Portfolio Backtesting is a strategy used by investors and traders to backtest how a portfolio would have performed if they have invested in a few specific assets during a defined time frame. The results of the portfolio backtesting help investors to create their own strategy (or expectations) while investing with similar assets in an alike situations.
To perform stock research, Portfolio Backtesting is a powerful tool for stock market investors. However, there are very few quality tools available in the Indian market to backtest Indian stock portfolios. In this post, we’ll discuss how to backtest portfolio using the Portfolio Backtesting tool by Trade Brains.
Portfolio Backtesting Tool by Trade Brains
Using Trade Brains’ Portfolio Backtesting tool, you can backtest your strategies to find out the returns that you might have got on any past investments. Here, you can test how portfolios would have performed if you’ve invested in different stocks with varied allocations for 5Yrs/10Yrs back, before Demonetization, amid COVID19, or any other desired time frame.
This advance portfolio backtesting feature allows you to build one or multiple stock portfolios based on different allocations and backtest their performance. Moreover, you can find the detailed result and can look into the absolute returns, CAGR, Portfolio growth, Y-O-Y or M-O-M returns in stocks on these portfolios.
Example: How to perform Portfolio Backtesting on Indian Stocks?
In this example, we’ll discuss how much returns you would have got if you’ve invested Rs One Lakh (1,00,000) in four companies Asian Paints, HDFC Bank, Hindustan Unilever (HUL), and Reliance between Jan 2014 to Jan 2019.
The allocations on all four stocks can vary in different portfolios. For example, an equally distributed portfolio will have Rs 25k invested in each stock. On the other hand, you can also give different weightage to some stocks in an unequally distributed portfolio.
Let’s backtest the return on these four stocks between 2014 to 2019. Here are the steps to perform Portfolio Backtesting on Indian stocks using Trade Brains Portal:
2. In the ‘Tools’ section on Top Menu Bar, select “Portfolio Backtesting”. Else, here is the direct link to the Trade Brains’ Portfolio Backtesting tool.
3. Enter the Start Date, End Date, and Initial Amount. For this example:
Start Date: 1st Jan 2014,
End Date: 1st Jan 2019 and
Initial investment amount: Rs 1,00,000
4. Next, allocate funds in different stocks to build your portfolio.
For Portfolio 1 (which is equally distributed), enter (25, 25, 25,25) which means 25% of Rs 1,00,000 allocated equally in each stock. In the other two portfolios take two different uneven allocations. For instance, (40, 40, 10, 10) and (20, 20, 30,30) allocation in stocks for Portfolio 2 and Portfolio 3.
5. Finally, Click on “Backtest”
After clicking on Backtest, a tabular result will appear that will show how much returns each portfolio would have made. Here is the result for the above example of portfolio backtesting:
From the above table, you can see that portfolio 1 has given a CAGR return of 18.81% per year. If you have an evenly distributed portfolio with the stocks of Asian Paints, HDFC Bank, HUL, and Reliance invested between Jan 2014 to Jan 2019, your investment amount of Rs 1,00,000 would have appreciated to Rs, 2,36,819.16 by 2019.
Note: You can look into the ‘Analysis’ segment on Trade Brains’ Portfolio Backtesting tool to get more details about the results of your backtest.
Further, please do notice that the second portfolio has given the best returns out of three with a CAGR of 19.81%. This shows that a better allocation can improve the final returns on the portfolio.
In this post, we discussed what is portfolio backtesting and the exact steps to perform it on Indian Stocks using Trade Brains Portal. If we summarize, portfolio backtesting is a powerful tool to find the historical performance of a bundle of stocks and evaluate how much returns can be expected if a similar portfolio is made. Another important point that we learned from this post is that the returns on a good portfolio can be improved by an efficient allocation of money on different stocks, rather than investing evenly in all.
That’s all for this post. I hope this post was useful to you. If you’ve got any queries related to Trade Brains’ Portfolio Backtesting tool, do let me know by commenting below. I’ll be happy to answer your doubts. Have a great day and Happy Investing.
Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting
Ever wondered why do companies like MRF don’t split the stock? If you check the current market price of MRF Share, it’s hovering at a whopping price of Rs 84,470 per share. Its all-time high for the last 52 weeks is Rs 98,599. Even though the price of one share is too high for this company, the interesting question here is why the MRF’s management/promoters are not splitting its shares? After all, buying a stock at Rs 84,470 per share is not financially viable for most retail investors.
In this article, we are going to answer the same. Here, we are going to discuss why companies like MRF don’t split the stock. However, before we discuss these expensive stocks, let’s first study why companies split their stocks?
An Interesting study on companies that Rapidly Split Stocks in Past
You might have heard about the wealth creation story of Infosys. A small investment in the 100 shares of Infosys in 1993 would be worth over Rs 6.04 crores by now. (Also read: How to Earn Rs 13,08,672 From Just One Stock?)
In the last 25 years, Infosys has given multiple bonuses and stock splits to its shareholders. And, that’s why the share price of Infosys is still in the affordable purchase rate for the average investors. In fact, if Infosys has not given so many bonuses and splits, the price of one share of Infosys might have been over multiple lacks by now. Here is the bonus and split history of Infosys from 1993 till 2018:
Besides, Wipro is another common stock with a similar story. Because of its consistent bonuses and splits, the Wipro share is still in the purchase range for the retail investors. Else, if the management had decided not to give any split or bonus, then the share of Wipro might also have been over multiple lakhs and maybe over crores by now. (Also read: Case Study: How 100 shares of WIPRO grew to be over Rs 3.28 crores in 27 years?)
The big question – Why do companies split a share?
Here are four common reasons why companies split their shares-
Stock splits help the companies to make the share price affordable for retail investors. For example, if a company is trading at a share price of Rs 3000 and it offers a stock split of 10:1, then it means that its price will drop to Rs 300 per share after the split. Now, which price is more affordable to the public- Rs 3,000 or Rs 300? Obviously, Rs 300.
The stock split makes the stock more liquid and hence increases its trading volume. This is because the total number of outstanding shares increases after the stock split.
Splitting a stock does not affect the financials of a company. Although the outstanding shares of the company will increase after the split, however, the face value will decrease in the same proportion. Overall, stock splits don’t affect the financials and hence the companies are willing to go for it.
As small and retail investors are more interested in affordable shares, stock splits help in increasing their participation and overall helps the companies to build a broadly diversified investor base for their stock.
Overall, in terms of value, the stock split doesn’t matters much as the financials of the company remains the same. However, by splitting the shares- the company is able to keep the shares affordable to the public and hence maintains a wide ownership base.
Companies that do not split their shares – List of few Costliest Shares!
The reasons to split shares might be clear by reading the above paragraph. However, the next big question is why few companies do not split their shares? Why the share price of many stocks in the share market is still in the 5 figures if they have an option to split their stocks.
If you check the current market price of the companies listed on the Indian stock exchange, you can find out that there are many companies whose share price is above Rs 5,000. Here are a few of the top ones:
Company
Industry
Market Cap (Rs Cr)
Current Price (Cr)
MRF Ltd.
Tyres & Allied
35528.29
83770.55
Honeywell Automation India Ltd.
Consumer Durables - Electronics
39314.58
44465.85
Rasoi Ltd.
Consumer Food
303.2
31387.65
Page Industries Ltd.
Textile
33131.19
29703.75
3M India Ltd.
Diversified
30843.25
27379.55
Shree Cement Ltd.
Cement & Construction Materials
97260.35
26956.3
Nestle India Ltd.
Consumer Food
159994.65
16594.25
Abbott India Ltd.
Pharmaceuticals & Drugs
31139.58
14654.4
Bosch Ltd.
Auto Ancillary
42343.13
14356.7
The Yamuna Syndicate Ltd.
Trading
433.35
14099
Tasty Bite Eatables Ltd.
Consumer Food
3559.82
13873.05
Procter & Gamble Hygiene & Health Care Ltd.
Household & Personal Products
42288.06
13027.45
Bombay Oxygen Investments Ltd.
Industrial Gases & Fuels
153.74
10249
Bharat Rasayan Ltd.
Pesticides & Agrochemicals
4082.51
9608.75
Bajaj Finserv Ltd.
Finance - Investment
149727.65
9408.7
Polson Ltd.
Chemicals
106.63
8885.9
Paushak Ltd.
Chemicals
2479.92
8046.15
Indiamart Intermesh Ltd.
e-Commerce
24265.63
7991.65
Sanofi India Ltd.
Pharmaceuticals & Drugs
17683.37
7678.2
TTK Prestige Ltd.
Consumer Durables - Domestic Appliances
10043.82
7231.65
Maruti Suzuki India Ltd.
Automobiles - Passenger Cars
214573.51
7103.2
Lakshmi Machine Works Ltd.
Textile - Machinery
7439.48
6963.85
Atul Ltd.
Chemicals
20425.57
6903.55
Ultratech Cement Ltd.
Cement & Construction Materials
194197.97
6728
Procter & Gamble Health Ltd.
Pharmaceuticals & Drugs
10543.51
6351.75
Wabco India Ltd.
Auto Ancillary
11639.55
6136.55
Kama Holdings Ltd.
Plastic Products
3556.68
5512
Hawkins Cookers Ltd.
Consumer Durables - Domestic Appliances
2912
5507
Gillette India Ltd.
Household & Personal Products
17895.31
5491.85
Bajaj Finance Ltd.
Finance - NBFC
324743.36
5389.15
Alkyl Amines Chemicals Ltd.
Chemicals
10885.79
5332.85
Schaeffler India Ltd.
Bearings
16580.54
5303.95
Affle (India) Ltd.
Telecommunication - Equipment
13510.52
5299
SRF Ltd.
Diversified
31296.58
5282.55
Blue Dart Express Ltd.
Courier Services
12436.88
5241.45
Bayer CropScience Ltd.
Pesticides & Agrochemicals
22897.55
5094.9
Quick Note: The above prices and values are updated till March 2021!
All these shares are not easily affordable for the average retail investor. Even the shares of Maruti are trading at a current price of above Rs 7,100.
Why Do Companies Like MRF Don’t Split the Stock?
Here are a few common reasons why few companies do not split their shares:
1. They are already doing good. Why bother to split?
Many of these companies are already good. Then, why should they bother to split the share and make it cheap?
For example- MRF was trading at a share price of Rs 6,358 in March 2010. Currently, as of March 2021, it is trading at Rs 84,470. The people might have argued that the stock was expensive and not affordable even in 2010. However, it has done pretty well in the last 11 years and given a return of over 1,100% to its shareholders.
In short, if a company is doing good, they why it should bother to go through the splitting process. It’s already making money for itself and its investor, even when the share price is expensive.
2. No financial benefits
There are literally no financial benefits while splitting the shares. The value of the stock remains the same after stock splitting (the financial statements and ratios don’t change). That’s why until and unless the promoters have any good enough reason, the share splitting does not appeal much to the management and promoters.
3. Keeps Speculators away
The stock split increases liquidity and makes the stock affordable. This results in an increase in the participation of retail investors and traders. And with an increase in participation, speculation also increases. On the other hand, a high share price helps to keep the traders and speculators away from the stock. Only serious investors are the ones who can find these companies appealing and might want to enter these stocks.
Another benefit of the high share price is that it keeps the newbie investors away from them. As the new investors are mostly attracted to the affordable companies and are not willing to invest a high amount, therefore their participation is quite low in these companies.
4. Limited Public Shareholding
The high share price of a company results in limited public shareholding. Retail investors and traders can’t easily enter such stocks. Sometimes, this also helps in decreasing the volatility in the share price. Moreover, by allowing the high share price, the promoters tend to keep the voting right in their hands. This helps in maintaining a static voting right which allows the owners to make key decisions without much interference.
Besides, fewer public shareholding also helps in avoiding scenarios like creeping acquisition or in worst case hostile takeovers. Expensive stocks discourage acquisition.
5. Symbol of Status and Uniqueness
Do you know that one share of Warren Buffett’s company- Berkshire Hathaway costs around Rs 2.74 crores? Yes, that’s true. The current share price of Berkshire Hathaway Inc. Class A is $3,77,440. Similarly, MRF is known in India for such an extremely high share price.
A high share price can be sometimes regarded as a symbol of status. Splitting that share means losing this exclusiveness.
Closing Thoughts
There are no specific guidelines or rules from SEBI or any stock exchange about a stock split. Therefore, the prices of the shares can go as high as they can and the company is not obliged to offer any split.
As we discussed in this article, there are both pros and cons of a high share price. The biggest advantage of a high share price is that it helps to keep the traders and speculators away from that share. Anyways, a company might choose whether it wants to split a share or not- depending on what suits them best for their interests.
That’s all for this post on Why Do Companies Like MRF Don’t Split the Stock. I hope it was helpful to you. If you still have any doubts/queries on this topic, feel free to comment below. I’ll be happy to help. Take care and Happy Investing!
Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting
List of Sensex 30 Companies: Sensex, the benchmark index of the Bombay Stock Exchange (BSE), consists of the top 30 companies listed on BSE. That’s why Sensex is also known as BSE 30. In this post, we are going to look into the Sensex 30 companies’ constituents, along with their weightage in the index. Let’s get started.
What is Sensex?
Before we look into the Sensex 30 companies’ weightage, let’s first brush up on the basics and revise what exactly is Sensex.
The BSE Sensex or the Sensex 30 tracks the behavior of the top 30 companies as per the free float market-cap registered on the Bombay Stock Exchange. BSE Sensex stands for S&P Bombay Stock Exchange Sensitive Index. Here are a few top facts about Sensex 30:
The 30 companies are selected on the basis of the free-float market capitalization.
The base year of Sensex is 1978-79 and the base value is 100. Currently, BSE is hovering at 50,000 points.
These are different companies from different sectors representing a sample of large, liquid, and representative companies.
Sensex is an indicator of market movement. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE has gone down. If Sensex goes up, it means that most of the major stocks in BSE went up during the given period.
Constituents of Sensex 30 Companies by Weightage
Here is the list of 30 companies of Sensex along with the company’s Sensex weightage.
Name
Industry
Weight
1.
Reliance Industries Ltd.
Integrated Oil & Gas
11.99%
2.
HDFC Bank Ltd.
Banks
11.84%
3.
Infosys Ltd.
IT Consulting & Software
9.06%
4.
Housing Development Finance Corporation Ltd.
Housing Finance
8.30%
5.
ICICI Bank Ltd.
Banks
7.37%
6.
Tata Consultancy Services Ltd.
IT Consulting & Software
5.76%
7.
Kotak Mahindra Bank Ltd.
Banks
4.88%
8.
Hindustan Unilever Ltd.
Personal Products
3.75%
9.
ITC Ltd.
Cigarettes,Tobacco Products
3.49%
10.
AXIS Bank Ltd.
Banks
3.35%
11.
Larsen & Toubro Ltd.
Construction & Engineering
3.13%
12.
Bajaj Finance Ltd.
Finance (including NBFCs)
2.63%
13.
State Bank of India
Banks
2.59%
14.
Bharti Airtel Ltd.
Telecom Services
2.31%
15.
Asian Paints Ltd.
Furniture,Furnishing,Paints
1.97%
16.
HCL Technologies Ltd.
IT Consulting & Software
1.89%
17.
Maruti Suzuki India Ltd.
Cars & Utility Vehicles
1.72%
18.
Mahindra & Mahindra Ltd.
Cars & Utility Vehicles
1.48%
19.
UltraTech Cement Ltd.
Cement & Cement Products
1.40%
20.
Sun Pharmaceutical Industries Ltd.
Pharmaceuticals
1.16%
21.
Tech Mahindra Ltd.
IT Consulting & Software
1.11%
22.
Titan Company Ltd.
Other Apparels & Accessories
1.11%
23.
Nestle India Ltd.
Nestle India Ltd.
1.07%
24.
Bajaj Finserv
Finance (including NBFCs)
1.04%
25.
IndusInd Bank Ltd.
Banks
1.03%
26.
POWERGRID
Electric Utilities
1.03%
27.
Tata Steel Ltd.
Iron & Steel/Interm.Products
1.01%
28.
NTPC Ltd.
Electric Utilities
0.94%
28.
Bajaj Auto Ltd.
2/3 Wheelers
0.86%
30.
Oil & Natural Gas Corporation Ltd.
Exploration & Production
0.73%
Quick Note: Please note that the BSE 30 companies are updated as of March 2021 and the top 30 listed companies in BSE is subjected to change in the future, which might result in a change in the weightage of 30 companies of Sensex.
In this post, we looked into the Sensex 30 Companies by weightage. All the stocks in the BSE top 30 companies list are old and well-established companies and mostly leaders in their industry. Many of these stocks are able to move the index and the market if there is a significant movement in the share price of these companies.
That’s all for this post on the Sensex 30 companies or the Sensex stocks list. Do let us know which is your favorite stock in the top 30 listed companies in BSE list in the comment section below. Have a great day and Happy Investing.
Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting
List of Top Moat Companies in India: Have you ever wondered, if the greatest investor existed in the Indian stock markets, “What stocks would he pick?”. This question got us wondering about Warren Buffet too. Hence we have created a list of Buffets favourite type of stocks existing in the Indian stock market.
In this article, we’ll cover the list of top moat companies in India, which is the Warren Buffett style of stocks for investing. Keep Reading!
What are Moats?
The term Moat was popularised by Warren Buffet in the world of investing.
A simple dictionary definition of a moat would be – a deep, wide ditch surrounding a castle or fort, typically filled with water and intended as a defence against attack. These moats were created in medieval times in order to ensure that in the case of an attack it would make it as hard as possible for an enemy to breach the castle.
However, even modern companies have moats too in their businesses.
Now picture the company as a castle and the attackers as new entrants or competitors. Business moats are generally put up by the company as some sort of competitive advantage that would act as a barrier to entry for new entrants. These could be in the form of brand identity, patents, size or market share, low-cost production, etc.
