained its pace, growing at over 27%. While there are asset quality concerns remaining, the bank promoted by the Hindujas Group, has so far outgrown it by compensating performance. The share price has appreciated by over 25 times since 2009. Due to its steady growth pattern, the stock has also grown in valuations and is now trading at nearly 6.5 times its book-value.

7 comments:

  1. Such a informative article but sad to see no body discussed anything in comments.
    However, great piece of content.

    ReplyDelete
  2. Good information for investors

    ReplyDelete
  3. Great list of fundamentally strong stocks

    ReplyDelete

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