Investment Philosophies

India’s top 10 Value Businesses6 min read

India is considered to be one of the fastest-growing developing economies of the world providing favourable business environment i.e. ease of doing business, abundant resources, good infrastructure and plenty of growth opportunities. Many multinational companies have started their operations in the past seeing the mouthful of opportunities and expansion potential too. The companies that have capitalised on these opportunities turned out to be market leaders. Being market leaders, they have shown consistent growth, dynamic management, consumer satisfaction, higher yield to investors, taxes to the government. In short, they have contributed to all its stakeholders in their growth story.  In this article, we are highlighting the ten companies that have outperformed their peers in the past and shall continue to do in the future as well, capturing further market share.

  • Colgate Palmolive India Ltd. – It is a leader in providing oral care products such as toothpast , toothbrushes, mouthwash under the brand name of ‘Colgate. Being established in 1937 in India, it has one of the widest spread distribution network channels in India and is available in almost 6.1 million retail market outlets. 

    A debt-freee company in the FMCG sector with promoter holding of more than 50 percent, outperforming its sector index since 20 years having a CAGR of close to 13% and a dividend yield of close to 2%should always be on the cards.
  • HCL Technology Ltd. – It is an Indian multinational IT service and consulting company and a subsidiary of HCL enterprise. With a staff strength of more than 150,000 employees,  it operates in many sectors including but not limited to healthcare, defence, retail, travel, utilities and technology. Founded in 1976, it has grown to a market cap of more than INR 1,40,000 crores and a return of equity of more than 22%. The promoter holding is more than 60 %and P/E at only 12, making it a valuable bet in the technology space. 
  • Hero Motocorp Ltd. – Founded in 1984, it has been designing and developing two-wheeler vehicles for customers around the world. It is a dominant market leader in two-wheeler market with over 50% market share in the domestic motorcycle market. It is effectively zero debt company with a P/E ratio of close to 10, lowest in the sector it operates. The company has been yielding good returns to the investors, being a market leader.
  • Hexaware Technologies – It is one of the fastest-growing companies with over 190,000 employees. Founded in 1992, an Indian Multinational company, is a debt-free company, has an earnings yield of over 13% year on year. It also has a dividend yield of 3.61%. With a forward-looking technology company, Hexaware Technologies is surely a company to look for years to come.
  • Dr Lal Pathlabs Ltd. – Debt-free company in the Pharma space is hard to find. Founded in 1949, it provides all ranges of blood tests and routine tests and has more than 3,900 employees. The company has been the biggest beneficiary during the current health crisis and has leveraged its resources optimally. The company has outperformed the S&P BSE Healthcare index consistently over the last 5 years and has been on an increasing trend. With a more than 50 percent promoter holding, Dr. Lal Pathlabs can be an outperformer in the pharma space in the years to come.
  • ICICI Prudential Life Insurance– A life insurance company incorporated with a joint venture between ICICI bank limited and Prudential corporation Holdings limited. In 2017, it became the first insurance company in India to be listed on NSE and BSE. India has an underpenetrated insurance market giving huge potential to the companies in the Insurance sector. Being in the business for the last 20 years, it has become a market leader outperforming the S&P BSE Finance index consistently over the last 5 years. 
  • Titan Company Ltd. – It is the largest consumer company of the TATA Group, incorporated in the year 1984 as a joint venture. It manufactures fashion accessories such as watches, jewellery, belts and eyewear. Backed by strong management having high ethical and business values, the stock has risen from a share price of INR 3 to current market price of close to INR 1,000 per share in the last 20 years giving multibagger returns to the investors, consistently outperforming the benchmark index by a huge margin.
  • HDFC Asset Management Company – Incorporated in the year 1999, it is one of India’s largest profitable mutual fund managers with INR 3.2 trillion in assets under management and a customer base of 9.4 million live accounts. The stock has already doubled the investor’s wealth in less than 2 years from the date of listing on the stock exchange. Mutual fund investments has been an uncharted territory for most part of India’s population and therefore, providing a huge opportunity for the asset management companies. HDFC AMC, being a market leader, backed by the most prestigious promoter bank, gives immense confidence to the investors. It is a portfolio stock and should be added at all levels. Insurance and securities are the two non-lending financial businesses to look out for the years to come.
  • Bajaj Consumer Care Ltd. – It is the leading company in hair care and skin care products. If you are looking for some annual fixed income, Bajaj consumer Care ltd. is the stock. It has a dividend yield of more than 10 percent. The growth rate in terms of CAGR exceeds the industry growth rate consistently year on year. The business dates back to the year 1953 and is the second largest company in the Bajaj group. The FIIs and DIIs combined hold more than 45 percent of the company, sensing a great amount of confidence in the business potential of the company.
  • Procter & Gamble Hygiene & Health Care Ltd. – With more than 80 percent of the shares held by the promoters, FIIs and DIIs, the company has a market leader in the FMCG sector. This multinational has increased from INR 300 per share to a whooping INR 10,500 per share in a span of 20 years only proving to be multi-bagger at a CAGR of 16 percent.

Most common trends of these companies in order  to become market leader  includes identifying strengths and opportunities, dynamic decision making,  growing and satisfying customer base, adapting to changing market conditions and identifying a good combination of resources and capabilities. A constant SWOT analysis and leveraging its existing capabilities to newer functions and products has led to the success of this company. All the companies are backed by strong promoter holding and goodwill backed management.

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