Warren Buffet has time and again expressed his love for these Moats stocks.
“The most important thing [is] trying to find a business with a wide and long-lasting moat around it … protecting a terrific economic castle with an honest lord in charge of the castle,” – Warren Buffet
Top Moat Companies in India
Here we have compiled a list of Moats existing in the Indian markets. Possibly answering the question, “If Warren Buffet participated in the Indian markets, whats stocks would he invest in?”
Asian Paints is one of the most obvious stocks on this list. The company was founded in 1942 and is engaged in the manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.
Over the years the company was successful in converting the paint commodity into an Asian Paints brand. They currently are India’s largest with a market share of almost 40%. It is also Asia’s 3rd largest paint company. In addition, the company has also maintained a good track record for consistent growth.
The next one on the list of moat companies in India is Shree Cements. The shares of Shree Cements are one of the most expensive cement stocks in the world. The company was formed in 1979 and is currently one of the biggest cement manufacturers in the country.
They recently joined an elite list of companies with Rs. 1 trillion Mcap. One of the biggest moats the company has set for itself has been its low production cost in the cement industry. The company has an EBITDA/tonne of Rs. 933/tonne whereas the industry average stands at only Rs 692/tonne.
Tata Consultancy Services recently surpassed Accenture to become the worlds largest IT firm by Mcap. TCS is a subsidiary of the Tata Group. The company is specialized in information technology (IT) services and consulting. They currently operate in 46 countries.
One of the biggest advantages was being the first software and services company in India in 1968 and also being the first Indian software company to set up operations in the US. They were also the first Indian company to develop an offshore delivery model giving them a cost edge.
Apart from its size being a significant moat they also benefit hugely from switching costs their clients may face. They still benefit from the first-mover advantage in the US as 95% of their new businesses come from their existing clients.
What we’re trying to find is a business that, for one reason or another — it can be because it’s the low-cost producer in some area, it can be because it has a natural franchise because of surface capabilities, it could be because of its position in the consumers’ mind, it can be because of technological advantage, or any kind of reason at all, that it has this moat around it.” – Warren Buffet.
Avenue Supermarts Ltd. better known as DMart is an Indian chain of hypermarkets founded by Radhakishan Damani in 2002. They are spread across the country with 196 stores in 72 cities.
Again one of the biggest advantages the hypermarket has is its size. This helped it set up a moat by providing one of the lowest costs to its consumers. Due to their size, they are able to generate huge volumes of sales which allows them to negotiate the price of products at a cheaper rate from suppliers when buying in bulk. This results in products sold at lower costs in their stores in comparison to other competitors.
Titan has been one of the greatest wealth creators in modern times. It is also responsible for creating a major chunk of the Big Bull- Rakesh Jhunjhunwala’s wealth. Titan, founded in 1984 is part of the Tata Group.
They are a lifestyle company engaged in the manufacture and sale of fashion accessories such as watches, jewellery and eyewear. They also introduced the Fastrack brand in the Indian markets and own over 60% of the domestic market share in the organized watch market. Titan is also the fifth-largest watch manufacturer in the world.
They sell jewellery through their Tanishq brand which is the largest branded jewellery maker in India. Titans brands like Tanishq enjoy strong customer loyalty giving them added advantages over their competitors.
Dr Lal PathLabs Limited was founded in 1949 by Dr S. K. Lal. They perform diagnosis and testing on blood, urine and other human body viscera. The company operates on a hub and spoke distribution model which allows it to have greater flexibility and further extending its network.
The company has over 200 clinical labs across the country with 2,569 Patient Service Centers (PSC) and 6,426 Pick-up Points (PUP). This model puts it at an advantage in comparison to other standalone chains.
They also have a strong franchisee network furthering their reach and at the same time reducing their capital expenditure. The company has achieved good growth over the years and at the same time maintaining good financials.
“But we are trying to figure out what is keeping — why is that castle still standing? And what’s going to keep it standing or cause it not to be standing five, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle?” – Warren Buffet.
Bajaj Finance has been one of the greatest wealth creators in the Indian markets in the last decade. It also makes it the most expensive NBFC stock. The company is a subsidiary of Bajaj Finserv and is one of the moat companies in India.
The company deals in consumer finance, wealth management and loans to SMEs. It has 294 consumer branches and 497 rural locations with over 33,000+ distribution points. Its attractive car, housing, small business loans and other commercial loan products have helped it achieve a customer base of 34.5 million in 2019.
One of their biggest loans has been cross-selling. Here Bajaj Finance has the ability to offer products to its existing customers. Cross-selling has helped it achieve to acquire 19.7 million customers.
Founded in 1959, Pidilite Industries Limited is an Indian adhesives manufacturing company. Their brands include FeviKwik, Dr Fixit, M-seal, Acron etc.
Their leading brands have a 70% market share in the Indian adhesive and industrial chemical market. There are very little competitors can do when accompany owns such a large portion of the market.
And then if we feel good about the moat, then we try to figure out whether, you know, the lord is going to try to take it all for himself, whether he’s likely to do something stupid with the proceeds, et cetera.” – Warren Buffet.
Maruti Suzuki India Limited is the subsidiary of the Japanese auto manufacturer Suzuki Motor Corporation. The company has successfully maintained a market share of 50% for many years now in the Indian markets.
Other companies have been able to do very little over the years to capture a significant portion of the market. The runner up Hyundai only holds a market share of 17%.
The State Bank of India (SBI) is India’s largest bank. The government-owned company holds a market share of 23% in terms of assets and 25% market share for total loans and deposits.
SBI is the biggest bank in India in terms of total assets. One of the biggest moats for the company has been the salary accounts being opened for all government employees. This also further allows them to cross-sell their products to their existing customer base. Another private equivalent to SBI has been HDFC. Recently Kotak Mahindra too signed an MoU with the Indian army to handle salary accounts.
Closing Thoughts
Investors like Warren Buffet make it seem too easy to find high-quality companies with wide moats. But identifying these moat stocks before they erupt and buying them at a fair price is challenging. Companies with moats can provide huge returns to their shareholders in the long run but it is very important to thoroughly research the stocks before investing as there are no guarantees.
We hope you have liked the list of best Moat companies in India. You may read about an economic moat and get more insights. Do let us know in which company you have invested or would like to invest in the comment section below. Happy Investing!
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
List of the best FMCG companies in India 2021: All our lives depend on FMCG (Fast Moving Consumer Goods) products that satisfy our basic needs. FMCG products are those that have a short shelf life that is produced in high volumes with low cost and are made for rapid consumption.
This industry includes household items, over-the-counter medicines, food, personal care items, and stationery and consumer electronics, etc. The fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector and has created employment for more than three million people.
Today, we take a look at the top 5 FMCG companies in India that are responsible for keeping over 1.3 billion Indians on their feet every day.
HUL is one of India’s oldest FMCG companies. It is a subsidiary of Unilever, a British-dutch company. The company was established in 1933 and has headquarters in Mumbai. HUL has served over 2 billion customers for over 87 years.
HUL has over 35 brands across 20 categories such as soaps, detergent, skincare, cosmetics, tea, toothpaste. The brand includes famous names like Surf, Excel, Dove, Lux, Lifebuoy, Clinic Plus, Wheel, Sunsilk, Knorr, Axe, etc.
ITC Ltd. has flourished in the Indian markets for over 110 years giving them a deep understanding of the Indian Consumer. The ITC is known to guarantee a certain standard in production and packaging. They have broad distribution channels in India. This has allowed them to penetrate into even the most rural areas through several retail shops.
Their products include Bingo, Sunfeast, Aashirvaad, Fiama Di Wills, Vivel, Savlon soaps and handwash, Papercraft, and Classmate. ITC sells 81% of the tobacco products in Asia including brands like Wills Navy Cut, Gold Flake Kings, Silk Cut, India Kings, Bristol, Gold Flake Super Star, Gold Flake Premium Lights, Classic Menthol, etc.
Nestle is a transnational food and beverage company headquartered in Switzerland. Globally the company has been around for more than 150 years. In India, Nestle dates back to 1912 when it began operating as Nestle Anglo-Swiss Condensed Milk Company. They cater to the nutritional and wellness requirements of Indian consumers. In 2016, they were rated 33 in Forbes list of largest public companies.
Nestle sells a plethora of products including beverages, bottled water, milkshakes, breakfast cereals, instant foods, performance, and health care nutrition, etc. A few of the 2000 brands they currently own are Nescafe, Maggi, Milky Bar, Kit Kat, Bar One, Milkmaid, Nestea, etc.
Britannia Industries is one of the oldest food-producing companies in the country. It was established in 1892 in Kolkata with an initial investment of merely Rs. 295. Their products are available in more than 5 million retail outlets. More than 50% of Indian households are proud users of their range of food items. The FMCG is known as the first Zero Trans Fat Business in the country. They have an extensive distribution network in India and 60 other countries.
Their products include Good Day, Tiger, Milk Bikis, Bourbon, Marie Gold, Cake, Cheese, Milk, and Yogurt. The company is the largest brand in the organized bread market.
Marico was established in 1990 in Mumbai. It began as a brand for coconut and refined edible oil and later expanded into various kinds of consumer goods. It is currently operating in 25 countries in the emerging markets of Asia and Africa. They maintain their innovation in manufacturing and packaging to preserve the tagline “Make a difference”.
Marico’s household brand includes Parachute, Saffola, Nihar, Livon, Set Wet, Mediker. Its global products include Parachute, Haircode, Caivil, Black Chic, Isoplus, Code 10, and X-men.
Financial Comparison – Top 5 FMCG companies in India
With the ever-growing needs and constantly improving standards of living the FMCG’s play an even larger role. In order to fulfill these requirements, there are several other FMCG’s too that compete for a significant spot in this market. They include Colgate Palmolive, Parle Agro, P&G, The Godrej Group, Amul, Patanjali, Dabur, etc.
In this highly competitive environment, the FMCG’s have managed to keep customers satisfied by reaching out to every nook and corner of the country making each and every FMCG an integral part of the economy.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
List of the Top EV Stocks in India 2021 – Electric Vehicle Manufacturers in India: When it comes to travel new technologies just keep popping up around the world. These alternative technologies in transport are mainly based around electronic vehicles with many companies jumping on the bandwagon to get some traction before the industry gets a radical shift away from traditional fossil fuels.
This change can also be seen as catchup that existing companies are trying to play in the electric vehicle (EV) segment with companies like Tesla and the bars set by them before its too late. Today, we take a look at the electric vehicle segment in India and the top EV stocks in India for investors to watch out for in this segment.
Why Electric and What is the plan ahead?
One of the major reasons why countries are forced into adopting an electric alternative is climate change. India according to Environmental Pollution Index (EPI) 2018 is ranked 178 out of 180 in terms of air quality. One of the strategies adopted to combat this has been the push for electric vehicles[EV]. This will not only improve the environment but also India’s overall economic health. India currently imports crude oil and which sets us back in a deficit of approx $60 billion.
The aim set by the government has been 100% electrification by 2030. This is a humungous target considering the early stages of adoption that we currently are in. The electric vehicle adoption rate in India is less than 1% according to a McKinsey&Company report. According to Bloomberg, in the six years leading up to October 2019, India has barely sold more than 8000 electric cars. If compared to countries like China these sales figured are achieved in less than 2 days.
Some state government realizing their role have tried to eradicate one of the major barriers to owning an EV i.e. the high initial cost. This can be seen in the example of Maharashtra where subsidies were announced amounting to 1 lakh for electric vehicles. Consequently, Maharashtra had the highest sales volume in 2017 in the Indian electric car market. The government has also realized that it is best to target their efforts towards the public transport system in the initial stages.
This is because the purchase of EV in the private sector will depend on major other factors like attractiveness etc. The public transport system being one of the most heavily used in a country like India will definitely offer a huge boost to the sector.
Top EV Stocks in India – Leading Vehicle Manufacturers
The Indian EV industry being in its nascent stages does not have an established market leader in all vehicle types. There are 10+ major players existing in the 2 wheeler segment, 3-4 in Electric buses, and few in car manufacturing. The following are the top Electric Vehicle[EV] Manufacturers in India.
Mahindra is the pioneer for EV in the Indian space. Being the first major EV manufacturer it launched Mahindra Reva, its first EV as early as 2001. The Mahindra Reva was India’s first electric car. Over the years Mahindra has gone ahead to set up a dedicated R&D center in Bengaluru.
Some of its other EV variants include the Mahindra E20 and eVerito. Mahindra however has not only focussed on the manufacture of EV’s but also battery packs and has partnered with various institutions in order to boost EV charging.
Tata is Indias biggest automobile manufacturer It automobile segment ranges from the manufacture of cars, utility vehicles, buses, trucks, and defense vehicles. Its associate companies include Jaguar Land Rover and Tata Daewoo. But when it comes to the EV segment Tata is a new entrant when compared to Mahindra.
In India, Tata Motors has an industrial joint venture with Fiat. One of Tata’s major benefits has been its ability to use resources from around the world. Tata’s innovation efforts are focused on developing auto technologies that are sustainable as well as suited. With design and R&D centers located in India, the UK, Italy, and Korea. Tata Motors in collaboration with its subsidiary, the UK based Tata Motors European Technical Centre (TMETC), are looking to have a major play in the EVs market in India.
When it comes to EV’s, Tata has focussed on the Passenger Vehicles and Electric Buses market in India. When it comes to four-wheelers Tata offers 3 vehicles to pick from. The Tigor EV, Nano EV, and the Tiago electric variant. In the Electric bus segment, Tata expects its demand from State transport Unions. The expected demand is estimated to be around 400,000 buses in the long run.
Apart from EV’s, Tata has also focussed on setting up charging stations in its efforts to improve the industry infrastructure.
3. Hyundai
Hyundai burst into the Indian EV segment with its launch of the Hyundai Kona EV in India. The South Korean global giant in the world of automobiles has stated that Kona was specifically designed to suit Indian operating conditions. One of the USP’s of the vehicle is its 452km range in one charge. This suited perfectly with Indians ‘Kitna Deti hai’ demand when it comes to vehicles.
Just to put things in perspective the range difference of the Kona and other market leaders is in hundreds of kilometers. The Kona, however, has an Ex-showroom cost of Rs.23.8 lakhs making it extremely expensive for Indian markets. Addressing this Hyundai has however said that another EV is in developmental stages keeping affordability in mind in order to serve the mass market. This EV is expected to be ready to enter the market in the next 2-3 years.
Ashok Leyland, the Hinduja Group’s flagship company, is the 4th largest bus manufacturer in the world and a market leader for trucks in India. The company has tied up with Sun Mobility in order to enhance its expertise in the vehicle domain.
Ashok Leyland designs electric variants specifically for Indian conditions and has also introduced battery swapping in electric buses to address e-mobility needs in the country. It has launched multiple electric bus variants like the Circuit, HYBUS, Electric Euro 6 Truck, and announced the iBUS. The immediate focus of the company, however, is currently in giving more thrusts to exports.
Top EV Stocks in India – Associated Industries & Stocks
The Indian EV market being in its nascent stages is viewed as an opportunity waiting to be exploited. Other players that also have products in the EV market include MG Motors, Maruti Suzuki, Renault, Audi, Volvo, Hero, Ather, etc. An expansion in the EV industry will also see other associated industries catch on too. This includes the battery and EV chargers. Interests have been shown by many companies like Siemens, Schneider, Delta, etc.
But unfortunately, these companies will only move in once a significant demand arises in the public 4 wheeler segment. On the other hand, one of the major factors for the EV industry not expanding has been consumer concerns regarding the lack of Fast Chargers in India.
Unorganized and small players are dominating due to the limited scale of business. In order to combat this, the NITI Ayog is laying a key role in setting up EV chargers. There are currently 270 units of installed EV chargers in India. NITI Aayog has partnered with NTPC in order to set up 100,000 EV charging stations across India. Other government entities like BHEL have partnered with ISRO in order to develop batteries using Lithium technologies.
Most lithium requirements are currently imported from China, South Korea, Vietnam, Singapore, and Japan. Other players who have shown interest in the Lithium battery production business in India include Reliance, Suzuki, Toshiba, Denso Corp, JSW Group, Adani, Mahindra, Hero Electric, Panasonic, Exide Batteries, Amara Raja.
In this article, we discussed the list of the top EV stocks in India along with leading Electric Vehicle Manufacturers, their current work in EV segment, and future prospects. The Indian government had set up the aim of replacing all internal combustion engines with EV’s by 2030. A report from Mckinsey and Company from 2017 indicated that 40% of electrification was a more realistic picture of mobility in 2030. This report, however, was prior to the Pandemic. This, in turn, will further set back electrification in the industry for years to come.
In addition, the steps taken in order to enable acceptance of EV will not suit their main purpose if alternative means of electricity production are not implemented. Currently, up to 60% of the electricity is produced from coal. Although the government has set major aims to bolster the growth of EVs a lot more has to be done in order to ensure they are implemented.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
List of Largest Stock Exchanges in the World (Updated 2021): People who invest in stock must be familiar with the New York Stock Exchange (NYSE), NASDAQ, Shanghai stock exchange as a few biggest exchanges in the list of largest stock exchanges in the world. But there are a few large stock exchanges with which they might not be familiar.
In this post, we are going to discuss the biggest and largest stock exchanges in the world by total market cap of all listed companies. Before we start this post, let us brief a bit about what the stock exchange is.
A Stock Exchange is an organization that anchor formulated market for dealing in securities, derivatives, commodities, and other financial equipment. It is one of the powerful ingredients of the financial market. Here, buyers and sellers club together to carry out transactions. And, securities are bought and sold out according to clear-cut rules and regulations.
