Please remember, these are not recommendations/ suggestions to buy or sell. Strictly for educational purpose the Indian Economy & Market Research Team has collected these details from the public domain for our subscribers as these couldn’t be a part of our regular monthly magazine.
This could be termed a SPECIAL ISSUE of Market Buzz because the 5 companies that we’re going to discuss here are unique, are different with a proven track record – never disappointing its stockholders. We must understand that whenever the market faces a reversal trend these companies are the first one to be affected. Read on each one, we have provided enough logic with many hidden financial numbers. But again we repeat, these are in no way recommendations. We have discussed here the finer points with a 2-3 years investment horizon. If you are ready to have a financial discipline for the next 2-3 months and consider a SIP approach to your investment method, rest assured the sky will be the limit in terms of returns.
TCS, the leading IT company, has recently done a buyback at Rs 4500 with a total outlay of Rs18,000 crore when the stock was trading at Rs 4043. Later stock zoomed but at present it is available at around Rs 3100; thus it has corrected almost 27 per cent and trading at 30PE. It was not the first time. It has done many times in the past also because the company has huge cash in the books. If we analyse the historical corrections of TCS, we find that during Covid it corrected 34 per cent, in 2016-17, 25 per cent and in 10 years it has been correcting between 20-34 per cent before zooming to make a new high each time. In FY22 it has recorded the highest ever performance after 3 years. With good growth and strong correction the stock is stable as more downside is limited. Those who wish to safely play IT can look into these details. However, accumulation is advised still in a staggered manner.
M&M has given year till date 20 per cent return and still trading in high territory whereas Nifty has corrected badly. In last 2 years the company has fully transformed itself in passenger vehicles segment. Two years back it launched Thar, last year XV700 and next week it will be launching Scorpio New Generation, which again is expected to get same kind of favour as it got in the two earlier launches. Thus it has made its high place in SUV segment again. In FY22 its financial performance was best in last 3 years. On CAGR, 5 years profit growth was 13 per cent whereas the stock during the time was up just 8 per cent. All its vehicles have a waiting list showing there is demand. Even tractor sale is growing after 2 years. With all its segments doing better the stock is ready for a rerating. If one wants to play auto sector one can’t ignore this stock which is in a sweet spot.
L&T has corrected 28 per cent from its recent January 2022 high of Rs 2078. This correction was only due to market sentiments otherwise on the performance level the story is just opposite. Oder inflow in Q4 has increased to 46 per cent and total order book has gone up to Rs 3576 billion, that means above Rs 3.5 lakh crore. In FY22 income was Rs 1,56,500 crore, the highest in its history yet the marketcap is only Rs 2,09,000 crore with an order book for next two and half years. It has 3 major IT subsidiaries with total marketcap of Rs 1.5 lakh crore. All its verticals are attracting good orders and it has a proven execution capability. After the recent correction now the stock has entered in the accumulation zone with minimum downside risk. Still investment is advised in SIP manner for 6 months to get a fair return.
Adani Ports & Special Economic Zone is fundamentally the best out of the total 7 listed Adani Group companies and a part of Nifty. All others trade at very exorbitant PEs whereas it is trading at just 28PE. It commands 24 per cent share in country’s total port capacity with 6 ports each at West and East coast, and developing a new port in Sri Lanka. If we leave out Adani Power and Adani Ports from the Adani stable then the rest 5 have a total marketcap of Rs10,50,000 with combined profit of Rs 3784 crore. After adding Adani Power we get profit of Rs 8696 crore. However Adani Ports itself has a marketcap of Rs 1,40,000 crore with Rs 4728 crore profit. All 7 companies command total marketcap of Rs 12,91,000 crore with Rs13,424 crore profit. All other Adani group companies are trading at unjustified mindboggling high price. In FY22 Adani Ports has recorded the highest ever income and operating profit. Another interesting factor not to be forgotten is that this is the only Adani group company which is trading at its 52 Weeks low. If you consider yourself an Adani lover then jump in this safest ship as it is providing a bottom fishing chance not on the basis of only return but safety also.
Ultrateck Cement has corrected 37 per cent from its 52 Weeks high of Rs 8269 trading at Rs 5177 these days. The board had announced a mega expansion plan of Rs 12,886 crore to add another 22.6 MT capacity per annum. In Q4 its capacity utilization was 90 per cent with 8.8 per cent volume growth. From its 3.26 Net Debt/ EBITDA ratio in December 2018 it is now reduced to just 0.32. That means in last 4 years the company has reduced its debt significantly and the effect of proposed mega expansion plan will be minimal. In FY22 sales was Rs 52,599 crore, operating profit Rs 11,514 crore and net profit Rs 7344 crore. The margin was impacted due to spiraling raw material price yet it has recorded highest ever profit in the year. Considering the demand in infrastructure sector and the huge correction it has gone through, the stock seems to be bottoming out, increasing the risk reward ratio.