Monday, October 22, 2007

Which of India’s Top 10 “Family Named” Stocks is Most Valuable? – Part 3 of 3

Now, it’s time to analyze the “Family Named” stocks based on:

  • Performance in the last five years
  • Valuations (Price/Earnings and Price/Book value ratios)
  • Current technical status

Ranking based on stock performance:

Scrip

5 year return

Scrip

1 year return

KIRLOSOIL

3,011.65

ABIRLANUVO

85.04

BAJAJHIND

2,804.17

JINDALSAW

59.08

ABIRLANUVO

1,774.42

SRIADIKARI

41.54

DALMIACEM

1,755.15

RPGCABLES

37.93

M&M

1,625.08

KIRLOSOIL

32.36

JINDALSAW

814.07

DALMIACEM

14.53

TATATEA

400.19

TATATEA

6.86

RPGCABLES

344.44

M&M

5.78

PATNI

NA

PATNI

(0.62)

SRIADIKARI

(26.75)

BAJAJHIND

(47.39)

It can be seen Aditya Birla Nuvo and Kirloskar Oil Engines find a place in the top 5 based on stock performance.

Ranking based on valuations:

The following table sorts out the stocks based on P/E and P/BV ratios.

Scrip

P/E

Scrip

P/BV

ABIRLANUVO

77.17

M&M

4.92

TATATEA

24.33

ABIRLANUVO

4.81

RPGCABLES

21.67

KIRLOSOIL

4.02

KIRLOSOIL

20.62

DALMIACEM

3.19

M&M

18.61

TATATEA

3.10

PATNI

15.73

JINDALSAW

3.01

SRIADIKARI

13.95

PATNI

2.77

BAJAJHIND

12.87

BAJAJHIND

1.80

JINDALSAW

10.57

SRIADIKARI

0.87

DALMIACEM

8.28

RPGCABLES

(8.26)

In my previous article, “Top value stocks in Indian markets” we discussed the relationship between P/E ratio and P/BV ratio. These two parameters can help an investor to identify “growth” and “value” stocks in the market. Growth stocks usually have high P/E and P/BV ratios, which means that these stocks are relatively high-priced in comparison with the companies’ net asset values. In contrast, value stocks have relatively low P/E and P/BV ratios. Most growth investors are willing to pay a fairly high price for a stock whose earnings they expect to go up higher. Value investors (Rakesh Jhunjhunwala for example) view cheapness as a major factor. They focus on stocks that are relatively cheaper.

Aditya Birla Nuvo and Kirloskar Oil Engines can be classified as “growth” stocks whereas Patni Computer Services and Jindal Saw can be classified as “value” stocks.

Ranking based on current technical scenario:

The following tables shows the summary of the technical status of stocks for short term, medium term and long term. It is to be remembered here that these can change when confirmed reversal signals appear on charts.

Since Sri Adhikari Brothers Television Networks will be suspended for consolidation of face value, it is excluded from our analysis. Its status need to be ascertained after relisting.

Scrip

Short term

Medium term

Long term

ABIRLANUVO

Bearish

Bullish

Bullish

BAJAJHIND

Bullish

Sideways

Bearish

DALMIACEM

Bullish

Bullish

Bullish

JINDALSAW

Bearish

Bearish

Bullish

KIRLOSOIL

Bullish

Bullish

Bullish

M&M

Bearish

Bearish

Bearish

PATNI

Bearish

Bearish

Bearish

RPGCABLES

Bearish

Bearish

Bearish

SRIADIKARI

-

-

-

TATATEA

Bearish

Bearish

Bearish

It can be seen that Aditya Birla Nuvo and Kirloskar Oil Engines are bullish for both medium term and long term.

Conclusion:

Kumar Mangalam Birla

Atul C Kirloskar

Based on the above analysis, we can conclude that Aditya Birla Nuvo and Kirloskar Oil Engines are the winners in this contest.