source: http://alphaideas.in/2015/02/16/alice-wonderland-valuations-indian-equities/
Overvalued stocks due to Fund managers are bullish and want to maintain NAV/AUM.
Consumer stocks: HUL, Colgate, Dabur, Nestle, Marico
Pharma stocks: >30 PE
MNCs: Blue Dart>110, Kenamental>90, GSK>60, Bosch >60x
Scarce/ Unique ideas: Just Dial > 80, Info Edge > 80, Jubililant Foodwork>70, Page > 70, Eicher > 60
The P/E (trailing twelve months) of Colgate has gone up from 34x in April 2014 to currently 48x. Similarly, Nestle from 42x to 53x, HUL from 33x to 44x, Dabur from 36x to 43x, Marico from 28x to 38x, etc. This is despite sales growth being slowest in the last many quarters for some of these companies (in some cases, up to eight quarters!). Similarly the P/E of some pharma companies have gone from mid-20x in April 2014 to mid-30x currently. The two other sectors which are captured by these institutions (partly overlapping with the two mentioned above) are MNCs and scarce/unique ideas. So, any MNC with a 75% parent holding is supposed to be a delisting candidate that justifies a ‘mu-maangi kimat’ for the tenderer (Blue Dart > 115x, 3M 90x, Kennametal 90x, Glaxo Pharma 60x, Bosch 60x). Scarce concepts in the listed space also command mind-boggling valuations (Just Dial 80x, Info Edge 80x, Jubilant Foodworks 75x, Page Industries 70x, Eicher Motors 60x etc.).
Overvalued stocks due to Fund managers are bullish and want to maintain NAV/AUM.
Consumer stocks: HUL, Colgate, Dabur, Nestle, Marico
Pharma stocks: >30 PE
MNCs: Blue Dart>110, Kenamental>90, GSK>60, Bosch >60x
Scarce/ Unique ideas: Just Dial > 80, Info Edge > 80, Jubililant Foodwork>70, Page > 70, Eicher > 60
The P/E (trailing twelve months) of Colgate has gone up from 34x in April 2014 to currently 48x. Similarly, Nestle from 42x to 53x, HUL from 33x to 44x, Dabur from 36x to 43x, Marico from 28x to 38x, etc. This is despite sales growth being slowest in the last many quarters for some of these companies (in some cases, up to eight quarters!). Similarly the P/E of some pharma companies have gone from mid-20x in April 2014 to mid-30x currently. The two other sectors which are captured by these institutions (partly overlapping with the two mentioned above) are MNCs and scarce/unique ideas. So, any MNC with a 75% parent holding is supposed to be a delisting candidate that justifies a ‘mu-maangi kimat’ for the tenderer (Blue Dart > 115x, 3M 90x, Kennametal 90x, Glaxo Pharma 60x, Bosch 60x). Scarce concepts in the listed space also command mind-boggling valuations (Just Dial 80x, Info Edge 80x, Jubilant Foodworks 75x, Page Industries 70x, Eicher Motors 60x etc.).
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