India's 75th Independence: 5 most valued stocks in the last 7 decades
Premium- Tomorrow, August 15, 2022, is India's 75th anniversary of its independence.
Tomorrow, August 15, 2022, is India's 75th anniversary of its independence. The Indian stock market commenced trading in 1855, and the S&P BSE Sensex was established in 1986. Its initial level was 561.01, and as of now, the BSE index has climbed to 59,462.78 and has experienced an all-time high of 10,499.24%. The National Stock Exchange (NSE) was established in 1992 and recognised as a stock exchange by SEBI (Securities & Exchange Board of India) in April 1993. The NIFTY 50 index commenced operations on January 1st, 1999 at a level of 890.80 and has since risen to 17,698.15, representing an all-time high of 1,886.77%. India's 75th anniversary of independence is showing how the two major indexes have fared over the years. Consequently, the most valuable stocks on the Indian stock market are listed below for stock market observers to monitor in order to forecast future price movement.
Reliance Industries
Reliance Textile Industries' initial public offering (IPO) in 1977 set a record by popularising the equity craze in India. Reliance Industries' share price climbed from 53.0 to its current market price of ₹2,632.00, representing an all-time high of 4,865.10%. An investment of ₹1 lakh made 20 years ago would now have turned to ₹49 lakhs approx. Reliance becomes the first and only privately owned Indian company to be included in the Fortune Global 500 list in 2004. Additionally, Reliance is the first privately held firm to have a credit rating from a global credit rating agency, such as Moody's or Standard & Poor's. Reliance crosses the $10 trillion market capitalization threshold for the first time in 2019 among Indian companies.
The brokerage firm Prabhudas Lilladher has recently said in a note that “We hosted a telecom expert to better understand India’s evolving telecom landscape, post completion of 5G auctions. Key highlights of the call were 1) Industry tariff hike of Rs60/mon (18-25%) likely before year end, to make up for high spectrum capex 2) By CY24 end Jio can expect revenues of Rs230bn from connectivity and IOT, then take a significant share in enterprise business (industry size likely to increase 3x to Rs750bn by FY25E ) 3) capex is likely at Rs200bn, including spectrum payment of Rs78bn p.a 4) company will likely go for pan India 5G launch vis-à-vis more gradual roll-out for peers, thereby attracting premium customers."
“Jio’s growth prospects look promising led by subscriber addition post churn and regular tariff hikes. We leave Jio estimates unchanged and will review them post 5G launch. Reiterate ‘BUY’ at TP of Rs3165. RIL is our preferred pick given dominant position across business verticals." said the research analysts of the broking firm Prabhudas Lilladher.
Hindustan Unilever Limited
In July 1995, Hindustan Unilever Limited conducted its first public offering. The price of Hindustan Unilever Ltd. shares has increased from ₹166 to the current market price of ₹2,591.00, representing a 1,460.84% all-time high. An investment of ₹1 lakh made 23 years ago would now have turned to ₹15.6 lakh approx.
Commenting on the Q1FY23 performance of HUL, the research analysts of the broking firm Centrum Broking Limited said “HUVR’s Q1FY23 print was ahead of our estimates; revenue/EBITDA/APAT grew 19.8%/ 14.0%/10.3%, supported by 6% volume growth YoY. Undeniably, it was a solid all‐round performance in a challenging environment. Management alluded, with rising food and fuel inflation consumer wallet share shrank and they chose to buy more essentials over discretionary products. We reckon with pick up in OOH consumption, 75% business winning markets share. Gross margin contracted 300bp to 47.4% due to unwavering inflation in top‐ 4 commodities – palm oil, crude oil, soda ash, and plastics coupled with currency depreciation. Though EBITDA grew 14%, high ad‐spends (+30%), other expenditure (+14.5%) and employee cost (‐3.4%) cut EBITDA margin by 114bp to 22.8%. The management said near term operating environment continue to be challenging and margins to decline due to increasing price vs cost gap. We have marginally tweaked earnings and retain ADD rating, with a revised DCF‐based TP of Rs2,701 (56.3x FY24E EPS)."
The research analysts of the broking firm Motilal Oswal said “While the pace of earnings recovery to double digit and then mid-teens will be gradual, improving narrative will keep multiples high for the bellwether FMCG company. Rolling forward to Jun’24E EPS and maintaining our target multiple of 60x result in our target price of INR3,000. Maintain BUY."
Titan
Titan was listed on the NSE on September 24, 2004, and since then, its stock price has increased from ₹4.27 to ₹2,472.60, representing a 57,806.32% all-time high. A ₹1 lakh investment made in Titan would today be worth around ₹5.79 Cr. Commenting on the Q1FY23 performance of Titan, the research analysts of the broking firm Centrum Broking Limited said “Titan’s Q1FY23 revenue was tad below our estimates; revenue grew 172% on a high base (75.5%), while EBITDA/ PAT grew 7.7x/7.9x. Jewelry segment grew 208% (including bullion sale) with 3-year CAGR of 23.4% led by growth in: (1) grammage +170%, (2) new buyer contribution +46%, (3) studded ratio +26%, and (4) wedding segment +178%. Moreover, jewelry segment reported 13.5% EBIT margin. GHS enrolment grew +30%. Watches segment grew 169% driven by 109% growth in volume, while wearables grew 4x. Eyewear business achieved highest quarterly revenue at Rs1.83bn (+173%) with 19.8% EBIT margin. Taneira grew 608%, while Fashion & FA grew 275%. Caratlane grew 204%. Gross margin at 25.5% (+310bp); EBITDA jumped to Rs11.9bn (7x) YoY, resulting in EBITDA margin at 12.7% (+872bp) YoY. APAT at Rs7.9bn (7.9x). We maintain BUY, with a DCF-based TP Rs2,817 (implying 69.5x FY24E EPS)."