Stock exchange furnishes the required edifice and framework to the brokers and members who deal with asset classes. It also governs the transaction activities to certify free and fair trade.
The most engaging aspect is that the Stock exchanges are also deemed as the financial measures of an economy where industrial development and firmness are mirrored in the index. Here is the list of the largest Stock Exchange in the world –
10 Largest Stock Exchanges in the World (By Market Cap)
1) New York Stock Exchange (NYSE), US
The New York Stock Exchange(NYSE) is the 1st on the list of the largest stock exchange in the world and is a highly esteemed stock exchange in the USA which is situated at 11, Wall Street, New York City.
It was established on May 17, 1792, and consists of 2,400 listed companies. It is the world’s largest stock exchange and has a market capitalization of US$ 24.49 trillion as of January 2021.
Back to the back of mergers has aided the New York Stock Exchange to gain its colossal size and global footprint. The blue-chip companies which are listed under NYSE are Berkshire Hathaway Inc, Coca-Cola, Walt Disney Company, McDonald’s Corporation, etc.
2) NASDAQ, United States
2nd on the list of the largest stock exchange in the world is NASDAQ which was primarily an abbreviation and stage for the National Association of Securities Dealers Automated Quotations. It is an American stock exchange and is headquartered at 151 W, 42nd Street, New York City.
The NASDAQ commenced its business on February 8, 1971, and is sighted as the world’s first electronically traded stock market.NASDAQ has a combined market capitalization of US$ 19.34 trillion as of Jan 2021 and is ranked 2nd in the list of largest stock exchanges.
It consists of more than 3,000 stocks listed under it and comprises of the world’s humongous tech giants such as Apple, Microsoft, Google, Facebook, Amazon, Tesla, and Intel.
The Shanghai Stock Exchange (SSE) is located in the city of Shanghai, China, and is one of the two stock exchanges plying autonomously in the People’s Republic of China. Although its foundation traces back to 1866, it was adjourned after the Chinese Revolution in 1949. However, The Shanghai Exchange in its contemporary outlook was laid down in 1990.
Currently, Shanghai SSE is the world’s 3rd largest stock exchange with a combined market capitalization of US$ 6.5 trillion as of Jan 2021. The most interesting fact is that the absolute market cap of the SSE is constructed out of formerly state-run insurance companies & commercial banks.
4) Honk Kong Stock Exchange (SEHK)
The Honk Kong Stock Exchange (SEHK) is located in Hong Kong and is the world’s 4th largest stock exchange on the basis of market capitalization. It consists of 2,538 listed companies with a wholesome market capitalization of US$ 6.48 trillion as of Jan 2021.
Its origin can be traced back to the mid-1800s and since then it has gone through a series of mergers and agglomeration with other exchanges. Some of the gigantic and eminent companies listed under the Hong Kong Stock Exchange are China Mobile, and HSBC Holdings & Petro China.
5) Japan Stock Exchange (JPX)
The Japan Stock Exchange (JPX) is a Japanese financial services corporation that operates multiple securities exchanges including Tokyo Stock Exchange and Osaka Securities Exchange. It was formed by the merger of the two companies on January 1, 2013.
JPX has close to 3,500 listed companies with a syndicated market capitalization surpassing the US$ 6.35 trillion as of Jan 2021.The TSE’s metric indicator is Nikkei 225 and it is home to some of the voluminous Japanese giants with international exposure, including Toyota, Suzuki, Honda, and Mitsubishi, and Sony.
The Shenzhen Stock Exchange (SZSE) is a stock exchange based in the city of Shenzhen, in the People’s Republic of China. It is one of two stock exchanges operating independently in Mainland China, the other being the larger Shanghai Stock Exchange.
As of January 2021, SZSE has 2,375 listed companies and has a market capitalization of US$ 4.9 trillion as of Jan 2021. Many of the companies within this market are subsidiaries of companies in which the Chinese government maintains controlling interest.
7) EURONEXT, Europe
The Word EURONEXT is an acronym for European New Exchange Technology and has its corporate address at La Défense in Greater Paris.EURONEXT was established in 2000 by the consolidation of the exchanges in Amsterdam, Paris, and Brussels.
Over the years, it amalgamated with multiple exchanges, most particularly the New York Stock Exchange. It steers financial markets in Amsterdam, London, Brussels, Lisbon, Oslo, Dublin, and Paris.
It has around 1,500 listed companies leading to a market capitalization worth US$ 4.88 trillion as of Jan 2021. EURONEXT provided the segments which are equities, warrants, exchange-traded, bonds, commodities, funds and certificates, derivatives, indices, and foreign exchange trading platforms.
8) LSE Group, UK and Italy
The London Stock Exchange (LSE) is based in London and is the sixth-largest stock exchange in the world. It was established in 1801 and is the oldest stock exchange in the world. It has more than 3,000 listed companies with a combined market capitalization of $3.67 trillion as of Jan 2021.
LSE is also the maiden source of benchmark prices, equity-market liquidity, and market data in Europe. Some of the massive companies listed under the LSE are Barclays, British Petroleum, and GlaxoSmithKline.
9) National Stock Exchange (NSE), India
National Stock Exchange of India Limited (NSE) is the leading government-owned stock exchange of India, located in Mumbai, Maharashtra. NSE was established in 1992 as the first dematerialized electronic exchange in the country.
The NSE has approximately 1952 listed companies and has a market capitalization of US$2.57 trillion as of Jan 2021. NSE’s flagship index, the NIFTY 50, a 50 stock index is used extensively by investors in India and around the world as a barometer of the Indian capital market.
10) Toronto Stock Exchange, Canada
The Toronto Stock Exchange (TSX) is situated in Toronto, Canada. It was introduced in 1852 and is held and wielded as a subsidiary of the TMX Group. It is the ninth-largest exchange in the world and has 2,231 listed companies with a combined market capitalization of US$2.5 trillion as of Jan 2021.
The financial instruments include equities, investment trusts, exchange-traded funds, bonds, commodities, futures, options, and other products. It is also to be noted that mining and oil and gas companies are listed in more numbers under the Toronto Stock Exchange compared to other stock exchanges around the world.
That’s all for this article on the ten largest stock exchanges in the world. We hope you liked the article. Comment below which one is your favorite stock exchange in the world to trade. Happy trading!
List of Companies with the highest share price in India (Updated – March 2021): The majority of shares in India trade at a share price below Rs 1,000 per share on Indian stock exchanges. However, there are a few stocks that trade at a price in the multiples of thousands of rupees.
Although, the share price of a company has nothing to do with the companies valuation, and even a company with a share price of Rs 2,000 can be undervalued compared to its peers. Anyways, for the small retail investors, it might be a little difficult to enter those stocks which trade at a very high share price.
In this article, we are going to discuss the most expensive shares in India i.e. the companies with the highest share price in India. Here, we’ll look at 12 of the costliest shares in India based on the current share price at which they are trading in the market.
Note: Please study the companies carefully if you want to invest in any of the stocks mentioned in the list here. A high stock price doesn’t guarantee a fundamentally strong company or a good investment. And vice versa. Let’s get started.
Madras Rubber Factory (MRF) is a Tyre manufacturer that produces a wide range of tyres. It specializes in Car & bike tyres, trucks/bus tyres, etc.
Currently, MRF has the highest share price in India among all the listed companies on BSE/NSE. The all-time high share price of MRF is Rs. 96,973. The stock is currently trading at a standalone PE of 22.66.
MRF has never split its share and has a face value of Rs. 10. Noticeably, this company was trading at a price of Rs. 10,000 in November 2012.
Honeywell Automation India Ltd, a part of Honeywell group, USA and is a leader in providing integrated automation and software solutions. It has a wide product portfolio in environmental and combustion controls, and sensing and control, etc.
This stock has given a return of over +235% in the last 5 years. It is currently trading at a PE of 88.92.
Page Industries is an Indian manufacturer and retailer of innerwear, loungewear, and socks. One of the popular brands under Page Industries is Jockey (Underwear and inner wears company). This stock has turned out to be a multi-bagger stock in the last couple of years and has given a return of over +2,000% in the last ten years.
Page Industries is currently trading at a PE of 124.92.
3M India Ltd is the subsidiary listed company of 3M Company USA in India. 3M Company USA holds a 75% equity stake in the company. It has a diversified portfolio of products in dental cement, health care, cleaning, etc.
This stock is currently trading at a PE of 544.93.
Shree Cement is an Indian cement manufacturer headquartered in Kolkata. This Indian cement manufacturer company was founded in Beawar, Ajmer district, Rajasthan, in 1979. Shree Cement is the biggest cement maker in northern India and also produces and sells power under the name Shree Power and Shree Mega Power.
Shree cements is currently trading at a PE of 45.38.
Dixon Technologies (India) Ltd is an Indian multinational electronics manufacturing services company, based in Noida, Uttar Pradesh, India. It is a contract manufacturer of televisions, washing machines, smartphones, LED bulbs, battens, downlighters, and CCTV security systems for companies such as Samsung, Xiaomi, Panasonic, and Philips.
Nestle India is in the food processing industry with a wide variety of products like Maggi, Kit-Kat, Nescafe, Every day, etc. It is the Indian subsidiary of Nestlé which is a Swiss multinational company.
The Yamuna Syndicate Limited engages in trading & marketing tractors, industrial lubes, automotive, batteries, electrical, pesticides & fertilizers, sugar, and also runs petrol pumps. The company was incorporated in 1954 and is based in Yamuna Nagar, India.
Headquartered in Mumbai, Abbott India Limited, a publicly listed company and a subsidiary of Abbott Laboratories, takes pride in offering high-quality trusted medicines in multiple therapeutic categories such as women’s health, gastroenterology, cardiology, metabolic disorders, and primary care.
It is currently trading at a PE of 48.22. This stock has given a return of over 179% in the last 5 years.
Bosch ranks 10th in the list of companies with the highest share price in India. It is a part of the German multinational company Robert Bosch (or just Bosch), headquartered in Germany. Bosch belongs to the automobile ancillaries industry.
It is currently trading at a PE of 529.62 (52-week high – Rs. 16,679).
This company operates in the food processing industry with products like tasty bite rice, noodles, entrees, etc. The Company offers a range of ready-to-serve (RTS) ethnic food products under the brand name Tasty Bite and Frozen Formed Products (FFP).
This stock is currently trading at a PE of 105.48.
P & G is in the personal care industry with products in hygiene and health care. The Company is involved in the manufacturing, trading, and marketing of health and hygiene products. The Company’s brands include Ambi Pur, Ariel, Duracell, Gillette, Head & Shoulders, Olay, Oral-B, Pampers, Pantene, Tide, Vicks, Wella, and Whisper.
This stock is currently trading at a PE of 62.77.
Summary
Here is the list of Companies with the Highest Share Price in India along with a few other popular stocks added:
S.No.
Company Name
Share Price (Rs)
MarketCap (Rs Cr)
Current PE
1
MRF
85,541.60
36,279.42
22.66
2
Honeywell Auto
46,985.25
41,542.12
88.92
3
Page Industries
28,675.25
31,984.01
124.92
4
3M India
27,953.65
31,489.98
544.93
5
Shree Cement
26,817.35
96,759
45.38
6
Dixon Technologies
20,074.75
23,515.30
170.61
7
Nestle India
16,458.10
1,58,681.95
76.20
8
The Yamuna Syndicate
14,980
460.43
52.52
9
Abbott India
14,730.95
31,302.24
48.22
10
Bosch
14,660.30
43,238.56
529.62
11
Tasty Bite Eatables
13,977.85
3,586.72
105.48
12
Procter & Gamble
12,855.95
41,731.36
62.77
13
Bombay Oxygen
10,306.05
154.59
6.56
14
Bharat Rasayan
9,657.65
4,103.28
26.74
15
Bajaj Finserv
9,544.85
1,51,894.30
462.77
16
Polson
9,104.95
109.26
14.86
17
Paushak
8,556.25
2,637.13
80.75
Disclaimer: The list of 12 Companies with Highest Share Price in India is till date March 2021. The stock market is dynamic and the stock prices will change in the future, which may change the list or the order of the companies listed here.
That’s all for this post on ‘#12 companies with the highest share price in India’. Most of the companies on this list are trading at a high PE. If you want to buy any one of them, then please study the company carefully.
Just being the costliest shares in India doesn’t make them a good pick for investment. Moreover, past performance does not guarantee future returns.
Further, do comment below which other stocks can find a place in this list of companies with the highest share price in India by next year (March 2022)? And which ones will be thrown out of the list, according to you? Happy Investing!
Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting
List of the Top 10 Companies in India by Market Capitalization (Updated March ’21): As per the International Monetary Fund (IMF), India is the sixth-largest economy in the world in terms of nominal Gross Domestic Product (GDP), which is valued to be worth US$ 2.87 trillion. This is mainly due to the business various Indian companies have been doing in India and overseas.
Every company operating in India works extremely hard to get better in terms of the quality and customer satisfaction that they provide through its products or services. An organization is generally evaluated on different parameters such as assets, profits, sales, market value, share price, etc. and is ranked accordingly.
However, when we talk about the size of a company, one of the biggest factors to look at is its market capitalization.
In this post, we are going to discuss the ten biggest public companies in India based on their latest market capitalization.
What is Market Capitalization?
Market capitalization is the aggregate valuation of the company based on its current share price and the total number of outstanding stocks. It is calculated by
Market capitalization = (Current market price of 1 share)*(total number of outstanding shares)
It helps to classify the companies into different types like large-cap, mid-cap, and small-cap companies. The companies with a market cap of Rs 28,500 crore or more are large-cap stocks.
Company stocks with a market cap between Rs 8,500 crore and 28,500 crores are mid-cap stocks and those less than Rs 8,500 crore market cap are small-cap stocks. (Related post: Basics of Market Capitalization in Indian Stock Market.)
Let’s understand with an example
Just by looking at the share price, you cannot judge the size of a company. For example, here are the share price of two companies from the automobile sector.
If you just look at the share prices, you might think that MRF’s share price is quite large compared to Maruti Suzuki, and hence, it may be bigger. However, the total number of outstanding shares of Maruti Suzuki is much large compared to MRF. Maruti Suzuki has around 30.6 Crore shares while MRF has 0.43 crores shares.
Therefore, the market capitalization of Maruti Suzuki is Rs 216,141 Crores while the market capitalization of MRF is Rs 36,825 Crores. Therefore, Maruti Suzuki is a bigger company compared to MRF.
Top 10 Companies in India by Market Capitalization
Here is the list of the top 10 companies in India by market capitalization:
Reliance Industries Limited (RIL) is an Indian multinational company headquartered in Mumbai, currently headed by Mukesh Ambani. The company was co-founded by Dhirubhai Ambani and Champaklal Damani in the 1960s as Reliance Commercial Corporation.
Reliance owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications. Reliance is one of the most profitable companies in India. The market capitalization value of RIL is Rs. 14,20,338 Crores with a current price of Rs. 2,100.45.
Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service and consulting company headquartered in Mumbai, Maharashtra, India. It is a subsidiary of Tata Group and operates in 149 locations across 46 countries.
TCS is the second-largest Indian company by market capitalization. TCS is now placed among the most valuable IT services brands worldwide. The market capitalization value of TCS is Rs. 11,66,503 Crores with a current price of Rs. 3,108.70.
HDFC Bank is an Indian banking and financial services company that was incorporated in 1994, with its registered office in Mumbai, India. Its first corporate office at Sandoz House, Worli was inaugurated by the then Union Finance Minister, Manmohan Singh.
As of March 2020, it had a base of 1,16,971 permanent employees with 5,130 branches across 2,764 cities. It is India’s largest private sector lender by assets and market capitalization. It has a market capitalization value of Rs. 8,33,676 Crores with a current price of Rs. 1,512.80.
Infosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services.
It is the second-largest Indian IT company after Tata Consultancy Services with its headquarters in Bangalore, Karnataka, India. The market capitalization value of Infosys is Rs. 5,89,781 Crores with a current price of Rs. 1,384.25.
Hindustan Unilever Limited (HUL) was established in 1933. It is a British-Dutch manufacturing company headquartered in Mumbai, India. Its products include foods, beverages, cleaning agents, personal care products, water purifiers, and consumer goods.
As of 2020 Hindustan Unilever portfolio had 35 product brands in 20 categories with 18,000 employees and sales of Rs. 39,783 crores in 2019-20. The market capitalization value of Hindustan Unilever is Rs. 5,27,195 Crores with a current price of Rs. 2,243.80.
Housing Development Finance Corporation Limited (HDFC) is an Indian financial services company founded in 1977 as the first specialized mortgage company in India based in Mumbai. It is a major provider of finance for housing in India.
HDFC also has a presence in banking, life and general insurance, asset management, venture capital, realty, education, deposits, and education loans. The market capitalization value of HDFC is Rs. 4,52,818 Crores with a current price of Rs. 2,510.75.
It is an Indian multinational banking and financial services company headquartered in Mumbai and its registered office in Vadodara, Gujarat. It offers a wide range of banking products and financial services in the areas of investment banking, life, non-life insurance, venture capital, and asset management.
ICICI Bank has 5,275 branches and 15,589 ATMs across India and has a presence in 17 countries including India as of February 2020. The market capitalization value of ICICI bank is Rs. 4,11,369 crores with a current price of Rs. 594.90.
Kotak Mahindra Bank is an Indian private sector bank headquartered in Mumbai, India. Established in 1985 by Uday Kotak.
In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the group’s flagship company, received a banking license from the RBI. It offers banking products and financial services in the areas of personal finance, investment banking, general insurance, life insurance, and wealth management. It is the third-largest Indian private sector bank by market capitalization value of Rs. 3,77,261 crores with a current price of Rs. 1,903.80.
