Sensex finally crossed the historical mark of 50,000 today, gaining over 95% since March. The rally was powered by gains in major index heavyweights that also notched to new record highs amid increased investor participation.
Since 1986, when S&P BSE Sensex was launched, only six companies have been able to retain their place in the 30-share index, while the rest have shuffled from time to time based on their performance. These are Reliance Industries, Hindustan Unilever, Nestle, ITC, Mahindra & Mahindra and Larsen and Toubro.
Shares of multinational conglomerate Reliance Industries have done exceptionally well, despite the pandemic. The oil-to-telecom conglomerate has been compared with giants like Amazon, Alibaba, Tencent etc., who have been able to create long-term shareholder value. The stock has also performed well within the peers in the Indian market, tracking expansion of businesses further to various segments such as telecom, retail.
Share price of RIL stood at Rs 3.65 on January 1, 1996. Since then, RIL stock has gained almost 56,197% to Rs 2,054 share apiece, quoted today.
RIL shares hit a 52-week low of Rs 867.82 on March 23, 2020. Since then, RIL stock has risen 172% to its all-time high of Rs 2,368.80 on September 16, 2020. Currently, the stock trades 15% lower than its all-time high. While hitting multiple 52-week highs last year, Mukesh Ambani-led RIL has achieved the highest ever recorded M-cap by an Indian company, crossing Rs 16 lakh crore mark, on September 16, 2020.
The oil-to-chemical focused conglomerate is gradually aiming for changing itself into a tech-focussed company with Jio. As per brokerage houses, the oil-to-telecom conglomerate stock offers an opportunity for investors to ride the growth wave of the digital and tech sector. Even after being rated as overvalued stock by most brokerages, RIL has been among the top choices of investors with its strong franchises, partnerships and growth plans. Company's growth prospects have always made investors run after the stock post any short-term profit booking.
Nestle stock has given decent returns to investors over the years and is ranked among the most consistent performers in the FMCG category. Priced at Rs 123 on January 1, 1996, the stock rose 14,189% till date.
One of the largest Food & Beverage (F&B) company in the world with more than 2,000 brands and 291,000 employees in over 187 countries, Nestle's fundamentals have been on an upward trajectory, despite the pandemic and its induced lockdown. The company has been able to generate lots of competition for its peers. The recent pullback in share price has also created an attractive entry-level for the stock.
Brokerage Edelweiss said in its recent note," Nestle is one of the most aggressive consumer companies on the e-commerce platform. Aggressive focus on scaling the ready-to-eat/cook categories. As work from home will continue in a milder form, we envisage Nestle to benefit from a rising sampling of its new RTC/RTE products as well as its new spice mixes for rice. Moreover, Rs 26 billion capex guidance indicates the parent's confidence in the India growth story. Hence, we continue to maintain 'buy' with TP of Rs 21,796. At CMP, the stock is trading at ~66x CY21E EPS."
Nestle stock has risen 49% from its all-time lows of Rs 12,588.95, hit on March 19, 2020 to Rs 18,821.45, as of 24 December 2020. The stock currently trades 6.4% lower than its all-time high.
The 'personal products industry' major's stock stood at Rs 36.69 on January 1, 1996, and has jumped 6,319% till January 20, 2020. HUL stock has gained almost 49% from its all-time low of Rs 1,756, hit on March 19, 2020 to the all-time high of Rs 2,614 on 8, April 2020. As of today, the HUL stock price stands 10.9% lower than it all-time high at Rs 2,355.40.
The consumer staple major was another top choice among its peers for market participants. Recently, brokerages like Edelweiss, Motilal Oswal, ICICI Direct, IIFL Securities and CLSA have maintained buy rating for the stock with target price around Rs 2,390 to 2,500, given its price correction from all-time highs.
CLSA said it continues to see HUL as a structural consumption play in India and added that near-term earnings stress may offer an opportunity for investors.
As per Motilal Oswal, staples appear to have remained resilient, and demand in the discretionary category seems to be recovering. Hence, the structural and near-term investment case for HUL remains strong.
Priced at Rs 3.58 on January, 1, 1996, the stock has gained 5,978% till date. The stock has hit a 52-week high and low of Rs 239.95 and Rs 134.95 and currently trades 10% lower than its 52-week high.
As per market experts, ITC stock price may get valued at 35-40 PE multiples over 3-5 years and is recommended among the top stocks to purchase ahead of the budget on expectations of increased sin tax every year.
ITC comes off as a great value company, that is still available at 20 PE multiples, causing a valuation gap with its peers. Decent balance sheet, dividend payouts every year, higher ROE and ROCE numbers are among the key strengths of the firm. The FMCG company was able to achieve strong tractions across the segments despite the pandemic situation.
ITC Limited stock has been stuck in a range for more than 2 years and has to meet a lot of expectations, as per brokerages.
Mahindra & Mahindra
Trading mere 4.03% away from 52 weeks high of Rs 843.7 hit a few days ago, M&M stock is among the top pick for investors from the auto segment. Mahindra and Mahindra share price has risen from Rs 17.47 (as of 1 January 1996) to Rs 824.15 (as of 20 January 2020). M&M shares are 45% higher than it was in a year-ago period.
Due to the Covid-19 outbreak and its induced long lockdowns, most automotive companies including M&M were severely affected, both in production and sales numbers for cars and two-wheelers. Holding a market share of 5.6%, Mahindra recorded dip in sales of 37.9% YoY at 1,36,500 units in 2020 as compared to 2,19,682 units in 2019.
However, the fundamental metrics of the auto firm haven't justified the share price gain. The company's current PR ratio multiple is among the cheapest in the automobile sector. The company has recently moved away from loss-making businesses and committed to tighter capital allocation policy. Due to the quantum of the input cost increase, the auto major has also hiked prices of its entire range of passenger and commercial vehicles.
Larsen & Toubro
From the lows of Rs 36.85 (as of 1 January 1996), Larsen and Toubro share price has risen 3,650% to Rs 3,650.15 (as of 20 January 2020). L&T stock has hit a new lifetime high of Rs 1,395 today, which is 111% higher than its 52-week low of Rs 661.05.
Despite a series of order wins in Q3FY21, L&T has underperformed the Nifty index and brokerages suggest the stock among those having cheap valuations.
Motilal Oswal has a neutral call on Larsen & Toubro stock with a target price of Rs 1,625.
"Key risks remain project delays/deferrals and less-than-expected conversion of the tendering pipeline," ICICI Securities said on Q3 results of the company and added," We expect adjusted standalone revenue to grow marginally by 0.5 per cent to Rs 19,985 crore. EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected to grow by 9.9 per cent to Rs 1608.8 crore with margins expected to improve 30 basis points (bps) to 8.0 per cent for the quarter".
Nomura said in its note," Core PE and EV/Ebitda are significantly lower than past averages and significantly below FY11-14 levels when the industry was in a slowdown. We raise FY22F/23F EPS by 3% to account for stronger order inflows and the associated rise in execution. We value L&T on a SOTP basis on Dec-22 estimates to arrive at our TP of Rs 1,510, implying 21% upside, and maintain our Buy rating."
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