This analysis is done with the only purpose of screening out good companies. No suggestions are being made to directly go and invest in the top scoring companies of this analysis.

Let’s study some auto ancillary companies, we have selected the following companies for study and analysis: –

1. Bosch
2. Motherson Sumi
3. Exide Industries
4. Endurance
5. Wabco India
6. Amara Raja Battery
7. Varocc Engg.
8. Minda Industries

Sr. No.	Company Name	Market Cap (Rs. Crore)
1	Bosch	60,603
2	Motherson Sumi	53,290
3	Exide Industries	22,389
4	Endurance	16,569
5	Wabco India	12,884
6	Amara Raja Battery	12,662
7	Varocc Engg.	9,014
8	Minda Industries	8,469

The top 100 companies according to the market capitalization are called as the large cap companies. Companies from 101 to 250 (based on market capitalization) are the mid-cap companies and the rest, that is above 250 are the small cap companies.

Bosch and Motherson Sumi are the large cap companies. Exide Industries is a mid-cap company. And the rest of the companies, Endurance, Wabco India, Amara Raja Battery, Varocc Engg., Minda Industries, are all small cap companies.

The analysis of these companies is going to be based on 6 parameters. They are as follows: –

1. Price-to-Earnings (PE) Ratio
2. Return On Capital Employed (ROCE)
3. Return On Equity (ROE)
4. Debt-to-Equity (DE) Ratio
5. 5 Years Sales Growth
6. 5 Years Net Profit Growth

These parameters play an important role in the analysis of any company. This does not mean that one should be dependent only on these, but these parameters are crucial for initial screening.

First, we have given the companies their ranks and then accordingly we have assigned scores to those companies from 1 to 8, where 1 being the least and 8 being highest score. (total number of companies taken here are 8, that’s why the mentioned scoring card)

PE Ratio

Sr. No.	Company Name	PE Ratio	Rank	Score
1	Bosch	37.35	7	2
2	Motherson Sumi	31.02	5	4
3	Exide Industries	30.08	4	5
4	Endurance	36.05	6	3
5	Wabco India	41.43	8	1
6	Amara Raja Battery	26.59	3	6
7	Varocc Engg.	19.69	1	8
8	Minda Industries	26.46	2	7

PE ratio is nothing but what price an investor is paying for 1 rupee of earning.

The company which has the highest PE ratio has been given number 8 rank and the company which has the lowest PE ratio has been given number 1 rank.

But the company which has the highest PE ratio has been given the lowest score.

Wabco has the highest PE ratio and thus got number 8 rank and scored 1. Varocc Engineering has the lowest PE ratio and thus scored number 1 rank and a score of 8.

ROCE

Sr. No.	Company Name	ROCE	Rank	Score
1	Bosch	22.73	5	4
2	Motherson Sumi	19.86	7	2
3	Exide Industries	20.08	6	3
4	Endurance	23.06	4	5
5	Wabco India	25.69	1	8
6	Amara Raja Battery	24.92	2	7
7	Varocc Engg.	15.52	8	1
8	Minda Industries	24.48	3	6

The company which has the highest ROCE has the highest rank and has also been given the highest points. And the company which has the lowest ROCE has the lowest rank and has also been given the lowest score.

Here too, Wabco has the number 1 rank and scored 8 points. Varocc Engineering, here too, has the lowest rank and scored 1 point.

ROE

Sr. No.	Company Name	ROE	Rank	Score
1	Bosch	15.23	7	2
2	Motherson Sumi	18.96	3	6
3	Exide Industries	13.46	8	1
4	Endurance	20.74	2	7
5	Wabco India	18.29	4	5
6	Amara Raja Battery	16.73	6	3
7	Varocc Engg.	17.96	5	4
8	Minda Industries	26.03	1	8

ROE has been analyzed on the same basis as ROCE.

The company which has the highest ROE has the highest rank and has also been given the highest points. And the company which has the lowest ROE has the lowest rank and has also been given the lowest score.

Minda Industries ranked 1^st as it had the highest ROE and thus scored 8. Exide Industries ranked 8^th as it had the lowest ROE and thus scored 1.