State Bank of India (SBI) is an Indian multinational, public sector banking and financial services statutory body headquartered in Mumbai, Maharashtra. SBI has a 23% market share by assets and a 25% share of the total loan and deposits market.
SBI has 22,141 branches and 58,555 ATMs as of 2020. The current market capitalization value of the State Bank of India is Rs. 3,37,751 crores with the latest share price of Rs. 378.45.
Bajaj Finance Limited, a subsidiary of Bajaj Finserv, is an Indian non-banking financial company (NBFC). The company deals in consumer finance, SME (small and medium-sized enterprises) and commercial lending, and wealth management.
Headquartered in Pune, Maharashtra, the company has 294 consumer branches and 497 rural locations with over 33,000+ distribution points. Market capitalization value of Bajaj Finance is Rs. 3,29,434 crores with a current price of Rs. 5,467.00.
Here is the list of companies with the largest market cap in India with a few other popular companies:
S.No.
Company Name
Current Price
MarketCap (Rs.Cr)
1
Reliance Industries
2,100.45
14,20,338
2
TCS
3,108.70
11,66,503
3
HDFC Bank
1,512.80
8,33,676
4
Infosys
1,384.25
5,89,781
5
HUL
2,243.80
5,27,195
6
H D F C
2,510.75
4,52,818
7
ICICI Bank
594.90
4,11,369
8
Kotak Mah. Bank
1,903.80
3,77,261
9
SBI
378.45
3,37,751
10
Bajaj Finance
5,467
3,29,434
11
Bharti Airtel
529.30
2,88,762
12
HCL
1,006.35
2,73,089
13
ITC
208.05
2,56,065
14
Asian Paints
2,470.80
2,36,998
15
Wipro
429.25
2,35,190
Disclaimer: This data is updated in March 2021. As the stock price changes in the future, market capitalization will also change. Hence, the list of top 10 companies in India by market capitalization can also change in the future.
A Guide to download the complete list of stocks listed in the Indian stock market: There are over 5,000 publically listed stocks on the Indian stock market. And this makes it really tough for an investor to study each one of them individually. Wouldn’t it be easier if you can find an excel sheet with the complete list of stocks listed in Indian stock market and categorized by their industry?
Well, you can download one!! Moreover, it’s pretty simple indeed. As a matter of fact, you can download the complete list of stocks within two minutes. In this post, I’m going to explain how to find the complete list of stocks listed in the Indian stock market in a fast and easy way.
Further, there’s also a bonus in the last section of this post. Therefore, make sure that you read this post until the very end so that you do not miss it. Let’s get started.
1. How to download complete list of companies listed on BSE?
You can download the complete list of stocks listed on the Bombay stock exchange from its official website- BSE India. Here’s the direct link to the BSE website.
All the publically listed companies on BSE can be found on its website. Here’s how you can download the complete list of stocks listed on the Bombay stock exchange:
1. Go to BSE India ‘LISTED COMPANIES | LIST OF SECURITY | BSE’ page. Here is the quick link.
2. Next, on the BSE India page for the list of securities, select ‘Equity’ in the segment and ‘Active’ as status.
Segment —> ‘Equity’
Status —> ‘Active’
Active status shows the list of companies that are active in the market. Further, do not change the rest of the options.
3. Finally, click ‘submit’.
Next, you can download the excel sheet of the complete list of stocks by clicking on the ‘download’ link on the top right corner as shown below.
An excel sheet will be downloaded by clicking on the link as shown above.
Note: The above excel sheet will contain a column of ‘GROUP’ with types A, B, T, XT, P etc. These are the group types of different companies as per BSE. You can read more about it here.
That’s all. This is how simple it is to download the complete list of stocks listed on the Bombay stock exchange (BSE). It was fast and simple, wasn’t it?
2. How to download the complete list of stocks listed on NSE?
You can download the complete list of companies listed on the National stock exchange from its official website of NSE. Here’s a quick link to the NSE website.
Here is exactly how you can download the complete list of companies listed on NSE:
2. On this website, go to the top menu bar and Select Market data –> Securities Available for Trading (Under the Trade Information Section).
3. Click on ‘Securities available for Trading’
4. Next, click on ‘Securities available for equity segment (.csv)‘ to download the complete list.
3. A CSV file will be downloaded by clicking on the link.
This is exactly how you can download the complete list of companies listed on the NSE (National Stock Exchange).
BONUS: Complete List of Stocks on NSE/BSE with Sector
You can also get the complete list of stocks listed in the Indian stock market using the Trade Brains Portal website. Here is how you can download the list of companies:
1. Go to the Trade Brains Portal. Here is the link: https://portal.tradebrains.in/
2. Select ‘Screener’ on the top Menu Bar
3. Next, use a filter of ‘Market cap > 0’. This will give you the list of all the listed companies on Indian stock exchanges i.e. BSE and NSE.
4. Further, you can also apply different filters to select stocks based on different criteria like price, market capitalization, ratios, etc on trade brains portal websites.
This is how you use the Trade Brains Portal website to get the list of the companies trading on BSE or NSE.
Conclusion
In this post, we discussed how to find complete list of stocks listed in the Indian Stock Market. Using the above steps, you can easily download the complete list of the companies listed on the Indian stock exchange using the official website of BSE & NSE. You can also get the same data using Trade Brains Portal website.
In addition, there are few other websites also like Money control, screener, etc where you can find the complete list of stocks listed in the Indian stock market. However, the easiest place to find the complete list is described in this post.
That’s all for this post. I hope this post is useful to the readers. If you have any questions, feel free to comment below. Have a great day and Happy Investing.
Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting
List of Top Indian Energy Stocks / Companies in Indian Electricity & Power Sector: The first electric street light in Asia was lit in Bangalore on 5th August 1905. Despite what seems like a headstart the electrification of India seemed like an uphill battle in the last for almost a century. However, in the last decade, India has begun to make strides not only in extending electrification throughout the country but also introducing greener alternatives.
Today, we take a look at the possible future prospect of the Indian electricity & power sector and top players that are present in the current environment.
Indian Electricity & Power Sector
India is the third-largest producer and second-largest consumer of electricity in the world. India had an installed power capacity of 371.97 gigawatts (GW) as of July 2020. When we take a look at the growth opportunities in this sector their prospects can be viewed in the two plans already put forward by the government. The first being the governments’ vision of ensuring 24×7 affordable and quality power for all.
According to the Ministry of Power, the Saubhagya mission which had begun in 2017 where 100% of households in 25 states would be electrified has already been achieved. The only states left out were Assam, Rajasthan, Meghalaya, and Chhattisgarh.
100% electrification, however, does not mean that going forward there will be limited opportunities isolated only to the remaining four states. India’s energy demand is expected to double by 2040 and also has the potential to triple. This is mainly because of the rising Indian temperatures and increased appliance ownership among consumers. This would require India to add massive amounts of power generation capacity in order to meet the demand from the 1 billion airconditioning units the country is expected to have by 2050.
Another government initiative that offers growth potential in the sector is its plan to double the electricity generation capacity of renewable energy. As of 2018, India ranked fourth in wind power, fifth in solar power, and fifth in renewable power installed capacity. If government plans are successful the shared electricity generated through renewable would increase to 40% by 2030. Currently, the electricity sector is dominated by fossil fuels like coal. In the 2018-19 fiscal these fossil fuels produced about three-quarters of the country’s electricity.
Quick Fact: Did you know that Bhadla Solar Park is located in Bhadla village, in Rajasthan’s Jodhpur district is claimed to be the largest solar power plant in the world. Spanning 14,000 acres, the fully operational power plant has been installed with a capacity of nearly 2,250 megawatts (MW).
Top companies in Indian Electricity & Power Sector
Power Grid Corporation of India Limited (POWERGRID) was incorporated on 23 October 1989 as a public limited company, wholly owned by the Government of India. The company is engaged in the power transmission business with responsibility for planning, implementation, operation, and maintenance of inter-state transmission system and operation of national and regional load dispatch centers.
Its transmission network consists of roughly 164,511 ckm Transmission Lines and 243 EHVAC and HVDC substations, which provides a total transformation capacity of 3,67,097 MVA. POWERGRID transmits about 50% of the total power generated in India on its transmission network.The government of India currently holds a 51.34% stake in the company and the balance 48.66% is held by the public.
NTPC Limited is an Indian Public Sector Undertaking company, which is engaged in the generation and sale of electricity. The company generates electric power using coal-based thermal power plants and is headquartered in New Delhi. The company has also ventured into oil and gas exploration and coal mining activities. It is the largest power company in India with an electric power generating capacity of 62,086 MW. It contributes over 25% of the total power generation of the country.
The company has approximately nine joint venture stations, which are coal-based. It also holds approximately nine renewable energy projects. The company’s subsidiaries include NTPC Electric Supply Company Limited, NTPC Vidyut Vyapar Nigam Limited, Kanti Bijlee Utpadan Nigam Limited, Bhartiya Rail Bijlee Company Limited, and Patratu Vidyut Utpadan Nigam Limited.
Adani Transmission Limited is a holding company. The Company operates as a power transmission company. It is engaged in the transmission of electric energy. Despite only being incorporated in just 2013 it is already one of the top companies in the sector. The company owns, operates, and maintains approximately 5,050 ckm of transmission lines.
NHPC Limited ( National Hydroelectric Power Corporation) is a Public Limited Company and was incorporated in the year 1975. It was created with the objective to generate hydroelectric power. The government of India and State Governments holds a 74.51% stake within the Company while the remaining 25.49% is public.
Over the years the company has diversified into other sources of energy like Solar, Geothermal, Tidal, Wind, etc.
Tata Power Company Ltd is India`s largest private sector power utility with an installed generation capacity of over 10,577 MW. The core business of the company is to generate, transmit, and distribute electricity.Tata is one of the few companies that are present in all segments of the power sector viz Generation (thermal, hydro, solar, wind, and liquid fuel), transmission, and distribution.
Adani Green Energy Limited (AGEL) is one of the largest renewable companies in India. The company was incorporated in 2015 and is part of the Adani Group.In 2017, the company took complete control of the overall solar energy portfolio of Adani Enterprises.
The Company operates and maintains utility-scale grid-connected solar and wind farm projects. AGEL broke into the news in September 2020 when the stock price of the company grew 1300% in one year and they posted a profit in the year 2019-20.
The power sector has immense opportunities in a country like India. But before investing it is also important that the investors inspect other aspects of the industry. For a long, time the power sector has found itself debt-ridden. This was primarily because of the lack of trickle-down of payments from the DISCOMS( Power Distribution companies) to the GENCOMS( Power Generation Companies). Another aspect that the investors must take caution is the viability of renewable energy companies.
Although they are marketed as a safer future, it is important to note that they too come at environmental costs and significantly higher economic costs all the while producing only a fraction of the energy in comparison to other fossils fuels. This affects both the motive i.e greener earth and the profitability prospect of the company.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
List of Indian Companies with Monopoly in their Industry: How many Indian companies can you name that are monopolies? Today we identify one of Warren Buffets’ favorite categories i.e. monopolies, but in the Indian markets. Monopoly refers to the category of companies who due to their major competitive advantage are market leaders in their industry. These companies are very difficult to compete with and maintain the highest market share for their products and services.
In investing however the stocks of these companies are known as MOAT stocks. A Moat is a hole that used to surround Medieval castles. This was done as a defense measure in order to make it harder for invaders to attack the castle. The wider and deeper is the moat, the more protected is the castle is. In the business world, these Moats are either barriers to entry like huge capital, government restrictions, or business advantage that a company has made it hard to compete with them.
Today, we take a look at the public Indian companies with monopoly in their industry. There are market leaders in their industry with zero or very less competition. Let’s get started.
Top 10 Indian Companies with Monopoly
Following are the list of monopolies in the Indian markets i.e. the companies that enjoy the status of being a monopoly: (Company – Market Share)
1. IRCTC – 100%
IRCTC is a state-owned entity and the only player in the Indian markets that operate in the Industry. This makes it a monopoly as consumers have no other alternative. The company was founded in the year 1845.It is one of the largest railways in the world and is one of the world’s largest employers. Rail networks are generally considered as ‘ Natural Monopolies’. This is because only one train can use the rack at a given time.
However, countries like the UK have bought in private players by allowing them to bid for rail lines. Earlier this year India too announced that it will be opening the sector for players.
2. HAL – 100%
The Hindustan Aeronautics India Limited represents the Indian aviation industry and plays a very important role in the Indian defense sector. The company a set up in 1940 by Walchand Hirachand and the Government of Mysore, with the aim of manufacturing aircraft in India. Today the company is state-owned and is associated with designing, fabricating, and assembling aircraft, jet engines, helicopters, and their spare parts.
3. Nestle – Cerelac – 96.5%
Cerelac is the brand of instant cereal made by Nestle for infants 6 months and older as a supplement for breast milk. Nestle is one of the worlds leading nutrition, health, and wellness company which was set up in 1866 in Switzerland. It has spent more than a century in the Indian markets over the years has become an undisputed market leader in the baby food segment. It has an undisputed market share of 96.5% despite functioning in an open to all industry.
4. Coal India – 82%
Coal India Limited is a coal mining and refining company. It is also the world’s largest coal-producing company in the world. It is owned by the Union government of India and is managed by the Ministry of Coal. The company contributes up to 82% of the total coal production in India. It was only this year that the government announced that the coal sector would now be opening up for commercial mining possibly ending its monopoly in the future.
5. Hindustan zinc – 78%
Hindustan Zinc Ltd. is the world’s second-largest zinc-lead miner and holds a 78% market share in India’s primary zinc industry. The company was incorporated as Metal Corporation of India in 1966 as a Public sector undertaking. Today the company is a subsidiary of Vedanta Limited which owns a 64.9% stake in the Company while the Government of India holds a 29.5% minority stake.
Although the company has diversified into a conglomerate in the last century. Despite this, its cigarette business still holds 77% a strong position in the Indian markets. This can be attributed to the expertise the company has developed in the field and a willingness to develop products to match the evolving taste of different types of consumers.
ITC’s wide range of brands includes Insignia, India Kings, Classic, Gold Flake, American Club, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal. Apart from a market experience, another advantage that the brand has is its supply chain and distribution network which spans across the country.
7. Marico – Oil Products – 73%
Marico is one of the well-known FMCG companies in India but the majority of its success lies in its two brands ‘Saffola’ and ‘Parachute’. The company has come a long way in the segment despite being around for only 3 decades. Safola which competes in the premium refined edible oil segment has maintained its market leadership with a share of 73%. ‘Parachute’ on the other hand holds a market share of 59%. These also form up to 90% of their income.
8. Pidilite – 70%
Pidilite’s product range includes adhesives and sealants (Fevicol and M-seal), construction and paint chemicals (Dr. Fixit), automotive chemicals, industrial adhesives, and industrial & textile resins. It is the leader in the adhesive and industrial chemical market with a market share of 70%.
9. CONCOR – 68.52%
Container Corporation of India Limited (CONCOR) is a Public Sector Undertaking managed by the Indian Ministry of Railways. The company was set up in 1966 with the aim of containerizing cargo transport in the country. Concor’s core businesses include that of cargo carrier; terminal operator, warehouse operator & MMLP operation. They hold a market share in domestic business of 68.52% in 2019-20.
10. BHEL
BHEL is India’s largest engineering and manufacturing enterprise in the energy and infrastructure sectors and also a leading power equipment manufacturer globally. Its services and products range from power-thermal, hydro, gas. Nuclear and solar PV, transmission, transportation, defense & aerospace, oil & gas, and water. It also holds the single largest market share in the emission control equipment business in India
In this post, we discussed the list of Indian Companies with Monopoly in their Industry. For a value investor, a monopoly or big Moat stock is similar to a gold mine. This is because if one can find a suitable Moat stock to invest in they provide significant returns in the long turn. But investors must watch out as these stocks just like other Blue Chip companies are generally overvalued and can lead to lower returns or losses.
That’s all for today. Let us know which other Indian companies enjoy a big monopoly in their industry in the comment section. Have a great day and Happy investing.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
However, there is one particular type of stock that gets a lot of attention from every kind of investor (beginners to the seasoned players)- and they are the BLUE CHIP stocks. Moreover, when most newbies enter the exciting world of the stock market, they are suggested to look into blue chip stocks as safer investment options. However, being new to investing, most of them are simply confused and are not able to understand what other means when they say blue chip companies.
In this post, we are going to look into what exactly are blue chip stocks and then cover ten of the best blue chip companies in India that every investor should know. Please note that this is going to be a long post, but I promise that it will be worth reading. Therefore, without wasting any further time, let us understand the blue chip companies in India.
A Quick Introductory Story
“… but blue chip companies are boring. It’s better to invest in growth stocks with huge upside potentials.”, Gaurav argued energetically.
“Yes, blue chips are not the ‘hot’ stocks in the market. However, they are a good option for the investors who are looking for low-risk investments with decent returns.”, I replied.
Gaurav has been investing in the stock market for the last two years and he likes to discuss his investment strategies with me. Nevertheless, his investment style is totally different from that of mine. Gaurav loves to invest majorly in mid-caps and small-cap companies (including penny stocks) which can grow at a fast pace. On the other hand, I like investing in a diversified portfolio.
“That’s true, dude. But most of these blue chip companies have already reached a saturation point. They can not continue to grow at the same pace and hence can’t similar returns as they used to give in the past. Once a company has sold a billion products, it’s difficult to find the next billion customers.”, Gaurav challenged me with his witty reply.
“I know the rule of large numbers, Gaurav. Thank you for reminding me. Moreover, I agree that the large-cap companies cannot maintain the same pace of growth forever. But bro, it doesn’t mean that they won’t be profitable in future or can’t give good returns to their shareholders… They have already established their brand. If they use their resources efficiently, they can make huge fortunes for themselves as well as for their shareholders…
For example- take the case of Reliance Industries. Reliance is a market leader in its industry and has a lot of customers. But they are also using their capital efficiently to grow their business. Two years back, they entered a new market- Telecommunication Industries, and now they are also a leader in that industry.