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ICICI Securities said “Titan has been an exceptional performer in the discretionary space with stock price appreciating at ~32% CAGR in last five years. We continue to remain structurally positive on the stock as high growth visibility justifies premium valuations and maintain BUY on the stock. We value Titan at ₹2800 i.e. 66x FY24E EPS."
TCS
TCS launched its initial public offering (IPO) in July 2004. The share price of TCS soared from 120.33 on August 27, 2004, to ₹3,402.00 today, representing an all-time high of 2,727.23%. An investment of ₹1 lakh placed in TCS shares 18 years ago would currently be worth almost ₹28.27 lakhs.
The research analysts of the broking firm ICICI Securities said in a note that “TCS’ share price has grown by ~2.8x over the past five years (from ~ ₹1,165 in July 2017 to ~ ₹3,265 levels in July 2022). We maintain BUY rating on the stock. We value TCS at ₹3,785 i.e. 29x P/E on FY24E EPS."
New organisation structure, which is aimed at increasing customer stickiness is expected to enhance market share gains, increase in outsourcing in Europe, vendor consolidation and deal pipeline leading to revenue CAGR of 12.2% over FY22-24E, we expect margins to be under pressure till FY24, resulting in margin contraction of 30 bps in FY22-24E, and double-digit return ratios, strong cash generation and healthy payout are the key triggers for the future price performance of TCS said the research analysts of the broking firm ICICI Securities.
The research analysts of the broking firm Emkay Global said “As per our interaction with TCS management, the company does not see any softness in demand or any delay in decision-making from clients despite the uncertain macro environment. Management is confident of sustaining revenue growth momentum in the coming quarters. TCS indicated that the deal pipeline remains healthy with a good mix of small, medium and large deals. The company further indicated that the deal closure velocity remains steady and it is not witnessing delays in decision making. TCS signed deals worth USD34.6bn in FY22 (up ~10% YoY). Margins are expected to remain under pressure in H1FY23 on account of headwinds stemming from wage hikes (w.e.f Q1) and an uptick in travel and visa costs. Margins should improve in H2, driven by normalization of salary hikes, moderation in attrition and benefits accruing from better pricing. TCS is well poised to benefit from strong demand and growing digital transformation opportunities. Key concerns include salary inflation, currency volatility and a potential slowdown in US/Europe. We have a Buy rating with a TP of Rs4,000 at 28x Mar’24E EPS."
Infosys
In the 29 years after Infosys' initial public offering (IPO) in February 1993, the stock price has increased from ₹11.59 to ₹1,593.75, representing an all-time high of 13,651.08%. An investment of ₹1 lakh placed in Infosys shares would now have grown to about ₹1.37 Cr.
Commenting on the Q1FY23 performance of Infosys, the research analysts of the broking firm Nomura Group said “We lower FY23-24F EPS by 1-3% (TP cut by ~1% to INR1,700 set at 25x FY24F EPS) factoring in lower margin, partly offset by better currency (USD-INR of 78 for FY23F and 79 for FY24F vs 77 earlier)."
The research analysts of the broking firm HDFC Securities said “Infosys (INFO IN) delivered strong growth in Q1, offset by steeper impact on margins (yet relative outperformance vs. peers). INFO increased its revenue guidance for FY23E to 14-16% (vs. 13-15% earlier) and EBITM guidance was maintained at 21-23%, with a tilt to the lower end. We expect INFO’s margin recovery ahead, supported by sub-contractor optimisation (~100bps lever) and utilisation increase on trainee productivity (~50bps lever). On the growth side, indicators remain strong that include (1) positive trends in large client mining and strength in NorthAm geo; (2) strong net headcount additions significantly ahead of peers; (3) growth momentum in digital (61% of revenue) supported by Cobalt cloud and flat trajectory in core services (vs. decline historically); (4) commentary on deal pipeline (grown in last 3-6 months) and mega deals; increasing share of net-new as % of large deal TCV despite soft large deal bookings; (5) improving margin trajectory ahead with most of the wage increase and pass-through impact over. Maintain BUY on INFO, valuing the company at INR 1,800, based on 26x FY24E EPS."
Motilal Oswal has said “INFO posted strong earnings in 1QFY23. Demand and the order book remain robust. The increase its FY23 growth guidance and high headcount addition provides further visibility on demand. We expect INFO to deliver margin on the lower side of its guidance band, with strong growth and reduced dependence on sub-contractors as attrition falls. We expect INFO to be a key beneficiary of an acceleration in IT spends. Based on our revised estimates, the stock is currently trading at 22x FY24E EPS. We value the stock at 26x FY24E EPS, implying a TP of INR1,760."
The research analysts of the broking firm ICICI Securities have said “Infy’s share price has grown by ~3.1x over the past five years (from ~ ₹490 in July 2017 to ~ ₹1,500 levels in July 2022). We maintain BUY rating on the stock. We value Infosys at ₹1,760 i.e. 26x P/E on FY24E EPS."
Differentiated digital and cloud capabilities to drive growth, growth remained broad-based and deal momentum robust, with digital transformation rapidly scaling across verticals and regions, Infosys to post industry leading revenue growth (13.9% CAGR in FY22-24E) and double-digit return ratios, strong cash generation and healthy payout are the key triggers for the future price performance of Infosys said the research analysts of the broking firm ICICI Securities.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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