DE Ratio

Sr. No.	Company Name	DE Ratio	Rank	Score
1	Bosch	0	1	8
2	Motherson Sumi	1.05	8	1
3	Exide Industries	0	1	8
4	Endurance	0.37	5	4
5	Wabco India	0	1	8
6	Amara Raja Battery	0.02	4	5
7	Varocc Engg.	0.42	6	3
8	Minda Industries	0.44	7	2

The company which has the highest DE ratio has the least score and the company with lowest DE ratio has the highest score.

Bosch, Exide Industries and Wabco being 0-debt companies have scored 8. Motherson Sumi has the highest DE ratio and has thus scored 1.

5 Years Growth – Sales & Profit

Sr. No.	Company Name	5 Years Sales Growth	Rank	Score
1	Bosch	6.19	7	2
2	Motherson Sumi	17.35	3	6
3	Exide Industries	8.84	6	3
4	Endurance	11.33	5	4
5	Wabco India	21.62	2	7
6	Amara Raja Battery	15.41	4	5
7	Varocc Engg.	0	8	1
8	Minda Industries	27.24	1	8

Sr. No.	Company Name	5 Years Net Profit Growth	Rank	Score
1	Bosch	9.46	6	3
2	Motherson Sumi	31.31	2	7
3	Exide Industries	5.91	7	2
4	Endurance	19.23	3	6
5	Wabco India	14.51	4	5
6	Amara Raja Battery	10.04	5	4
7	Varocc Engg.	0	8	1
8	Minda Industries	61.87	1	8

The company with the highest 5 Year CAGR in Sales and Net Profit get the highest rank and thus gets the highest score. And Vice-Versa.

Minda Industries has the scored 8 in both, as they have the highest 5 years sales & net profit growth. And Varocc Engineering has the scored 1 in both, as they have the lowest 5 years sales & net profit growth.

Final Standings

Rank	Company Name	Final Score
1	Minda Industries	39
2	Wabco India	34
3	Amara Raja Battery	30
4	Endurance	29
5	Motherson Sumi	26
6	Exide Industries	22
7	Bosch	21
8	Varocc Engg.	18

Minda Industries is on the 1^st position with 39 points, Wavco India on 2^nd with 34 points, Amara Raja Battery on 3^rd with 30 points and Varocc Engineering is on the last position, that is 8^th with 18 points.

Companies in the 1^st four positions are all small cap companies. Also, as Bosch has secured a lower rank does not mean that it is a bad company even after being a large cap and a blue-chip company. Its just that according to the parameters selected here, Bosch has scored less.

The point here is to focus on the fundamentals of the company. Here, we have analyzed the company based on their current fundamentals. Also, the qualitative analysis of these companies will provide with a better outlook towards them

And quantitative analysis along with qualitative analysis will give a better understanding of which company is worth investing from here on.

Note: –

• We are not, in any case, suggesting buying stocks of any of the companies mentioned above. We have just provided a study on these companies.
• All the data used is of Trailing Twelve Month (TTM)

A comparison between these 2 banks has been presented here. The comparison is done in quantitative terms. This comparison is just to get a perspective on how these banks stand against each other.

Basic Information

Parameters	HDFC Bank	Kotak Bank
Market Cap (Rs. Crore)	5,65,833	2,36,224
Stock P/E	29.7	35.8
ROCE	7.32%	7.93%
ROE	17.87%	13.87%
Total Capital Employed (Rs. Crore)	1,17,637	25,779
Total Assets (Rs. Crore)	10,63,988	3,37,720
Average ROCE – 3Years	7.67	8.43
Interest Coverage Ratio	1.64	1.7
D/E Ratio	8.58	4.95
D/B Ratio	5.32	4.68
Dividend Yield	0.6	0.06
Promoter Holding	21.43%	30.02%
PEG Ratio	1.41	1.55
Interest Coverage	1.64	1.7
PAT Growth 5 Years	21.05%	23.05%
Sales Growth 5 Years	18.01%	18.32%
Gross NPA	1.30%	2.22%
Net NPA	0.40%	0.98%

