India Strategy
India’s US$10 Billion Club
In India, 23 stocks have market cap >= US$10bn:
This group’s total market cap is US$575 billion or 45% of
India’s aggregate. Their daily volume is US$825 million
or 35% of India’s average daily trading. In aggregate,
FIIs are 400 bps overweight in these 23 names vis-à-vis
MSCI India. Local institutions are underweight 120 bps
(ex-SUUTI’s holdings). These 23 stocks account for
60% of FII portfolios in India. This group’s 12-month
return (equally weighted average) is 28%, a tad ahead of
the Nifty. The equally weighted average five-year CAGR
relative return is a solid 7 percentage points.
The key question – which of these stocks should be
in portfolios with a 12- to 18-month view? Here’s how
we determine our ranking.
Good market dynamics, as we define them: High
trailing five-year return and low beta (high returns
with low volatility), where the sell-side consensus is
not bullish and institutional ownership is not high but
both are rising at the margin, and where trading
volumes are depressed relative to history (lack of
“love” for the stock). The most unloved and
under-owned names are Indian Oil and Kotak Bank.
Determinants of robust fundamentals: We pick
strong five-year trailing ROE and earnings growth,
high forward change in ROE and earnings, and the
depth and breadth of consensus earnings revisions.
The strongest fundamentals belong to HDFC Bank
and Sun Pharma.
Valuations: We use trailing P/B, dividend yield,
PEG, and long-term implied earnings growth minus
trailing five-year growth. The least expensive stocks
appear to be Axis Bank and Wipro.
Overall, Wipro, Axis, HDFC Bank, Sun Pharma and ITC
rank as the best. Bharti, HDFC and Tata Motors finish at
the bottom of the list. (See Exhibits 1 & 2 for details).
Focus List changes: Combining this work with our
analysts’ recommendations, we add Sun Pharma and
HDFC Bank to our Focus List. We are booking gains in
Dr. Reddy’s and Yes Bank
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India’s US$10 Billion Club
In India, 23 stocks have market cap >= US$10bn:
This group’s total market cap is US$575 billion or 45% of
India’s aggregate. Their daily volume is US$825 million
or 35% of India’s average daily trading. In aggregate,
FIIs are 400 bps overweight in these 23 names vis-à-vis
MSCI India. Local institutions are underweight 120 bps
(ex-SUUTI’s holdings). These 23 stocks account for
60% of FII portfolios in India. This group’s 12-month
return (equally weighted average) is 28%, a tad ahead of
the Nifty. The equally weighted average five-year CAGR
relative return is a solid 7 percentage points.
The key question – which of these stocks should be
in portfolios with a 12- to 18-month view? Here’s how
we determine our ranking.
Good market dynamics, as we define them: High
trailing five-year return and low beta (high returns
with low volatility), where the sell-side consensus is
not bullish and institutional ownership is not high but
both are rising at the margin, and where trading
volumes are depressed relative to history (lack of
“love” for the stock). The most unloved and
under-owned names are Indian Oil and Kotak Bank.
Determinants of robust fundamentals: We pick
strong five-year trailing ROE and earnings growth,
high forward change in ROE and earnings, and the
depth and breadth of consensus earnings revisions.
The strongest fundamentals belong to HDFC Bank
and Sun Pharma.
Valuations: We use trailing P/B, dividend yield,
PEG, and long-term implied earnings growth minus
trailing five-year growth. The least expensive stocks
appear to be Axis Bank and Wipro.
Overall, Wipro, Axis, HDFC Bank, Sun Pharma and ITC
rank as the best. Bharti, HDFC and Tata Motors finish at
the bottom of the list. (See Exhibits 1 & 2 for details).
Focus List changes: Combining this work with our
analysts’ recommendations, we add Sun Pharma and
HDFC Bank to our Focus List. We are booking gains in
Dr. Reddy’s and Yes Bank
- ONGC
- TCS
- ITC
- Reliance Industries
- Coal India
- HDFC Bank
- State Bank of India
- HDFC
- ICICI Bank
- Infosys
- NTPC
- Hindustan Unilever
- Bharti Airtel
- Sun Pharmaceutical
- Larsen & Toubro
- Wipro
- Tata Motors
- Indian Oil Corp.
- Axis Bank
- Mahindra & Mahindra
- Kotak Mahindra Bank
- Cairn India
- UltraTech Cement
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