INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Good image is fetching a premium in Indian stock market this season.
As Dalal Street struggles to separate the chaff from the
grains amid widespread corporate governance issues and crippling rating downgrades at reputed corporate groups, MNC firms and some small
foreign promoter-backed stocks are seeing an extended good run
A few of them have rallied as much as 74 per cent year to date.
MNCs and foreign promoter-backed firms are traditionally known for strong
parentage, technological proficiency and asset-light business models
They are usually well-capitalised, have low debt exposures and good dividend policies
While half the NBFCs are down in the dumps amid debt and liquidity challenges, foreign promoter-backed players Aavas Financiers (up 72 per
cent) and CreditAccess Greameen (up 52 per cent) have kept on rallying to be counted among the best performers of the market this
year.
Aavas Financiers is backed by private equity players Lake District and Partners Group, while CreditAccess is promoted by
Netherlands-based CreditAccess Asia.
Shares of Black Rose Industries, where foreign ownership stood at 74.5 per cent as of March 31, are up
companies, Epsom Properties, Hexaware Technologies Xchanging Solutions and Sobha are all having a dream run on the bourses.
Among Indian
arms of MNCs, Astrazeneca Pharma is up 31 per cent this year
Steelco Gujarat, Huhtamaki PPL, Procter - Gamble Health, Bata India, Heidelberg Cement India and Siemens have gained 20-30 per cent.
Others
such as Esab India, ABB India, Timken India, Honeywell Automation India, Abbott India, IST and Pfizer are up 10-17 per cent
This compares with a 5-7 per cent slump in BSE Midcap and the BSE Smallcap indices during the same period.
Many of these stocks have
stocks, including those in consumer and NBFC segments, have been seeing a rerating over the past 2-3 years even though many of them were
neither seeing either strong volume or earnings growth
If you map price multiples to actual earnings growth, you will see many MNCs got much better rerating of price multiples despite having
Rose Industries have risen 244 per cent in last three years, 1,075 per cent in five and 2,950 per cent in last 10 years
Astrazeneca has doubled investor wealth in last two years, having risen 73 per cent in three years
In all, 14 of the 139-odd BSE-listed MNCs have delivered 100-500 per cent returns in three years
As many as 36 stocks have rallied over 50 per cent during the period.
Not-so-transparentOnkar said MNCs might have lesser corporate
Very few of them offer public disclosures with quality that matches those of their domestic counterparts
Consistent performers, high on valuationsDeepak Jasani of HDFC Securities said brand and technology leaders in consumer staples,
discretionary, chemicals and industrials have consistently outperformed within the MNC space
These benefits, he said, have translated into high RoE, low leverage and better asset turnover
That said, high valuations and slowdown in earnings growth have hit quite a few stocks
To name a few, largecap MNC stocks such as Hindustan Unilever (flat), Maruti Suzuki (down 14 per cent), Nestle India (up 5 per cent),
Britannia Industries (down 8 per cent), Vedanta (down 17 per cent) and Bosch (down 17 per cent) have taken a hit in recent times
Jasani said while none of the MNCs are available at cheap or fair valuations, one should watch this space for sudden selloffs which is when
they would offer good entry points.
Top picksAntique Stock Broking prefers stocks that rank high on quality quotient, have made FY19- 21
stocks we cover, staples rank high on quality parameter
Industrials are another set of stocks which meet all parameters given the likely recovery in investment cycle
Stocks that meet all the three parameters include HUL, Nestle India, Bosch, Colgate, Siemens, ABB India, P-G Hygiene, Gillette India,
India, Pfizer, Wabco India, SKF India and Thomas Cook
Grindwell Norton, Timken India, Johnson Controls, Linde, Federal Mogul, GE T-D, ICRA and Kennametal are three smallcap MNCs the brokerage is