• In terms of PE, Kotak bank seems to be little over-priced in comparison with HDFC bank.
• ROCE of both the banks is almost same.
• ROE of HDFC bank looks better than the ROE of Kotak Bank.
• Total Capital Employed of HDFC bank is almost 4 times that of Kotak bank.
• Total Assets are the loans given in the market.
• If the Interest Coverage ratio of a company falls below 2.5 then it can be an alarming sign. But this can be said in the case of banks, because their itself is of borrowing and lending. In case of banks, having interest coverage ratio above 1 is healthy. The banks have almost similar values, but Kotak has a little advantage.
• Banks will always higher D/E ratio values as their business is of lending itself.
• In terms of P/B ratio, HDFC bank looks a little over-priced.
• Both the banks have dividend yield lower than the industry average. Lower the dividend yield the better it is for a bank. This means that promoter wants to still re-invest the money rather than taking a payout as a dividend.
• The major promoter holder in HDFC bank is HDFC Ltd and the promoters of Kotak Bank are Mr. Uday Kotak family. RBI has instructed the promoters of Kotak Bank to reduce their holding in the bank up to 20% before 31^st December 2018.
• The PAT growth of Kotak bank is more.
• Sales growth of the banks are almost same.
• Gross NPA and Net NPA are two of the most important parameters here. HDFC bank scores very well here as their Gross NPA is very low in regards of their loans given in the market. In Net NPA too, HDFC bank has upper hand over Kotak bank.

Last 12 Quarter Results

These are the Quarter-on-Quarter results of the last 3 years.

• Sales of HDFC bank has been increasing every quarter. Which is a very good sign.
• Kotak bank too is growing on the same line. Only one quarter it has shown negative growth. But overall Kotak bank is also growing nicely.
• In Net profit, there are only 3 quarters where HDFC bank has shown a little negative growth in quarter-on-quarter.
• And in Kotak bank, there are only 2 negative growth quarters.
• On these parameters, both the banks are growing only similarly.

Yearly Performance

This is the yearly performance of the banks for the last 10 years.

• Sales growth of HDFC bank in 10 years is 23.01%. And that of Kotak bank is 21.29%.
• Net profit growth 10-Year CAGR of HDFC bank is 27.10%. And that of Kotak bank is 20.13%.

We have also shown sales & net profit growth on the base of 3-years rolling returns.

• Here, one can see that in the last 3-year rolling returns of the last 3 years, the sales growth of Kotak bank is being beating those of HDFC bank.
• And in profitability too, the 3-year rolling returns of last 2 years, the growth momentum can be seen shifting to the side of Kotak bank.

Share Price Movement

Source – Moneycontrol.com

• The price movements of the stocks of both the companies is almost same.
• Both the banks given around 700% returns in the last 10 years.
• The returns of HDFC bank are a little higher as their dividend yield too has been a little higher as compared to Kotak bank.

Note: –

• We are in no way telling anyone to go and invest in stocks immediately.
• We are also not suggesting that these two are the best banks and to buy the stocks of these banks. Neither are we suggesting which one is better to buy.

What is/How to Identify a Value Stock?

There aren’t any ultimate indicators or the thumb rule of identifying value socks, but following are the major parameters that can be used to focus and short list value stocks list: –

1. Low Price-to-Earnings (PE) Ratio

• A stock which is trading at below average of all the other stocks in that category, then that stock is called as a Low PE ratio stock
• PE ratio is nothing what price an investor is paying for 1 rupee of earning. For example, if a stock has a PE ratio of 20, it mean that for earning 1 rupee the investor is willing to pay 20 rupees
• PSU Bank stocks are generally low PE ratio stocks (not saying that they are value stocks). For example, suppose private banks are having PE ratio of 25-30 and PSU banks are having PE ratio between 8-12. This would mean that market is paying lesser money for PSU bank stocks compared to private bank stocks
• So, if a stock has low PE ratio then it can be said that is a greatly valued stock, but one should also look at other parameter like business performance, etc. along with it

1. Low Price-to-Book (P/B) Ratio

• P/B ratio compares the current market price of the share of a company with its book value
• Let’s say that a company gets liquidated and its PB is 1. Then it would mean that one will at least get back the current value of whatever invested
• Generally, value stocks trade at lower P/B ratio, ranging between 1 to 2

1. High Dividend Yield

• A company will give high dividend yields when the company doesn’t have any growth potential ideas with them and they don’t want to retain whatever surplus money they have or profits they are earning. They think that it is better to give that money to investors rather than re-invest
• High dividend yield means market feels that the company doesn’t have many great ideas for business and that is why they are distributing dividend to their investors

These are the basic thumb rule with the help of which one can identify or at least shortlist the first list of value stocks.