Because of their strong financials- they were able to bring the latest 4G technology to the Indian market and hence were able to quickly acquire a lot of customers. As the initial set-up cost in this industry is very high, they have created an entry barrier for the small and mid-cap companies. This is what a blue-chip company can do if they use their resources properly.“
Gaurav looked a little mind-boggled. That’s why I thought better to give him another example to make him understand the capabilities of blue chip companies.
“Let’s discuss another example- Hindustan Unilever. If you think that HUL cannot grow any further because it is a large-cap company, then you might need to reconsider it. HUL already have popular products in the market like Lux, Lifebuoy, Surf Excel etc which are generating them a good revenue from those products. But, they still have a large rural area to cover. They are not so popular in the village areas, are they? So, they can definitely grow in the rural areas…”
…besides, as they have enough resources and financials, they are also continuously working on new product development in their Research & development (R&D) department. If they can make another great product, their profits will add-up in the future….“
Finally, when Gaurav didn’t argue further, I concluded-
“…a good blue chip company is like Rahul Dravid. If you want fast scorers (or T-20 players), then you may not like his batting style. However, if you are looking for dependable players, then you will definitely appreciate Rahul Dravid’s consistency.”
What are Blue Chip companies?
Blue chip companies are large and well-established companies with a history of consistent performance. These companies are financially strong (usually debt-free or very low debts) and are capable to survive in tough market situations.
Most of the blue chip companies are the market leaders in their industry. A few of the common examples of blue chip companies in India are HDFC Bank, HUL, ITC, Asian Paints, Maruti Suzuki etc.
— Signature Characteristics of Blue Chip Companies
Here are a few signature characteristics which you can look forward while researching blue chip companies—
They are large reputed companies.
They have widely used products/services.
Most of these companies are listed in the market for a very long time.
Blue chip companies have survived a number of bear phases, market crises, financial troubles, etc. But they are still going strong.
Blue chip companies have a strong balance sheet (a large number of assets compared to liabilities) and a healthy income statement (revenues and profits continuously growing for the last few decades).
These companies have a good past track record of stable growth.
Almost all blue chip stocks are older companies. You might already know many of the blue chip companies in India and have been using their products/services in your day-to-day life.
For example- Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit —- all these products are offered by the same blue chip company in India – Hindustan Unilever (HUL).
New to stocks? Confused where to begin? Here’s an amazing online course for beginners: ‘HOW TO PICK WINNING STOCKS?‘ This course is currently available at a discount.
— Why are they called blue chips?
Oliver Gingold- who worked at Dow Jones, is credited to name the phrase ‘Blue Chip’ in 1923. The term ‘blue chips’ became popular after he wrote an article where he used ‘Blue chips’ to refer the stocks trading at a price of $200 or more.
Quick Note: There are other sets of investors who believe that blue chip companies got its name from the Poker game, as in that game- blue chips are relatively more valuable. Similar to the game, the stocks which are more valuable in the market are termed blue chip stocks.
Although Oliver Gingold used the term ‘blue chips’ for high priced stocks, however, later people started using this word more often to define high-quality stocks (instead of high priced stocks).
— Financial characteristics of blue chip stocks
Apart from the signature characteristics discussed above, here are few key financial characteristics of blue chip companies –
1. Blue chip companies have a large market capitalization -As a thumb rule, the market cap of most of the blue chip companies in India is greater than Rs 20,000 Crores.
2. Good past performance: Blue chip companies have a track record of good past performance (like consistently increasing annual revenue over a long-term).
3. Low debt to equity ratio: The bluest of the blue chips are (generally) debt free stocks. However, a lower and stable debt to equity ratio can also be considered as a significant characteristic of blue chip companies.
4. Good dividend history: Blue chip companies are known to reward decent dividends to their loyal shareholders.
5. Other characteristics: Apart from the above four- few other key characteristics of blue chip companies are a high return on equity (ROE), high-interest coverage ratio, low price to sales ratio etc.
Now that you have understood the basic concept, here is the list of top 10 best blue chip companies in India. (Disclaimer- Please note that the companies mentioned below are based on the author’s research and personal opinion. It should not be considered as a stock recommendation.)
This company needs no introduction. Reliance Industries is an Indian conglomerateholding company and owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications.
In December 2015, Reliance Industries soft-launched Jio (Reliance Jio Infocomm Limited) and it crossed 8.3 million users as of January 2018.
Reliance is one of the most profitable companies in India and the second-largest publicly traded company in India by market capitalization. On 18 October 2007, Reliance Industries became the first Indian company to reach $100 billion market capitalization. It is also the highest income tax payer in the private sector in India.
HUL is one of the largest Fast Moving Consumer Goods (FMCG) Company in India with a heritage of over 80 years. It is a subsidiary of Unilever, a British Dutch Company. HUL’s products include foods, beverages, cleaning agents, personal care products, and water purifiers.
Few famous products of HUL are Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.
HDFC Bank is India’s leading banking and financial service company. It is India’s largest private sector lender by assets and has 84,325 employees (as of March 2017).
HDFC Bank provides a number of products and services which includes Wholesale banking, Retail banking, Treasury, Auto (car) Loans, Two Wheeler Loans, Personal Loans, Loan Against Property and Credit Cards. It is also the largest bank in India by market capitalization and was ranked 69th in 2016 BrandZ Top 100 Most Valuable Global Brands.
Asian paint is one of the largest Indian paint company and manufacturer. Since its foundation in 1942, Asian paint has come a long way to become India’s leading and Asia’s fourth-largest paint company, with a turnover of Rs 170.85 billion. It operates in 19 countries and has 26 paint manufacturing facilities in the world, servicing consumers in over 65 countries.
Asian Paints is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.
Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service, consulting and business solutions company.It was established in 1968 as a division of Tata Sons Limited. As of March 31, 2018, TCS employed 394,998 professionals.
TCS is one of the largest Indian companies by market capitalization (Rs 722,700 Crores as of June 2018). It is now placed among the most valuable IT services brands worldwide. TCS alone generates 70% dividends of its parent company, Tata Sons.
Infosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has its headquarters in Bengaluru, Karnataka, India.Infosys is the second-largest Indian IT company by 2017 and 596th largest public company in the world in terms of revenue. On April 19, 2018, its market capitalization was $37.32 billion.
Infosys main business includes software development, maintenance, and independent validation services to companies in finance, insurance, manufacturing and other domains. It had a total of 200,364 employees at the end of March 2017.
Indian Tobacco Company (ITC) is one of the biggest conglomerate company in India. ITC was formed in August 1910 under the name of Imperial Tobacco Company of India Limited. It has a diversified business which includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, Agri-Business & Information Technology. Currently, ITC has over 25,000 employees.
As of 2016, ITC Ltd sells 81 percent of the cigarettes in India. Few of the major cigarette brands of ITC include Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star, Insignia, India Kings etc.
Apart for the cigarette industry, few other well-known businesses of ITC are Aashirvaad, Mint-o, gum-o, B natural, Sunfeast, Candyman, Bingo!, Yippee!, Wills Lifestyle, John Players, Fiama Di Wills, Vivel, Essenza Di Wills, Superia, Engage, Classmate, PaperKraft etc.
Sun Pharma Sun Pharma was established in 1983 with just 5 products to sell in only two states: Bihar and West Bengal. Eventually, the company started expanding across the nation, and currently, it is India’s biggest pharmaceutical company.
As of FY21/Q1, the company has 43 manufacturing plants across the world with more than 36,000 global employee base and the company is also ranked 9th in the US Generic Markets. As of FY20, the company has footprints in more than 100 countries across the globe and is ranked 4th among global specialty generic companies. The company is engaged in manufacturing products in the following therapy areas: Cardiology, CNS Disorders, Pain, Ophthalmology, Diabetes, Oncology, Allergy- Asthma, Gastroenterology.
Further, Caraco Pharmaceutical Labs, Sun Pharmaceutical Industries Inc., Sun Pharma (Bangladesh), and Alkaloida Chemical Company Exclusive Group Ltd. are the subsidiaries of the company.
Bajaj Auto is a global two-wheeler and three-wheeler Indian manufacturing company. It manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto was founded by Jamnalal Bajaj in Rajasthan in the 1940s. It is the world’s sixth-largest manufacturer of motorcycles and the second-largest in India.
A few of the popular motorcycle products of Bajaj Auto are Platina, Discover, Pulsar and Avenger and CT 100. In the three-wheeler segment, it is the world’s largest manufacturer and accounts for almost 84% of India’s three-wheeler exports.
Nestle India is a subsidiary of Nestle SA of Switzerland- which is the world’s largest food and beverage company. It was incorporated in the year 1956. Nestle India Ltd has 8 manufacturing facilities and 4 branch offices in India. The Company has continuously focused its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings.
Few famous products of Nestle India are Maggi, Nescafe, KitKat, MUNCH, MILKY BAR, BARONE, NESTLE CLASSIC, ALPINO etc. (On 8 March 2018, Nestle Indias food brand MAGGI completed 35 years of existence in India.)
Most people invest in blue chip companies become of their long history of consistent performance and a similar expectation of standard performance in the future. Blue chip companies are low-risk high return bet for the long term.
Many blue chip companies in India like Tata, Reliance, Infosys etc are considered as ‘Too-big-to-fail’ companies as they have survived and remained profitable for a very long time. Nevertheless, this is not always true!!
Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting
HDFC Bank Case Study and analysis 2021: In this article, we will look into the fundamentals of HDFC Bank, focusing on both qualitative and quantitative aspects. Here, we will perform the SWOT Analysis of HDFC Bank, Michael Porter’s 5 Force Analysis, followed by looking into HDFC Bank’s key financials. We hope you will find the HDFC Bank case study helpful.
Disclaimer: This article is only for informational purposes and should not be considered any kind of advisory/advice. Please perform your independent analysis before investing in stocks, or take the help of your investment advisor. The data is collected from Trade Brains Portal.
About HDFC Bank and its Business Model
Incorporated in 1994, HDFC Bank is one of the earliest private sector banks to get approval from RBI in this segment. HDFC Bank has a pan India presence with over 5400+ banking outlets in 2800+ cities, having a wide base of more than 56 million customers and all its branches interlinked on an online real-time basis.
HDFC Limited is the promoter of the company, which was established in 1977. HDFC Bank came up with its 50 crore-IPO in March 1996, receiving 55 times subscription. Currently, HDFC Bank is the largest bank in India in terms of market capitalization (Nearly Rs 8.8 Lac Cr.). HDFC Securities and HDB Financial Services are the subsidiary companies of the bank.
HDFC Bank primarily provides the following services:
There are 12 PSU banks, 22 Private sector banks, 1485 urban cooperative banks, 56 regional rural banks, 46 foreign banks and 96,000 rural cooperative banks in India. The total number of ATMs in India has constantly seen a rise and there are 209,110 ATMs in India as of August 2020, which are expected to further grow to 407,000 by the end of 2021.
In the last four years, bank credit recorded a growth of 3.57% CAGR, surging to $1698.97 billion as of FY20. At the same time, deposits rose with a CAGR of 13.93% reaching $1.93trillion by FY20. However, the growth in total deposits to GDB has fallen to 7.9% in FY20 owing to pandemic crises, which was above 9% before it.
Due to strong economic activity and growth, rising salaries, and easier access to credit, the credit demand has surged resulting in the Credit to GDP ratio advancing to 56%. However, it is still far less than the developed economies of the world. Even in China, it is revolving around 150 to 200%.
As of FY20, India’s Retail lending to GDP ratio is 18%, whereas in developed economies (US, UK) it varies between 70% – 80%).
Michael Porter’s 5 Force Analysis of HDFC Bank
1. Rivalry Amongst Competitors
The banking sector has evolved very rapidly in the past few years with technology coming in, and now it is not only limited to depositing and lending but various categories of loans and advances, digital services, insurance schemes, cards, broking services, etc.; hence, the banks face stiff competition from its rivals.
2. A Threat by Substitutes
For services like mutual funds, investments, insurances, categorized loans, etc., banks are not the only option these days because a lot of niche players have put their foot in the specialized category, surging the threat by substitutes for the banks.
Another threat for the traditional banks is NEO Banks. The Neo Banks are virtual banks that operate online, are completely digital, and have a minimum physical presence.
3. Barriers to Entry
Banks run in a highly regulated sector. Strict regulatory norms, huge initial capital requirements and winning the trust of people make it very tough for new players to come out as a national level bank in India. However, if a company enters as a niche player, there are relatively fewer entry barriers.
With RBI approving the functioning of new small finance banks, payment banks and entry of foreign banks, the competition has further intensified in the Indian banking sector.
4. Bargaining Power of Suppliers
The only supply which banks need is capital and they have four sources for the capital supply viz. deposits from customers, mortgage securities, loans, and loans from financial institutions. Customer deposits enjoy higher bargaining power as it is totally dependent on income and availability of options.
Financial Institutions need to hedge inflation, and banks are liable to the rules and regulations of the RBI which makes them a safer bet; hence, they have less bargaining power.
5. Bargaining Power of Customers
In modern days, customers not only expect proper banking but also the quality and faster services. With the advent of digitalization and the entry of new private banks and foreign banks, the bargaining power of customers has increased a lot.
In terms of lending, creditworthy borrowers enjoy a high level of bargaining power as there is a large availability of banks and NBFCs which are ready to offer attractive loans and services at low switching and other costs.
HDFC Bank Case Study – SWOT Analysis
Now, moving forward in our HDFC Bank case study, we will perform the SWOT analysis.
1. Strengths
Currently, HDFC Bank is the leader in the retail loan segment (personal, car and home loans) and credit card business, increasing its market share each year
The HDFC tag has become a sign of trust in the people as HDFC has come out as a pioneer not only in banking, but loans, insurances, mutual funds, AMC and brokerage.
HDFC Bank has always been an institution of its words as it has, without fail, delivered its guidance and this has created a strong brand loyalty in the market for them.
HDFC Bank has very well leveraged the technology to help its profitability, only 34% transaction via Internet Banking in 2010 to 95% transaction in 2020.
2. Weaknesses
HDFC bank doesn’t have a significant rural presence as compared to its peers. Since its inception, it has focused mainly on high-end clients. However, the focus is shifting in the recent period as nearly 50% of its branches are now in semi-urban and rural areas.
3. Opportunities
The average age of the Indian population is around 28 years and more than 65% of the population is below 35, with increasing disposable income and rising urbanization, the demand for retail loans is expected to increase. HDFC Bank, being a leader in retail lending, can make the best out of this opportunity.
With modernization in farming and a rise in rural and semi-urban disposable income, consumer spending is expected to rise. HDFC Bank can increase its market share in these segments by grabbing this opportunity. Currently, the bank has only 21% of the branches in rural areas.
4. Threats
A lot of niche players have set up their strong branches in respective segments, which has shown stiff competition and has shrined the market share and profit margin for the company. Example – Gold Loans, Mutual Funds, Brokerage, etc.
In-Vehicle Financing (which is HDFC Bank’s major source of lending income), most of the leading vehicle companies are providing the same service, which is a threat to the bank’s business.
HDFC Bank has set high standards in corporate governance since its inception.
Right from sticking to their words to proper book writing, HDFC has never compromised with the banking standards, and all the credit goes to Mr. Aditya Puri, the man behind HDFC Bank, who took the bank to such great heights that today its market capitalization is more than that of Goldman Sachs and Morgan Stanley of the US.
In 2020, after 26 years of service, he retired from his position in the bank and passed on the baton of Managing Director to Mr. Shasidhar Jagadishan. He joined the bank as a Manager in the finance function in 1996 and with an experience of over 29 years in banking, Jagadishan has led various segments of the sector in the past.
Financial Analysis of HDFC Bank
48% of the total revenue for HDFC bank comes from Retail Banking, followed by Wholesale Banking (27%), Treasury (12%), and 13% of the total comes from other sources.
Industries receive a maximum share of loans issued by HDFC bank, which is 31.7%, followed by Personal Loans and Services both at a 28.7% share of the total. Only 10.9% of the total loans are issued to Agricultural and allied activities.
HDFC Bank has a 31.3% market share in credit card transactions, showing a growth of 0.23% from the previous fiscal year, which makes it the market leader, followed by SBI.
HDFC Bank is the market leader in large corporate Banking and Mid-Size Corporate Banking with 75% and 60% share respectively.
In Mobile Banking Transaction, the market share of HDFC bank is 11.8%, which has seen a degrowth of 0.66% in the current fiscal year.
With each year, HDFC Bank has shown increasing net profit, which makes the 1-year profit growth (24.57%) greater than both 3-year CAGR (21.75%) and 5-year CAGR (20.78%).
Capital Adequacy Ratio, which is a very important figure for any bank stands at 18.52% for HDFC Bank.
As of Sept 2020 HDFC, is at the second position in bank advances with a 10.1% market share, which has shown a rise from 9.25% a year ago. SBI tops this list with a 22.8% market share, Bank of Baroda is at the third spot with a 6.68% share, followed by Kotak Mahindra Bank (6.35%).
HDFC Bank is again at the second spot in the market share of Bank deposits with 8.6%. SBI leads with a nearly 24.57% market share. PNB holds 7.5% of the market share in this category, coming out as the third followed by Bank of Baroda with 6.89%.
HDFC Bank Financial Ratios
1. Profitability Ratios
As of FY20, the net profit margin for the bank stands at 22.87%, which has seen a continuous rise for the last 4 fiscal years. This a very positive sign for the bank’s profitability.
The Net Interest Margin (NIM) has been fluctuating from the range of 3.85% to 4.05% in the last 5 fiscal years. Currently, it stands at 3.82% as of FY20.
