Three Years Back

This is reproduced here for having some perspective now against Feb 2009 (some companies have split stocks and/or given bonus shares since then, pl check before you form an opinion) :

Thursday 26 February 2009 (www.birdinfo.net)

The bus may be missed by those try to time the market

Friends,

The ULIPs (unit linked insurance plans) have gained popularity recently and have have given negative returns for the first time in past twelve months. Reason is not far to seek, the USA’s financial disorder has to do every thing with and therefore it was something which the fund managers could not have controlled or assessed. I am also a insurance sales person attached with HDFC Standard Life Insurance Co (please visit http://www.panchtattvainsurance.blogspot.com) and have been advocating the need to stay invested in equities through ‘growth funds’ for some time. I decided to evaluate the ‘growth fund’ portfolio of HDFCSLIC. Their top holdings with more than 1 pc investment of the gross amount with the fund is as under (CMP on 020209):

ASIAN PAINTS (2.66 pc): Its book-value is 97/- against CMP of 778/- and EPS is Rs 37.10. Its 52W H/L happens to be 1314/778. This is good scrip and has good stability and brand image.It’s leadership is undisputed.It can be held for long term without fear as the management is top class.

BHEL (6.67 pc): Its book-value is 153/- against CMP 1308/- and EPS of Rs59.3. The 52W H/L is 2366/984. This is company which has least worries on account of slowdown due to robust order-book. This is slated to give handsome returns over long period and is one of the best picks.

BHARTI AIRTEL (2.92 pc): Its BV is 106.3 and EPS is Rs 39.10. The CMP is 715/- and 52W H/L happens to be 950/484. This is a great company by all standards and is in a field that is growing by leaps and bounds. It has head start over other players in the field and should be one of the best bets at the time.

BLUE STAR (1.83 pc): Its B//V is 29.30 and EPS is Rs 17.70 while CMP rules at 140/- against H/L of 500/122. This is an old player in air-conditioning and has very resonable price against EPS.

COLGATE (3.18 pc): Its BV is 11.90 and EPS is Rs19.70 while the CMP is 415/- against 52W H/L of 460/341. This is one of the best managed companies and its brand value is tremendous. This should be a part of any good portfolio and for consistency. FMCG sector is growing even in today’s gloomy times.

CROMPTON (4.05 pc): Its B/V is 25/- and EPS Rs 10/- and CMP rules at 130/- against 52W H/L of 336/106. A player in electrical equipment sector and with good pedigree , this gives absolute comfort in a portfolio.

DISHMAN PHARMA (1.59 pc): Its BV is 58.2 and EPS Rs 10.8 while CMP rules at 112/- against 52W H/L of 350/97. This pharma company is discounted very favorably just now and carries value.

DIVI’s LAB (2pc): Its BV is 135 and EPS is Rs 63.50 while CMP rules at 862/- against 52W H/L of 1635/797. This also falls in same category as Dishman Pharma and has scope of appreciation.

EXIDE (2.90 pc): Its B/V is 12.40 and EPS Rs 3.50 while CMP rules at 40/- against H/L of 84/37. This is at reasonable level of price and has no risk of further slide.

GLAXO SMITHKLINE (1.69 pc): Its B/V is 183.40 and EPS Rs 44.80 while CMP rules at 585/- against 52W H/L of 766/480. In packaged food business, this company has good track record and is good scrip to hold.

ICICI BANK (4.53 pc): Its B/V is 417.40 and EPS Rs 37/- while CMP rules at 385/- against H/L of 1245/282. This is a bank with great strides in expansion of business. It was under bad publicity but without substance, over time it gain old glory and will increase value of portfolio.

INFOSYS TECH (5.44 pc): Its BV is 235.60 and EPS Rs 94.90 while CMP rules at 1049/- against 52W H/L of 2017/1040. This company is known all over the world for right reasons and is a good addition to portfolio.

ITC (6.58 pc): Its BV is 31.80 and EPS Rs 8.40 while CMP rules at 132/- against 52W H/L of 232/178. A leader in all its field of operations and consistent growth in EPS this is best addition to portfolio.

L and T (4 pc): Its BV is 162.70 and EPS Rs41.30 while the CMP rules at 662/- against 52W H/L of 1937/611. This is under some cloud over investment in ’satyam’ but would soon regain glory. Its business is growing on compounding basis and would add good value to portfolio over time.

NESTLE (2.76 pc): Its EPS is Rs 70/- and CMP rules at 1477 against 52W H/L of 1520/1335. This is a company of high esteem and stable business and great brands. This would give stability to portfolio as also decent returns.

ONGC (4.21 pc): Its BV is 330.20 and EPS Rs 77.20 while the CMP rules at 639/- against 52W H/L of 1124/538. This is a company which may be called backbone of India. It global acquisitions have tremendous scope of giving profits. Its a ‘must-keep’ for any good portfolio.

RELIANCE (5.41 pc): Its BV is 608.20 and EPS Rs99.90 while CMP rules at 1278/- against 52W H/L of 2707/930. This company is capable of negotiating any rough patch without losing out. A very efficient refinery and oil exploration business make it a all time company. Should be improving performance in coming time.

SATYAM (2.30 pc): This would have been a dead investment but some how has been saved by the new team at work after being subjected to greatest fraud by its own executives.This may have been added due to more attractive ratios but due to concealed reasons. No further damage will be there on account of this investment.

SEIMENS (2.69 pc) :Its BV is 61.30 and EPS Rs 21.40 while CMP rules at 201 against 52W H/L of 865/186. At current price and the capacity generate profits in future give is a special status.

STATE BANk (6.73 pc) : Its BV is 772/- and EPS Rs 130/- while CMP rules at 1096/- against 52W H/L of 2310/991. This is pure value at current price. Would be star performer in coming time.

UNITED PHOSP. (3.99 pc): Its BV is 43.50 and EPS Rs 3.90 while CMP rules at 96/- against 52W H/L of 185/65. Catering to vast agri-sector of India , its a very efficient player in the field. Almost must for a good portfolio.

ZEE ENT. (3.64 pc): Its BV is 49.40 and EPS Rs 7.40 while CMP rules at 104/- against 52W H/L of 280/90. This has been picked for the sectoral preference. I have some reservations about the quality of corporate governance even though it may give good returns.

The above companies represent 82 pc of the investible funds under ‘growth fund’. The rest comprises of small investments in a few equities and rest is in bonds etc. As you may have noticed that the investments are of two types ie where the business is ever growing and is not subject to recessionary conditions and where there is value. The value stocks have been chosen keeping in mind the line of business which is again less prone to recessionary conditions. This is a good strategy adopted by the fund managers. I have looked in to each of above stock and may say that given time and given normal conditions, each of above companies may see doubling of the share price. It is for this reason that I have been insisting on investors/policy-holders remaining invested in ‘growth fund’. It could have been suggested that one remains partly invested in ‘growth fund’ but at such fantastic values which naturally ensure safety in long term, it is only advisable to remain invested 100 pc. The bus may be missed by those try to time the market and mid-way it may be more risky to enter. I hope you appreciate what I say, for confirmation please wait with patience.

HariOm,
Krsna Khandelwal

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