Suggestions for Investors: –

SEBI has introduced new mutual fund categorization and with that a Value/Contra investment strategy in equity oriented mutual funds. Investors can check few mutual fund portfolios and have a look at the average PE ratio, average P/B ratio and dividend yields of that portfolio to understand and identify value stocks:

1. ICICI Pru Value Discovery Fund
2. Aditya Birla Sun Life Pure Value Fund (more focused on small and mid cap and shouldn’t be compared with Nifty or Sensex PE ratios and compare them with small and mid cap indices PE ratio)
3. Invesco Contra (Contra Strategy)

For example, ICICI Pru Value Discovery Fund has an average PE ratio of 19. Average PE ratios of Nifty or Sensex are 21-22. Thus, the funds PE ratio is below the average PE ratio of the category. The P/B ratio of the fund is around 1.8, which as mentioned above is between 1 and 2.

We are not suggesting anyone to invest in these funds and are only mentioning these stocks for you to have look at their portfolios and understand what value stocks are and how to identify them.

Let’s study some auto sector companies, we have selected the following companies for study and analysis: –

1. Maruti Suzuki
2. M&M
3. Bajaj Auto
4. Hero MotoCorp
5. Eicher Motors
6. Tata Motors
7. Ashok Leyland
8. TVS Motors

The companies here are a combination of 2-wheeler and 4-wheeler companies. These companies have been chosen on the basis of market capitalization.

Sr. No.	Company Name	Market Cap (Rs. Crore)
1	Maruti Suzuki	2,35,892
2	M&M	98,878
3	Bajaj Auto	83,460
4	Hero MotoCorp	67,122
5	Eicher Motors	65,861
6	Tata Motors	50,803
7	Ashok Leyland	31,131
8	TVS Motors	27,553

The top 100 companies according to the market capitalization are called as the large cap companies. Companies from 101 to 250 (based on market capitalization) are the mid-cap companies and the rest, that is above 250 are the small cap companies.

All the 8 companies here are large cap-oriented companies.

The analysis of these companies is going to be based on 4 parameters. They are as follows: –

1. Price-to-Earnings (PE) Ratio
2. Return On Capital Employed (ROCE)
3. Return On Equity (ROE)
4. Debt-to-Equity (DE) Ratio

These 4 parameters play an important role in the analysis of any company. This does not mean that one should be dependent only on these, but these 4 parameters are crucial for initial screening.

Every parameter has been equal importance (25%). And the companies are scored from 1 to 8, where 1 being the least and 8 being highest score. (total number of companies taken here are 8, that’s why the mentioned scoring card)

PE Ratio

Sr. No.	Company Name	PE Ratio	Score
1	Maruti Suzuki	29.86	4
2	M&M	17.26	7
3	Bajaj Auto	18.62	5
4	Hero MotoCorp	18.35	6
5	Eicher Motors	31.19	3
6	Tata Motors	35.45	2
7	Ashok Leyland	15.79	8
8	TVS Motors	40.64	1

PE ratio is nothing what price an investor is paying for 1 rupee of earning.

The company which has the highest PE ratio has been scored 1 and the company with the lowest PE ratio has been a score of 8.

The PE ratio of TVS Motors is the highest and has gotten the score of 1 and Ashok Leyland has the lowest PE ratio and that is why it’s has been scored 8.

This does not mean that Ashok Leyland is the best and TVS Motors is the worst stock. A company gets premium valuations when the company’s business prospects are looking good.

ROCE

Sr. No.	Company Name	ROCE	Score
1	Maruti Suzuki	23.77%	3
2	M&M	13.64%	2
3	Bajaj Auto	30.96%	6
4	Hero MotoCorp	46.1%	7
5	Eicher Motors	49.4%	8
6	Tata Motors	8.55%	1
7	Ashok Leyland	28.4%	5
8	TVS Motors	24.09%	4

Eicher Motors has scored 8 for having the highest ROCE and Tata Motors scored 1 for having the lowest ROCE.