Since FY16, there has been a constant fall in RoE, right from the high of 18.26% to 16.4% as of FY20.
RoA has been more or less constant for the company, currently at 1.89%, which is a very positive sign.
2. Operational Ratios
Gross NPA for the bank has fallen from FY19 (1.36) to 1.26, which a positive sign for the company. A similar improvement is also visible in the Net NPA, currently standing at 0.36.
The CASA ratio for the bank is 42.23%, which has been seeing a continuous fall since FY17 (48.03%). However, there has been a spike rise in FY17 as in FY16, it was 43.25 and in FY18, again came to the almost same level of 43.5.
In FY19, Advance Growth witnessed a massive spike from 18.71 level in FY18 rising to 24.47%. However, in FY20, it again fell nearly 4 points, coming down to 21.27%.
Promoters hold 26% shares in the bank, which has been almost at the same level for the last many quarters. In the December quarter a years ago, the promoter holding was 26.18%. The marginal fall is only due to Aditya Puri retiring and selling few shares for his post-retirement finance, which he stated.
FIIs own 39.95% shareholding in the bank, which has been increasing for years in every quarter. HDFC bank has been a darling share in the investor community.
21.70% of shares are owned by DIIs as of December Quarter 2020. Although it is less than the SeptQ2020(22.90%), it is still far above the year-ago quarter (21.07).
Public holding in HDFC bank is 12.95% as of Dec Q2020, which has tanked from the year-ago quarter (14.83%) as FIIs increasing their share, which is evident from the rising share prices.
Closing Thoughts
In this article, we tried to perform a quick HDFC Bankcase study. Although there are still many other prospects to look into, however, this guide would have given you a basic idea about HDFC Bank.
What do you think about HDFC Bank fundamentals from the long-term investment point of view? Do let us know in the comment section below. Take care and happy investing!
HUL Case Study and analysis 2021: Hindustan Unilever Limited (HUL) is India’s biggest fast-moving consumer goods company. In this article, we will look into the fundamentals of HUL, focusing on both qualitative and quantitative aspects. Here, we will perform the SWOT Analysis of HUL, Michael Porter’s 5 Force Analysis, followed by looking into HUL key financials. We hope you will find the Hindustan Unilever Limited (HUL) case study helpful.
Disclaimer: This article is only for informational purposes and should not be considered any kind of advisory/advice. Please perform your independent analysis before investing in stocks, or take the help of your investment advisor. The data is collected from Trade Brains Portal.
About HUL and its Business Model
With a legacy of over 80 years, Hindustan Unilever Limited (HUL) is India’s biggest fast-moving consumer goods company. Actually, the very first product of the company was launched in 1888 named Sunlight Soap. In 1931 Unilever set up its subsidiary in India and in 1956, its subsidiaries consolidated to form Hindustan Leer Limited.
In 2007, the name was renamed Hindustan Unilever Limited. In 2013, the parent company Unilever increased the market stake in HUL to 67% and in 2018, the market cap of HUL passed $50bn.
HUL primarily has three divisions:
Home Care
Beauty and Personal Care
Food and Refreshment
Hindustan Unilever has a pan India access and it is found that more than 9 out of 10 households in India use a brand of HUL. Currently, the company has 14 brands in 44 different categories including Skin Cleansing, Tea, Deodrants, HFD, etc. Famous Brands like Surf Excel, Rin, Wheel, Vaseline, Pepsodent, Clinic Plus are included in the portfolio of the company.
On April 1, 2020, HUL also acquired leading brands like Horlicks and Boost. The company has 21,000 employees working under it with 31 factories, more than 1150 suppliers, and the products are available at more than 8million outlets in India.
HUL Case Study – Industry Analysis
FMCG sector is the fourth largest sector in India, which has surged from 840 Billion USD in 2017 to 1.1 Trillion USD in FY20 and is expected to grow at 10% a year. Personal Care and Household dominates with 50% of FMCG sales in India. Rapid urbanisation, increasing disposable incomes and better lifestyles have been the main growth drivers for the FMCG sector.
55% of the sales come from the urban segment, however, for the last few years, it has witnessed faster growth in the rural segment as compared to the urban segment. In rural India, the sector grew at 10.6% in the Q3 FY20, majorly due to better agricultural output.
It is expected that the rural FMCG market will rise to USD 220 billion by the end of 2025, at the same time, the market share of the unorganised market is expected to fall rapidly.
Michael Porter’s 5 Force Analysis of HUL
1. Rivalry Amongst Competitors
FMCG industry is a very competitive one with many brands available, and new products coming in each quarter make innovation very important. FMCG business is highly dependent on advertisement and companies spent a big percentage on it.
The switching costs for the customers are very low in this sector as the product differentiation is moderately low, which intensifies the competition.
2. A Threat by Substitutes
Substitute in the FMCG sector is highly dependent on the particular product. For example, it is way easier to find Colgate toothpaste at a local shop than a homemade organic dentifrice. On the other hand, the substitute product for biscuits is rusk which is easily available. Since switching costs are very less, the threat of substitutes is relatively on the higher side.
3. Barriers to Entry
Barriers to entry in the FMCG sector are far less as compared to the others. FMCG business is majorly dependent on brand identification and this can be developed with unique qualities, logo, advertisement; basically, proper market strategy.
The distribution network is very large and branched in the FMCG sector, which further eases out barriers of entry.
4. Bargaining Power of Suppliers
In FMCG business, companies have long term business with the suppliers, which helps them to negotiate the price. Moreover, the number of suppliers is ample; hence, decreasing the bargaining power of suppliers. However, companies need to make sure that they are getting the supplies at the cheapest possible prices as the industry is a high-volume, low-margin business.
5. Bargaining Power of Customers
Factors like a high number of similar product companies available, very low switching costs and similar products available at similar quality and in almost the same price range increase the bargaining power of customers. The only thing that can make them stay is brand loyalty for a product.
HUL Case Study – SWOT Analysis
Now, moving forward in our HUL case study, we will perform the SWOT analysis.
1. Strengths
HUL has a strong brand equity and a large legacy as it is a very old and well-rooted company with a variety of popular brands and products.
The company has its presence across the length and breadth of India with over 8 million+ retail stores where its products are available.
2. Weaknesses
HUL runs in a very competitive environment and there are highly established and rising companies that are little product-focused and hence, eat up the market share of the company.
HUL currently doesn’t have any ayurvedic or natural products in their portfolio, which is a negative aspect of the company as the current population’s trend is shifting to herbal products and many focused companies are making the best use of it.
3. Opportunities
With increasing disposable incomes, education and youth population, the FMCG sector in rural and semi-urban areas is expected to grow very rapidly as compared to urban areas. The company can use this very well as it already has a brand image and a wide chain of distributors.
The company can use its healthy cash reserve position and brand image legacy to acquire various products to diversify its portfolio.
4. Threats
HUL runs in a highly competitive environment, with 100% FDI allowed by the Govt. of India and new multinational companies setting their feet, the company faces a high threat from its competitors.
The company is highly dependent on raw material prices. Inflation can shrink the margins for the company as it runs in a sector that is a high-volume, low-margin one.
Population’s shift to organic and healthy products can help some unorganized and small companies to increase their market share, which can be a threat to HUL.
There are 9 members in the board of directors committee of the company, out of which 6 are Independent Directors including one female member.
Mr Sanjiv Mehta has been serving as the Chairman and Managing Director of the company since 2018. Chartered Accountant by degree, Sanjiv Mehta is also the President of Unilever South Asia(Pakistan, Bangladesh, Sri Lanka and Nepal). In 2019, he was awarded the “Business Leader of The Year” award by the All India Management Association.
Mr Willem Uijen is the Executive Director, Supply Chain of Hindustan Unilever Limited. He has been with the company since 1999 and was a part of various demographical projects of the company, especially in Latin America. In January 2020, he joined his current position.
Financial Analysis of HUL
44% of the company’s revenue comes from Beauty and Personal Care, followed by Home Care (34%). Foods & Refreshment contributes 19% and only 3% comes from others.
In terms of Operating profit, Beauty and Personal care products contribute the maximum (55%), 29% comes from Home Care, 14% and 3% from Foods and others respectively.
The company has a 54% market share in the Skin Care Segment, which makes it the market leader. In Dishwashing Detergents, 55% of the market share is dominated by the company. 47% and 37% is the respective market share which company owns in Shampoo and Personal Care Segment.
As of Sept’20, the company spent 9.79% on advertisements as a % of total sales, which has shown a good rise from 7.46 of June’20.
Net Profit Margin for the company is 14.77% as of FY20, which has surged from 13.59% as that of FY19. Current NPM is the highest of that in the last 5 financial years and the 3 Yrs. Avg. Net Profit Margin is 14.26%. Source: Trade Brains Portal]
In FY20, HUL showed a Revenue Growth of 1.2% from the previous FY. 3-year CAGR is 6.16%, which means that in recent years, the revenue growth has been subdued. A similar trend is visible from Net Profit Growth, 1-year CAGR is 11.46% whereas 3-year CAGR (14.66%) is higher.
The company has a very healthy and consistent cash flow from Operating Activities. Outflow in cash flow from financing activities surged in FY20 as the company paid a higher dividend than the previous year.
HUL Case Study Financial Ratios
1. Profitability Ratios
EBITA Margin for the company has been increasing for the last 5 financial years except for FY19, in which it witnessed a small dip from 20.7 to 19.91. As of FY20, EBITDA Margin is 21.54%.
Hindustan Unilever has the premium RoE of 84.15 (FY20), and a consistent rise in the same has been visible for the last 4 years. The 3 years avg RoE is 79.76%.
The company enjoys 3-digit RoCE, which is very well respected by the market and a similar rising trend is visible in RoCE as that of RoE. As of FY20, RoCE is 114.67% and the Avg ROCE for 3 years is 110.16%.
2. Leverage Ratios
As of FY20, Quick Ratio and Current Ratio for the company are 1.02 and 1.32 respectively, which indicated its good liquidity position. These levels have been more or less the same for the last 5 financial years, which is a positive sign for the company.
HUL is a 100% debt-free company and its Interest Coverage Ratio is 48.69% as of FY20. Although this level is very good currently, it was 261.73 in FY19.
3. Efficiency Ratios
Currently, the asset turnover ratio for the company is 2.4, which is slightly lower than the previous year but this figure has been almost constant in the recent financial years.
The inventory turnover ratio witnessed a continuous rise from FY16 (12.04%) to FY19(17.53%), which later dipped to 17.18 in FY20 due to virus outbreak disruptions.
The number of receivable days has decreased (12.79% in FY19 to 11.83% in FY20) and the number of payable days has increased (90.77% in FY19 to 92.86% in FY20), indicating the company’s increased bargaining power over the buyers and suppliers.
Shareholding Pattern of HUL
Promoters own 61.9% of the company as of December quarter 2020. Although it has been the same for the last 3 quarters, a fall was seen from the level of 67.18% in March 2020. The best part is that promoters do not pledge a single share.
FIIs hold 14.92% of shares of the company as of December 2020, which has surged from the level of 12.32% in the same period the previous year.
DIIs own nearly 10.72% shares of the company, which was around 6.68% a year back. Both FIIs and DIIs have increased their shareholding in the previous years.
Public shareholding has witnessed a fall in the recent quarters, from the level of 14.95% in Jun2020 to 12.46% in Dec 2020.
Closing Thoughts
In this article, we tried to perform a quick Hindustan Unilever Limited (HUL) case study. Although there are still many other prospects to look into, however, this guide would have given you a basic idea about HUL.
What do you think about HUL fundamentals from the long-term investment point of view? Do let us know in the comment section below. Take care and happy investing!
Infosys Case Study and analysis 2021: In this article, we will look into the fundamentals of Infosys, focusing on both qualitative and quantitative aspects. Here, we will perform the SWOT Analysis of Infosys, Michael Porter’s 5 Force Analysis, followed by looking into Infosys key financials. We hope you will find the Infosys case study helpful.
Disclaimer: This article is only for informational purposes and should not be considered any kind of advisory/advice. Please perform your independent analysis before investing in stocks, or take the help of your investment advisor. The data is collected from Trade Brains Portal.
About Infosys and its Business Model
In 1981, Narayana Murthy with a team of six members incorporated Infosys in Pune with an initial capital of just $250 and within the very first year itself, they locked in the deal with Data Basics Corporation of New York.
The theme of the organization is “Sustainable and Resilient” and since its inception, the company has been delivering sustainable solutions. Currently, the company is heavily investing in digital platforms like Data Analysis, Agile Technology, Artificial Technology, Cloud Infrastructure, etc.
Infosys primarily provides the following products and services :
IT Services (Application Services, IMS, SOA Services, Infrastructure Services, etc.)
Engineering Services (Product Engineering, Manufacturing Process, IT Strategies, etc.)
BPO Services (Business Platforms, Human Resource Outsourcing, Order Management, etc.)
Product and Platforms (Finacle, Infosys ActiveDesk, Infosys Mconnect)
As of FY20, the company has a client base of 1411, which has shown a growth of CAGR 6.62% in the last 4 years. Infosys BPO, Infosys Consulting, Infosys Australia, Infosys China and Infosys Mexico are the subsidiary companies of Infosys. It also has its offices in the top cities of the world like Singapore, New York, Tokyo, Shanghai, etc.
Infosys Case Study – Industry Analysis
As of FY20, the IT-BPM industry of India is worth USD 191 billion, which has been growing 7.7% y-o-y and by 2025, it is estimated to reach USD 350 billion. The Digital Segment has seen rapid growth in recent years and is expected to cover around 38% revenue of the entire industry. As of FY20, 147 billion USD was contributed by the export revenue and the domestic revenue was at US$40 billion. Indian IT industry exports to more than 80 countries across the world with over 1000 global delivery centres. IT sector of India attracts the second largest FDI inflows as per the report by the Department for Promotion of Industry and Internal Trade. Currently, India leads the world in sourcing destinations with 75% of global digital talent present in the nation. As per NITI Aayog, by 2035, Artificial Intelligence can boost the nation’s annual growth rate by 1.3%. Currently, the IT industry of India contributes 7.7% to the country’s GDP and is expected to increase its contribution to 10% by 2025. With the growth of AI, Data Analytics and IoT, the demand of India’s cloud market is expected to reach USD 7.1 billion by the end of 2022, signifying a triple fold jump.
Michael Porter’s 5 Force Analysis of Infosys
1. Rivalry Amongst Competitors
IT Industry is a very competitive one with every leading company providing almost similar solutions. Moreover, the competition is not only limited to the nation itself but beyond the boundaries, too as many countries like China are working briskly to provide technologically advanced services at a cheaper cost.
2. A Threat by Substitutes
With the world getting greatly dependent on technology, there is almost no substitute for it. In the case of ITeS and BPO segments, the companies can still develop their IT department. However, this trend has witnessed a continuous fall as companies feel that it is better to outsource and focus on their core business rather than investing in the IT department.
3. Barriers to Entry
As the IT industry is hugely capital intensive and with rich talent in the digital space, the barriers to entry in the IT Industry are not very high. With the government also extending its help to new tech startups, the competition in this industry is increasing.
As technology is changing every second, new companies have to focus on innovation because outdated technology gets no importance, which requires a regular flow of skill and cash. However, some focused niche-based startups can eat up a huge market share of the existing companies. For example, AI, IoT, etc.
4. Bargaining Power of Suppliers
India is rich in skilled IT labor, having more than 75% of the global digital talent, that too at a very cheap cost. Moreover, the business is not concentrated on a limited group and the work is distributed over many divisions, which decreases the bargaining power of suppliers.
5. Bargaining Power of Customers
Bargaining power in the case of customers is a two-way variable. At first, customers enjoy a very high bargaining power as there are various companies providing quality solutions but when they get installed with the products, the increasing switching costs result in a fall in bargaining power for them. As the company gets dependent on the IT partner for all future updates and technological developments, the bargaining power of customers decreases.
Infosys Case Study – SWOT Analysis
Now, moving forward in our Infosys case study, we will perform the SWOT analysis.
1. Strengths
The company has a wonderful brand value and is one of the pioneers in the IT sector as it has been providing end-to-end world-class business solutions consistently. The company enjoys a huge cash reserve with one of the finest corporate governances.
Since its inception, the company has been highly focusing on innovation and strengthening its roots in the new technologies especially AI, IoT, etc.
2. Weaknesses
Even though the company has made a strong presence worldwide, it still lags in making its dominance within the boundaries of the nation.
Nearly 85% of the business is concentrated in North America and few countries of Europe, which makes the business prone to unwanted volatilities and uneven growth.
The company is not efficiently focusing on growing economies that are seeing a massive development into technology.
As the company is one of the biggest mass recruiters of the nation, it faces a high rate of attrition. This means a lot of employees leave the company for better pay and job, which deteriorates the company’s image.
3. Opportunities
Infosys can focus on the emerging economies of the world as the demand for technology will rise hugely there and it can acquire a big market share in those countries coming out as their market leader in the future.
As the company has a huge pile of cash in its reserve, it can use it in R&D for the latest technologies, developing world-class products and entering new segments. For example, cloud-based solutions.
With the government’s major focus on the digitalization of its undertakings, Infosys can play an important role in the same. Especially in the BFSI sector where Infosys has done a terrific job in the past.
4. Threats
As most of the company’s revenue is earned in dollars and euros, it imposes a currency risk on the earnings of the company.
Infosys faces stiff competition from its competitors. Well-established companies like TCS, Accenture, etc. eat up the market share. Moreover, intense competition leads to a contraction in margins and a force to invest in the latest technologies.
Nandan Nilekani, who co-founded the company with Narayana Murthy, is the current chairman of the board for Infosys. IITian by degree, he was awarded Padma Bhusan in 2006 and held numerous awards in the corporate world.
