A Glance at the largest 100 companies in India

Some interesting points about the largest listed companies in India. We look at the top 100 companies in order of market capitalization across NSE and BSE.


The data is as on 21st October 2020. 75% of the Indian market cap is contributed by these 100 companies. Out of these 100 ten are currently loss making.


Debt Factor

There are only 8 companies which have Debt to Equity ratio as zero - HUL, Maruti, ITC, SBI Life, ICICI Prudential, Ambuja Cements, HDFC AMC and P&G Hygiene.

Six non financial companies have Debt Equity ration over 2, in order

  • Adani Green - 19.48 (largest in the top 100)
  • Adani Transmission - 4.65
  • Interglobe Aviation - 3.88
  • LT - 2.08
  • M&M - 2.07
  • Tata Motors - 2.01  
7 companies have less than one times Interest Coverage Ratio. Out of these seven companies four of them have glaringly high Debt to Equity ratios.


Sales Growth

In the trailing 12 months 47 companies had sales growth and the rest did not. Amongst the positively growing companies the median sales growth was +9.05% and the overall median across the 100 companies was -0.56%.


Return on Invested Capital and Return on Equity

11 companies had negative Return on Invested Capital. The median number for the 100 companies was 16.6%. The median Return on Equity in this total base was also 16.6%.


Valuations

On Price to Earnings basis the median number was 37x and on Price to Book basis the median number was 3.5x. 11 companies traded below book value, 7 of them are PSUs.

The median EV/EBIDTA is 18.4 and the median Price to Sales is 3.6.


Cash Flows

76 companies generated positive Free Cash Flows last year and amongst those who had negative Free Cash Flows 12 were non financial companies. Within these 12 non financial companies who had negative Free Cash Flows 5 were PSUs.


Combination of Sales Growth, ROIC & ROE

When we look at companies who have above median Sales Growth, ROEs & ROICs we get 9 companies, None of the non financial companies have a Debt to Equity ratio of 1 or more. Only one company out of this 9 did not create a positive price return in trailing one year. 

The median PE of this set of 9 today is 32.2 and one year before it was the same at 32.1. 5 companies had a drop in their PEs and 4 had an increase in their PE. The current median Price to Book is 5.6, EV/EBIDTA is 19.5 and Price to Sales is 4.7.

The returns in the trailing one year for an equal weighted portfolio of these 9 stocks is a comfortable 39.96% not including dividends, bonus etc. (average dividend yield is 0.81). The CAGR returns of these 9 over the previous 3 years is 28.7% (1 company was not listed), 24.8% CAGR in last 5 years (4 companies were not listed) and 31.94% CAGR in last ten years (same 4 companies were not listed).

The Nifty 50 has given a return of 2.51% in the last one year and CAGRs have been 3.2% in 3 years, 6.1% in 5 years and 6.1% in 10 years.


Conclusion

Q. What is this called?
A. Yes you are right, this is hindsight bias.

But what if we were to have a filter on simple growth, ROIC and ROE and rebalance every year. As Peter Lynch would have liked us to do - Water the flowers and cut the weeds.

Comments

  1. Can you share the list of 9 companies filtered on the combination of sales growth ROIC and ROE

    ReplyDelete
    Replies
    1. Hey you can download the entire csv file here. Please play around and run the filters. https://drive.google.com/file/d/1iwQ4m8s_Mwv7vAXzhiO3YYjFPAOHvxK9/view?usp=sharing

      Delete
    2. Thanks Deepak, your CSV database was very comprehensive listing the entire universe of Indian Stock Markets. Which database do you use to extract this kind of data

      Delete

Post a Comment

Popular posts from this blog

Pied Pipers of Dalal Street

Can we time SIPs?

Price Earnings Multiple: An exception to Occam's razor?