Salil Parekh is the Chief Executive Officer and Managing Director of the company, who has more than three decades of experience in the IT services industry. In Jan 2014, Mr Pravin Rao joined the board of the company and he is the COO and Whole-time Director of the same.
Kiran Mazumdar-Shaw, who is also the chairperson and MD of Biocon Limited, is the Lead Independent Director of the company. There are a total of 4 Independent Directors on the board.
Financial Analysis of Infosys
Financial Services contribute the maximum for the company (32%), followed by Retail (16.4%). Both Energy Utilities and Communication contribute 12.6% in the total revenue of the company, 9.9% by Manufacturing. Life Sciences and Hi-Tech contribute 6.3% and 7.5% respectively.
60.5% of the company’s business is from North America, followed by Europe which contributes 24.1%. Only 2.5% of the total business is based in India and 12.9% comes from the rest of the world.
The company has a 4% software testing services segment market share.
As of Mar’20, the company spends 0.91% on R&D as a % of total sales which is falling with every quarter. In Dec’20, Constant Currency Growth in the BFSI sector almost doubled to 12% from the level of 6.2% in the same period the previous year.
As of FY20, the Net Profit Margin for the company is 18.33%, which has been continuously falling for the last few years, especially from the level of 22.83% in FY18. However, the 3-year average stands at 19.93%.
3 Year CAGR Revenue Growth for the company is 9.85% which is almost the same as the last year’s data (9.82%). However, Net Profit Growth has shown a great rise, as in FY20, it was at 7.73% and 3 Yrs CAGR for the same is 4.95%.
The company has one of the finest cash flow statements. Cash Flow from Operating Activities has been rising tremendously year after year and so is the outflow in cash flow in financial services; hence, the company pays a good dividend every year from the cash they receive.
Infosys Financial Ratios
1. Profitability Ratios
In FY 2016, EBITA Margin for the company was 27.28% and from this level, it has fallen continuously year by year. As of FY20, EBITDA Margin is at 23.96%
Return on Equity for the company has shown a rise in the recent few financial years. As of FY17, RoE for the company was 22.03% which has shown a rise to the level of 25.62% in FY20. The 3 Yr. average RoE for the company is 24.50%.
An almost similar trend can also be noticed in RoCE, it has risen from the level of 30.57% in FY17 to 34.01% in FY20. The 3 Yr. average RoCE for the company is 32.26%.
2. Leverage Ratios
Quick Ratio and Current Ratio for the company is far above the threshold levels of 2.62% each, which is a very positive sign for the company’s liquidity position.
Infosys enjoys a debt-free status and has an Interest Coverage Ratio of 130.45.
The Asset Turnover Ratio for the company is 1.04 as of FY20, which showed an improvement from the level of 0.87 in FY17. This can also be deduced from the increased RoE in the same period as NPM growth is muted for that period.
Receivable days for Infosys have increased from the level of 61.74% in FY19 to 66.96% in FY20, indicating the buyers’ bargaining power. Payable days for the company have also increased from the level of 8.9% in FY19 to 15.03% in FY20, which shows the company’s bargaining power over the suppliers.
12.95% shares are owned by the promoters of the company without any pledging of shares, which has been more or less constant from the previous few quarters.
FIIs have slightly increased their shareholding from the level of 30.47 in June 2020 Q to 32.26% in the latest quarter.
As of Dec 2020 quarter, DIIs own 23.75% of the company, which has come down from the level of 25.42% in June 2020 Q.
13.78% shareholding is by the public, which has been almost constant for the last few quarters. Also, 17.26% of owners are others who have shown a similar trend.
Closing Thoughts
In this article, we tried to perform a quick Infosys case study. Although there are still many other prospects to look into, however, this guide would have given you a basic idea about Infosys.
What do you think about Infosys fundamentals from the long-term investment point of view? Do let us know in the comment section below. Take care and happy investing!
Asian Paints’ Case Study and analysis 2021: Asian Paints is the largest and leading Indian paint company. In this article, we will look into the fundamentals of Asian Paints, focusing on both qualitative and quantitative aspects. Here, we will perform the SWOT Analysis of Asian Paints, Michael Porter’s 5 Force Analysis, followed by looking into Asian Paints’ key financials. We hope you will find the Asian Paints’ case study helpful.
Disclaimer: This article is only for informational purposes and should not be considered any kind of advisory/advice. Please perform your independent analysis before investing in stocks, or take the help of your investment advisor. The data is collected from Trade Brains Portal.
About Asian Paints and its Business Model
Asian Paints is India’s 1st largest, Asia’s 3rd largest and the world’s 9th largest paint company. It has been setting a high standard of operational efficiency, management, world-class innovation and technological vision for the last 7 years.
The paint industry is divided mainly into two segments viz. Decorative and Industry. The Decorative segment includes household paints (interior wall finishes, exterior wall finishes, enamels and wood finishes) and is undeniably dominated by Asian Paints in India. The Industry segment includes industrial paints, automotive coatings, OEM paints, powder coatings etc., in which Asian Paints comes at 3rd place after Kensai Nerolac and Akzo Nobel.
The decorative segment is less technology-dependent due to which some unorganized players also eat up a small fraction of the market share. However, the industry segment is highly technology-dependent and entirely have organized players.
Asian Paints holds a global presence by operating in 15 different countries and owning 26 paint manufacturing plants across the globe. In India, it has a robust distribution network of suppliers. To improve its margins and operational efficiency, the company chose dealers over distributors.
Currently, the company has 70,000+ shopkeepers across the nation. It has also been enhancing its dealers for the past 40 years. Asian Paints has a phenomenal supply chain as it carries out around 2.5 – 3 lakh deliveries per day and its trucks visit the dealers around 4 times a day.
Asian Paints’ Industry Analysis
The paint industry runs parallel to the GDP and economy. Considered as discretionary spending, as the GDP increases so does the spending capacity of the people. In the past, this industry has seen double-digit growth in terms of both, value and volume, and this is why it has always traded at premium valuations in emerging economies.
For the last two years, there has been a constant rise in the market share by organised players. Currently, the ratio is around 70:30 between organised and unorganised players, and with the technological innovation and proper GST implementation, this market share is expected to rise to 85% in the next couple of years.
The paint industry of India is expected to witness a phenomenal rise in the coming years considering India’s latest per capita consumption (of around 4kg) as compared to that of the world (15kg.) This data provides a vast scope for the paint industry to grow in India.
The paint industry is a raw material intensive industry. Especially in the case of India, most of the raw materials are imported from other countries. With the government imposing import bans and promoting the self-reliant mission, the supply is expected to come from within the country in the coming years, which will be a boon to this industry and it will see a tremendous rise in operational margins.
Michael Porter’s 5 Force Analysis of Asian Paints
1. Rivalry Amongst Competitors
The 70% paint industry is dominated by the organized sector which includes 4 companies (Asian Paints, Berger Paints, Kansai Nerolac and Akzo Nobel). As it is a raw material intensive industry, the distribution network plays an important role; hence a very tough competition is observed among the competitors.
2. A Threat by Substitutes
In earlier days, limewash was used as an alternative to paints. However, in the modern era, the trend is entirely getting shifted to paints. Hence, the threat to substitutes is very low.
3. Barriers to Entry
The Industry segment is totally governed by technological developments, which limits the entry of unorganized players owing to the high R&D expenditure.
Established players have a well-developed and trusted distribution system, which will be very difficult for a new entrant to break.
4. Bargaining Power of Suppliers
Paint manufacturing requires more than 300 raw materials, of which the maximum is imported. Titanium oxide, which constitutes 25% of the raw materials, is facing a shortage of supply. 50% of the same is Petro-based products which see high volatility in prices. Hence, the bargaining power of suppliers is very high in the paint industry.
5. Bargaining Power of Customers
With almost similar products offered by 4 different companies of an industry, it becomes price-sensitive; hence, customers enjoy high bargaining power.
The industry segment attracts technologically enhanced companies with a robust supply chain, which is not offered by many; hence, customers do not possess much bargaining power in this segment.
Asian Paints’ SWOT Analysis
Now, moving forward in our Asian Paints case study, we will perform the SWOT analysis.
1. Strengths
Right after setting foot in the paint industry, Asian Paints chose dealers instead of distributors and wholesalers. This decision has turned out to be a boon for the company as the distributors demanded a 20% margin whereas now only 3% margin goes to the suppliers.
Technological Development is the sector where Asian Paints have been investing for decades. Asian Paints bought a supercomputer worth 8 crores in 1970, which is ten years before ISRO did it. It collects almost double the data than its competitors and forecasts the trend with more than 97% accuracy.
2. Weaknesses
The penetration of Asian Paints in the industry segment is far too low, and it faces stiff competition from already strong Kansai Nerolac and Akzo Nobel.
Despite being the 9th largest paint company in the world, the global business of the company is far below average with the exception of Bangladesh, Nepal and UAE.
3. Opportunities
Asian Paints states that they aim to enter the list of top 5 paint companies of the world. This could be achieved by focusing on the emerging economies of the world.
Considering the market share, Asian Paints has an opportunity to increase its market share in the industry segment as it requires world-class technology which the company can very easily afford.
Government policies (like the extension of CLSS), rapid urbanization and easy availability of home loans will increase the demand for paint. With its strong distribution network, innovative products and total home solutions, Asian Paints can be hugely benefitted.
4. Threats
With new players like Indigo Paints and already established players, Asian Paints faces stiff competition. In the global market too, the world-class technologically innovative players dominate the market share.
As most of the raw materials for manufacturing paint are imported, the company may face operational disruption during circumstances like a pandemic, country tensions, etc.
The visionary founder of Asian Paints, Mr Chamaklal Choksi laid the stone of efficient management in the company. From its incorporation to this date, Asian Paints has been setting standards in management qualities, and this is one of the reasons it has been one of the biggest wealth creators of all time in India.
Being a visionary and understanding the importance and future of technology, Mr Choksi bought a supercomputer worth Rs 8 Crores, back in 1970 before ISRO (after 10 years) and IIT Bombay (after 21 years) did, to collect various data, forecast the sales, efficient changes and customer interest. This custom of pure management is still going on in the company.
The newly appointed MD and CEO Mr Amit Syngle owns just 600 shares of the company (the previous one, Mr KBS Anand owned mere 270 shares). The board of Asian Paints enjoys broad expertise and vast experience.
Financial Analysis of Asian Paints
84% of the company’s revenue comes from the decorative segment. In FY20 company launched various value for money emulsions which helped the company to gain more market share.
2% of the company’s revenue is incurred from the Industrial coating Business. The company is a market leader in auto refinish segment and stands at the second position in the OEM segment.
2% of the total revenue constitutes from the home improvement business. Recently, the company is trying to enter complete home solutions like sanity ware, kitchen and living area under the brands ap royal bathrooms.
International Business accounts for 11% of the total revenue generated by the company, and in FY20, the company improved the product value proposition in the key markets like Egypt, Bangladesh, Sri Lanka etc.
42% market share of the Indian Paints Industry is dominated by Asian Paints, which makes it a leader of the industry, followed by Berger Paints (12%), Kansai Nerolac (7%), Akzo Nobel (5%) and Indigo Paints (2%). 33% of the market share is acquired by other small and unorganised players.
Asian Paints beats its competitors in profitability with an NPM of 11.66%. [Berger Paints (10.44%) and Kansai Nerolac (8.75%); Source: Trade Brains Portal]
Although the company has break-even cash flows, it enjoys healthy operating cashflow with a spike of Rs 495.15 crores from FY19 (Rs 99.92 crore) to FY20 (Rs 595.07 crore).
The company has a CFO to PAT (last 5 yrs. average) ratio of 1.03 which is a positive sign for the company’s cash flow position.
Asian Paints’ Financial Ratios
1. Profitability Ratios
Asian Paints has EBITA Margin of 17.83%, which is constantly rising from the last few years and it is the highest among its peers. The recent rise from 16.99% in FY 19 to 17.83% in FY20 is mainly due to falling crude prices.
Asian Paints has been constantly delivering a massive RoE of above 25% for a lot of years. The current RoE stands at 27.79%.
For the FY20 the RoCE is standing at a massive 35.83%. However, there has been a decreasing trend in RoCE for the last couple of years mainly due to increased competition, additional CAPEX and investment for future growth.
Current Ratio for the FY20 is 1.73% for the company, which has seen continuous improvement for the last couple of years. Current Ratio above 1.33% is considered healthy.
The Company is almost debt-free with Debt-to-Equity ratio of a mere 0.04. It means the company is funding additional projects from the equity.
The quick ratio of the company is 0.96 for the latest financial year. Although liquidity has not improved in the last few years, it has maintained a threshold requirement.
Asset turnover Ratio has seen a continuous fall from FY 16(1.83). Currently, the ratio is 1.44%. However, there has been a similar fall for the entire peers of the industry and Asian Paints still has a better figure than the peers.
The inventory turnover Ratio for the FY20 is 7.14%, which is the highest among the peers. However, an entire industry has seen a fall in this ratio from the last few years.
The number of payable days has decreased from the previous fiscal year (52.73 to 50.51), which shows the supplier’s bargaining power over the company, whereas the receivable days are continuously increasing from the last few years indicating stiff competition.
Promoters hold 52.79% of the company with around 10.67% of pledging. Promoter holding has been constant for the last few quarters and pledging of shares has also reduced from 12.53% in December 2019 to 10.67 % in December 2020. Nevertheless, pledging above 10% is an alarming sign.
A constant increasing trend has been seen in the case of FII holding for the last few quarters with a shareholding of 17.24% in September 2019 to 21.13% in the recent quarter.
DIIs own nearly 7.10% of the company. However, a constant decreasing trend has been seen in the DII shareholding in Asian Paints for the last few quarters.
Public Holding has been more or less the same in Asian Paints of around 19-20%.
Closing Thoughts
In this article, we tried to perform a quick Asian Paints’ case study. Although there are still many other prospects to look into, however, this guide would have given you a basic idea about Asian Paints.
What do you think about Asain Paint fundamentals from the long-term investment point of view? Do let us know in the comment section below. Take care and happy investing.
Tata Motors Stock Study & Analysis: Tata Motors stocks have given a return of over 390% from March 2020 to Feb 2021 (till date). In fact, currently, Tata motors stocks are being considered more popular than Tesla in terms of returns. Nevertheless, looking at just the share price is the dumbest strategy while evaluating a company.
In this post, we’ll look into the fundamentals of TATA Motors focusing on both qualitative and quantitative aspects. Here, we’ll perform the SWOT Analysis of Tata Motors, Michael Porter’s 5 Force Analysis of Tata Motors, followed by looking into Tata Motors’ key financials. Let’s get started.
Disclaimer: This article is only for informational purposes and should not be considered any kind of advisory/advice. Please perform your independent analysis before investing in stocks, or take the help of your investment advisor. The data is collected from Trade Brains Portal.
Tata Motors Stock Study – About & Business Model
Incorporated in the year 1945 as TATA Engineering and Locomotive Company (TELCO), TATA Motors used to manufacture locomotive steam engines and other engineering products. It joined hands with Daimler Benz AG in 1954 to manufacture commercial vehicles which ended in 1969.
Understanding the technological trend, the company eventually discontinued this segment and set its foot into the commercial vehicle segment independently in 1977 in Pune. Currently, the company is a market leader in the commercial vehicle segment in India with a share of over 37%. TATA Motors entered the Passenger Vehicle segment in 1991 with the launch of TATA Sierra, and in 1998 Auto Expo, the company wrote history by launching TATA Indica which became the number one car in the respective segment within the next two years.
In 2008, the company acquired the Jaguar Land Rover segment from Ford Motors to enter foreign markets completely. Currently, the company has manufacturing and R&D facilities in the leading economies of the world viz. China, the UK, the USA, South Korea, etc. The Product Range of the company includes:
Passenger Cars
Utility Vehicles
Trucks
Commercial Passenger Vehicles
Luxury Cars
Defense Vehicles
Tata Motors’ Industry Analysis
By selling 3.99 million units of the vehicle in 2019, India surpassed Germany to become the 4th largest auto market of the world, and it is expected that by 2021, India will become the third-largest auto market displacing Japan. In the last four years, domestic automobile production has witnessed a growth of CAGR 2.36% with 26.36 million vehicles being manufactured and a 1.29% CAGR sales growth.
Considering Auto Industry as a whole, two-wheelers dominate the industry by 80.8%, followed by passenger vehicles at 12.9%. Mid seized and small cars grab maximum sales in the PV category.
According to the Society of Indian Automobile Manufacturers, PV wholesales in India saw a 26.45% YoY growth in September 2020. Automobile Export has grown with a CAGR of 6.94% during FY16-20, with the export of 4.77 million.
EV sales in India witnessed a 20% growth in FY20 with sales of 1.56 lakh units. And the EV industry in India is expected to be of Rs 50,000 crore by 2025.
The Indian Automobile industry is favored by several factors like cheap skilled labor, great R&D centers, and low-cost steel production. By 2026, the industry is expected to reach 16.16 -18.18 trillion Rs.
Tata Motors’ Michael Porter’s 5 Force Analysis
1. Rivalry Amongst Competitors
Auto Industry of any nation faces a stiff competition, that is why companies have to be price efficient and come up with new technologically advanced cars and features. The industry is very large and the exit cost is also very high as a lot of asset investment is being done, which intensifies the competition. Also, be it any range of car price, companies have to deeply focus on R&D.
2. A Threat by Substitutes
With the increasing fuel prices and online booking of tickets, people find cabs and other modes of transport as a substitute to a personal vehicle. Moreover, they do not have to spend on maintenance too. Still, owning a personal four-wheeler is a sign of prestige and convenience for the most.
In the commercial vehicle segment, road transport is still very much dominated (59%) as it can be connected to the mountains and to sea shores unlike trains, which makes substitutes for commercial vehicle highly unfavorable.
3. Barriers to Entry
Auto Industry requires continuous innovation, proper raw materials, skilled labor and huge initial capital investment which makes it very difficult for new entrants to step their foot in this industry.
Other barriers are government policies which have become very strict in the recent period especially focusing on environmental safety and high import taxation.
4. Bargaining Power of Suppliers
In Auto Industry, the bargaining power of supplier depends on the size of the supplier as few small suppliers are totally dependent on few auto players, so they have to play according to the rules and regulations set by the vehicle companies, and switching from one supplier to another is very easy for big players.
5. Bargaining Power of Customers
Customers are very price-sensitive and would switch to other brands that offer a better car at the cheapest price as there is no switching cost involved in this industry. So, customers enjoy a high bargaining power in the auto industry. However, companies try to increase customer loyalty by offering better quality and post service.
Tata Motors’ SWOT Analysis
1. Strengths
TATA Motors has a well-diversified portfolio of vehicles which includes right from economical passenger vehicles to luxury cars and the penetration of TATA Motors into the commercial vehicle segment is also very impressive. It creates a brand royalty for the company.
2. Weaknesses
The revenue of Tata Motors is heavily dependent on the JLR segment, which can hit the business and profitability if a slowdown occurs in this segment. In 2019 such situations occurred for the company when there was a massive decline in demand for JLR in Chinese and European markets and the rest was fueled by the pandemic in 2020.
3. Opportunities
With the advent of Electric Vehicles in India and other nations, TATA motors can take the advantage of its innovative legacy to increase its market share in the EV segment. Its sister companies like TATA Power can create the entire EV environment by installing more charging stations.
With the economy coming on track and industries coming out of recession, the purchasing power of people is expected to increase which TATA Motors can use to increase their revenues and market share in the PV segment.
4. Threats
The government’s increasing concern for the environment has posed various threats for the company as various policies (BS-VI) have been implemented in the past to reduce pollution which has caused an overall slowdown in the industry.
International issues like Brexit, Chinese Economy Slowdown, US import tariff, trade wars, and pandemic can severely affect the company in the future as it has also done in recent years.
With the advent of foreign PV companies like MG, Kia in India, the market share of existing companies will shrink severely and TATA Motors will be the one among them.
Tata Motors’ Management Study
Mr. N Chandrasekaran, the same personality who joined TCS in 2008 and made it India’s biggest company in 2018, is the Chairman and Non-Executive Director of the company. In the annual report of FY20, he has assured the shareholders that he will make the company debt-free in the next three years and since then the price of the stock did not look back.
In Feb 2021, Tata Motors announced the appointment of new CEO. Tata Motors’ new chief executive and managing director Marc Llistosella will take over the company’s India business. Llistosella’s experience in India, as the head of Daimler India Commercial Vehicles Ltd, will help Tata Motors increase its selling volumes in the premium vehicles.
One study shows that TATA only acquires those companies which have management structure similar to that of its own. Management has shown their concern for minority shareholders and the foundation was led by the respected Ratan Tata.
Tata Motors’ Financial Analysis
JLR segment contributes 77.76% of the company’s revenues majorly coming from China, Europe, and the USA.
19.09% of the total revenue constitutes of TATA Motors Standalone business out of which 11.61% is from Commercial Vehicle segment and 7.48% is from Passenger Vehicle segment. Recently, with the launch of new passenger vehicles, TATA Motors has succeeded in increasing its market share in the PV segment.
TATA Motors incurs around 2.01% of the total revenue from vehicle financing under the name TATA Motors Finance Limited (TMFL).
As of 2019-20, TATA Motors dominate the CV market share by 44.41% share coming out as a leader, followed by M&M (24.68%), Ashok Leyland (18.37%), and Eicher Motors (6.13%). Tata Motors has been continuously increasing its market share in the CV and PV segment for the last few years mainly due to the launching of new vehicles.
With the recent operational and leverage inefficiency, the NPM has dipped to -4.2 in FY20 making TATA Motors a loss-making company for two consecutive years. The fall is mainly due to the roller coaster commodity prices and disruption in sales.
Total Borrowing of the company has increased by Rs 12,498.12 Cr. (Rs 70,817.50 Cr. in FY19 to Rs 83,315.62 Cr. in FY20)
The net cash flow position for the company is in the negative region for the last few fiscal years. Although in FY19 it reported a net cash flow of Rs 8010.03 Cr., this was led by increasing huge long term and short-term debt (financing cash flow).
PARTICULAR
2016
2017
2018
2019
2020
Cash From Investing Activities
-37504.43
-38079.88
-26201.61
-19711.09
-34170.22
Cash From Operating Activities
37899.54
30199.25
23857.42
18890.75
26632.94
Cash From Financial Activities
-3795.12
6205.3
2011.71
8830.37
3389.61
Net Cash Flow
-3400.01
-1675.33
-332.48
8010.03
-4147.67
Tata Motors’ Financial Ratios Analysis
A. Profitability Ratios
EBITDA Margin has continuously fallen from 13.21% in FY16 to 6.78% in FY20 reaching almost lowest in the industry, which is an alarming sign for the company.
RoE for the company in FY 2016 was 16.42% but it slumped to -37.19% in FY 2019, mainly due to profitability getting severely hit because of disruptions in sales and increasing leverage. Although the current figure has shown improvement from the previous fiscal year, it is still at a fatal level of -17.94%.
Trend in RoCE has been more or less same as that of RoE, from the level of 16.42% in FY16 to mere critical -37.19% in FY19. The current RoCE for FY 20 stands at -1.92%.
B. Leverage Ratios
Current Ratio for the FY20 is 0.85% for the company. Although it has not shown any improvement, it has not deteriorated either since FY 2019. However, the current level is below the threshold level.
With a debt of around Rs1.1 Lakh crore, Tata Motors is a debt laden company and debt to equity ratio has been rising continuously for a lot of quarters, and at present, it is at an alarming level of 1.91.
Quick Ratio has always been a headache for the company. Being 0.72 in FY 16, it has fallen to 0.58 in the present fiscal year. Issues in the profitability and increasing leverage has dangerously affected the liquidity levels of the company.
The Interest Coverage Ratio is at a dangerous level of -0.46, which shows the inefficiency of the company in fetching EBIT income and deterioration in solvency levels of the company.
C. Efficiency Ratios
Currently, the asset turnover ratio for the company is 0.84, which is down from the previous year by 0.14 points.
Inventory turnover Ratio has seen a continuous fall since FY16 (8.97) without a single rise in between, currently at 6.83. Evident from the rise in inventory days to 53.46.
The number of receivable days has increased (17.19% in FY16 to 21.09% in FY20) and number of payable days has decreased (81.53% in FY16 to 94.20% in FY20), indicating that both the buyers’ and suppliers’ bargaining power has increased.
Tata Motors’s Shareholding Pattern
For the last 5 quarters promoter’s holding in TATA Motors has been at the same level of 42.39%. Also, 3.95% of the promoters’ share are pledged, which has not changed for the same period.
FIIs hold 15.61% of shares of the company as of December 2020 which is more or less same since June 2020 Quarter.
DIIs own nearly 12.71% shares of the company which was around 15% a year back.
From 24.245 in December 2019 to 29.27% in December 2020, public holding has surged.
Particular
Dec-19
Mar-20
Jun-20
Sep-20
Dec-20
Promoters
42.39
42.39
42.39
42.39
42.39
Shareholding Pledge
3.95
3.95
3.95
3.95
3.95
Public
13.7
16.8
18.21
18.1
17.81
FII
18.32
16.84
15.62
15.84
15.61
Total DII
15.05
13.58
13.39
13.22
12.73
Others
10.54
10.39
10.39
10.45
11.46
Closing Thoughts
In this post, we tried to perform a quick Tata Motors Stock Study. Although there are still many other prospects to look into, however, this guide would have given you a basic idea of Tata Motors Stocks. Do let us know what you think of Tata Motors stocks as an investment opportunity in the automobile industry by commenting below.
That’s all for today’s article. We hope it was useful for you. We’ll be back tomorrow with another interesting market news and analysis. Till then, Take care and Happy investing!
A complete overview of Penny stocks in India: Hello Investors! Penny stocks are the darlings of new investors. The low market price of these stocks makes them quite attractive to beginners. However, there are a number of things that an investor should know before investing in penny stocks. In this post, we are going to discuss penny stocks, their pros and cons, and whether an investor should buy it or not. Let’s get started.
What are Penny stocks in India?
Penny stocks are those stocks that trade at a very low market price, generally with a share price less than Rs 10. These stocks have a very low market capitalization and typically under Rs 500 crores. Further, penny stocks in the Indian stock market have low liquidity and are speculative in nature.
Being smaller than Small-cap companies, these stocks belong to the microcap category. However, you can find a number of penny stocks in India listed on both the Bombay stock exchange (BSE) and the National stock exchange (NSE).
Note: If we look into history, the term Penny Stocks came from US markets. In the United States, penny stocks used to be those stocks who trade below one dollar ($1) i.e. the stock worth pennies. However, nowadays, even the stocks trading below two to five dollar are even considered penny stocks there.
Penny stocks have a high potential of rewarding its shareholder. The returns are quite high if you are able to get a good penny stock. Many penny stocks have turned out to be multi-baggers for their investors.
These stocks are able to make explosive moves. There are a number of penny stocks that have given multiple times returns in just a few months. Moreover, due to the low market price of these stocks, investors are able to buy large quantities of penny stocks.
Generally, penny stocks are not known to many as retail investors do not have information about these stocks, and institutional investors do not invest in these companies because of their low market capitalization. Therefore, if you are able to find one such stock before the market does, then it can turn out to be a great wealth creator for you.
The cons list of penny stocks is too large compared to its pros. Here are a few of the common disadvantages of buying penny stocks:
High Risk: These stocks are quite risky as the percentage of a number of penny stocks outperforming the market is quite less. Many of the penny stocks become bankrupt and go out of business.
These stocks have very low liquidity. Therefore there will be troubles on both ends of transactions i.e. buying and selling. While buying these stocks, you might not be able to find a seller. In case you bought the stock, and the stock price starts falling, then you won’t be able to find a buyer to sell the stock.
There is a large bid-ask spread in these stocks.
Limited information is available to the public about the company.
Price manipulations: There have been a number of cases of price manipulations in penny stocks where the insiders try to inflate the share price. Further, one can easily manipulate the penny stocks by buying large quantities of these stocks.
Sudden delisting and regulatory scrutiny: There are multiple cases where penny stocks have been delisted from the stock exchanges. Further, these stocks are regularly under scrutiny by SEBI.
Prone to scams: There are a number of past scams in penny stocks (Ex- pump and dump).
Penny stocks are suitable for those investors who are ready to take high risks in expectations to get high returns. If you have a low-risk appetite, do not invest in these stocks.
Rules for investing in Penny stocks in India
Here are a few guidelines that can help you to invest in penny stocks.
Look for value, not just the price: Even for penny stocks, you need to look at the value the company is giving. Understand the company’s business, product, services, etc. Investing in penny stock is not buying a lottery ticket.
Study the company’s fundamentals: Look at the company’s financials, management, debt, growth rate, etc
Check the liquidity: Buy stocks that have reasonably high trading volumes so that there is ample liquidity.
Promoter’s share and pledge: Check the promoter’s shareholding patterns and stock pledge if any.
Technical factors: If you know technical analysis, then also check the penny stock’s technicals. Moreover, if you’re purchasing penny stocks just for quick returns, do not ignore looking into factors like momentum, technical indicators like moving averages, RSI, etc.
Invest only a small portion of your investment in penny stocks: As these stocks have a high risk, you should only invest a small amount, less than 10% of your total investment amount in penny stocks.
Monitor continuously: Penny stocks are very volatile.As these stocks are known to make explosive moves, therefore monitor these stocks continuously. If the stocks are performing well, buy more. If they are continuously performing poorly, get rid of it.
Do not diversify: As you are only investing a small proportion of the amount in these stocks, diversifying will make the net investment even smaller. Select only 2 or 3 penny stocks and invest in them.
Be disciplined: Do not invest all in if your penny stocks start performing tremendously good. Similarly, do not quit if one or two of your penny stocks failed to give satisfactory returns.
Do not believe the ‘It cannot go down any further’ myth. If the prices of the stock are falling, try to find the reason behind it.
Conclusion
While there are a number of peoples who have created huge wealth by investing in penny stocks, however for many penny stocks are wealth destroyers. If you are going to invest in penny stocks, do your research carefully and do not speculate about the stock. Moreover, there are high risks involved in these stocks. So, be ready for it.
Finally, here’s a short video to summarize what are penny stocks in India and how to research and analyze them.
That’s all for today on penny stocks. I hope this post was useful to you. If you have any doubts/queries, feel free to comment below. I’ll be glad to help. Happy Investing and Trading. Take care!
Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting
Introducing Digital India Stocks: One of the greatest wealth creators in the stock market has been technologically-driven digital stocks. The companies working on Digital India (and digital world) segment have been the darlings of the investors because of their tech advancement and future growth scope.
Today, we take a look at the Digital India Stocks and the top companies that fall into this theme.
What is Digital India?
Digital India is a campaign launched by the Government of India in order to ensure improved online infrastructure by increasing Internet connectivity. The government has put forward plans to connect rural areas with high-speed internet networks. Empowering citizens with access to digital services and information can emerge as one of the biggest drivers of economic growth.
The government has rightly identified this sector in order to bring greater focus to this sector. The initiatives include enhancing digital infrastructure, increasing digital literacy, and providing a sustainable living environment in urban areas through the use of technology, and building smart cities.
How well was the Digital India Initiative?
When the Digital India Week was launched by Prime Minister Narendra Modi in Delhi on 1 July 2015, top CEOs from India and abroad committed themselves towards investing US$3.1 trillion towards this initiative. These investments would be directed towards making smartphones and internet devices at an affordable price in India.
Such initiatives would lead to greater job generation in India and also reduce the cost of products. The program has been favored by multiple countries including the US, Japan, South Korea, the UK, Canada, Australia, Malaysia, Singapore, Uzbekistan, and Vietnam.
After the launch of the initiative, Indian firms got $7.4 billion in the nine months into 2017 in comparison to $4.5 billion in 2016. India is now adding 10 million daily active internet users monthly. This is is the highest rate of addiction to the internet community anywhere in the world. The Ministry of Communications & IT also revealed that Digital India was now a $1-trillion business opportunity.
Digital India Stocks – Top Companies
Below are some of the companies that fall within the Digital India Stocks Theme. The table includes companies name along with the market cap and respective industry.
#
COMPANY Name
MARKETCAP
INDUSTRY
1
Infosys Ltd.
550977.69 Cr
IT - Software
2
Reliance Industries Ltd.
1329422.49 Cr
Telecom/Refineries
3
Zee Entertainment Enterprises Ltd.
21352.01 Cr
TV Broadcasting & Software Production
4
Honeywell Automation India Ltd.
33003.06 Cr
Consumer Durables - Electronics
5
Mphasis Ltd.
29583.92 Cr
IT - Software
6
HCL Technologies Ltd.
268992.05 Cr
IT - Software
7
Bharti Airtel Ltd.
280361.09 Cr
Telecommunication - Service Provider
8
Tata Consultancy Services Ltd.
1160349.92 Cr
IT - Software
9
Sun TV Network Ltd.
19386.99 Cr
TV Broadcasting & Software Production
10
Tech Mahindra Ltd.
97138.96 Cr
IT - Software
11
Info Edge (India) Ltd.
70731.55 Cr
BPO/ITeS
12
Quess Corp Ltd.
7746.56 Cr
Miscellaneous
13
Indiamart Intermesh Ltd.
20948.42 Cr
e-Commerce
Important Note: If you want to look into many such thematic stocks like Housing India, Electric Vehicle India Stocks, Infrastructure India, etc, you can go to Trade Brains Portal – BUCKETS. Here, you can find an organized selection of stocks, categorized especially for you.
Closing Thoughts
Digital India Stocks are technologically driven and hence have been one of the biggest saviors in times of the pandemic. The current situation has also led to an increased usage of products from such companies.
This also means a change in our behaviors post the pandemic with regards to acceptance and dependence on such products. Selecting stocks that have the ability to weather the storm provides investors with the opportunity to take part in the growth of these stocks.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
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This company needs no introduction. Reliance Industries is an 
HUL is one of the largest Fast Moving Consumer Goods (FMCG) Company in India with a heritage of over 80 years. It is a subsidiary of Unilever, a British Dutch Company. HUL’s products include foods, beverages, cleaning agents, personal care products, and water purifiers.
HDFC Bank is India’s leading banking and financial service company. It is India’s largest private sector lender by assets and has 84,325 employees (as of March 2017).
Asian paint is one of the largest Indian paint company and manufacturer. Since its foundation in 1942, Asian paint has come a long way to become India’s leading and Asia’s fourth-largest paint company, with a turnover of Rs 170.85 billion. It operates in 19 countries and has 26 paint manufacturing facilities in the world, servicing consumers in over 65 countries. 
Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service, consulting and business solutions company. It was established in 1968 as a division of Tata Sons Limited. As of March 31, 2018, TCS employed 394,998 professionals.
Infosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has its headquarters in Bengaluru, Karnataka, India.
Indian Tobacco Company (ITC) is one of the biggest conglomerate company in India. ITC was formed in August 1910 under the name of Imperial Tobacco Company of India Limited. It has a diversified business which includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, Agri-Business & Information Technology.
Bajaj Auto is a global two-wheeler and three-wheeler 
Nestle India is a subsidiary of Nestle SA of Switzerland- which is the world’s largest food and beverage company. It was incorporated in the year 1956. Nestle India Ltd has 8 manufacturing facilities and 4 branch offices in India. 