Eicher Motors has a ROCE of 49.4%. This mean that it has capacity of 49.4% to generate returns on the capital. This is a very good number.

ROE

Sr. No.	Company Name	ROE	Score
1	Maruti Suzuki	16.37%	2
2	M&M	17.23%	3
3	Bajaj Auto	22.15%	4
4	Hero MotoCorp	32.46%	8
5	Eicher Motors	31.68%	7
6	Tata Motors	10.04%	1
7	Ashok Leyland	23.22%	5
8	TVS Motors	24.44%	6

Here too, Tata Motors scored 1 by having the lowest ROE and Here MotoCorp has the highest ROE and has thus scored 8.

DE Ratio

Sr. No.	Company Name	DE Ratio	Score
1	Maruti Suzuki	0	8
2	M&M	1.52	1
3	Bajaj Auto	0.01	6
4	Hero MotoCorp	0	8
5	Eicher Motors	0.02	5
6	Tata Motors	0.93	2
7	Ashok Leyland	0.14	4
8	TVS Motors	0.41	3

If a company’s ROE is less than its ROCE, then it means that the company is not able to mange its debt efficiently. And whenever, the ROE decreases than the ROCE, the chances of increasing debt increases. If the company is mt able to generate returns and is also not able to service its debt, then that is not good.

Maruti Suzuki and Hero MotoCorp being 0-debt companies have scored 8. M&M has the highest DE ratio and has thus scored 1.

Final Standings

Rank	Company Name	Final Score	1 Year Returns
1	Hero MotoCorp	29	-12.5
2	Eicher Motors	23	-23
3	Ashok Leyland	22	-10.8
4	Bajaj Auto	21	-14.5
5	Maruti Suzuki	17	-22
6	TVS Motors	15	-26.4
7	M&M	13	5
8	Tata Motors	6	-58

Hero MotoCorp is on the 1^st position with 29 points, Eicher Motors on 2^nd with 23 points, Ashok Leyland on 3^rd with 22 points and tata Motors is on the last position, that is 8^th with 6 points.

M&M is the only company which is showing positive returns in the last 1 year.

The point here is to focus on the fundamentals of the company. Here, we have analyzed the company based on their current fundamentals. Also, the qualitative analysis of these companies will provide with a better outlook towards them

And quantitative analysis along with qualitative analysis will give a better understanding of which company is worth investing from here on.

Note: –

• We are not, in any case, suggesting buying stocks of any of the companies mentioned above. We have just provided a study on these companies.
• All the data used is of Trailing Twelve Month (TTM)

Let’s study some consumer durable companies, we have selected the following companies for study and analysis: –

1. Havells India
2. Voltas
3. Whirlpool
4. Symphony
5. Blue Star
6. Bajaj Electrical
7. Johnson Hitachi
8. IFB Industries

All the companies selected above are the major companies which are involved in Air conditioning and air-cooling segment, which is the most popular segment in the consumer durable sector. There may be arguments that one can also include Titan or TTK Prestige or Hawkins Cooker. But in this analysis, we are focusing on the air conditioning and air-cooling market.

Company Name	Market Cap (Rs. Crore)
Havells India	44,099
Voltas	18,966
Whirlpool	17,821
Symphony	8,497
Blue Star	6,192
Bajaj Electricals	5,229
Johnson Hitachi	4,916
IFB Industries	3,397

The top 100 companies according to the market capitalization are called as the large cap companies. Companies from 101 to 250 (based on market capitalization) are the mid-cap companies and the rest, that is above 250 are the small cap companies.

Out of all the companies, listed above, Havells India is the only large cap company. Voltas and Whirlpool are the mid cap companies. And Symphony, Blue Star, Bajaj Electricals, Johnson Hitachi and IFB Industries are the small cap companies.

The analysis of these companies is going to be based on 4 parameters. They are as follows: –

1. Price-to-Earnings (PE) Ratio
2. Return On Capital Employed (ROCE)
3. Return On Equity (ROE)
4. Debt-to-Equity (DE) Ratio

These 4 parameters play an important role in the analysis of any company. This does not mean that one should be dependent only on these, but these 4 parameters are crucial for initial screening.

Every parameter has been equal importance (25%). And the companies are scored from 1 to 8, where 1 being the least and 8 being highest score. (total number of companies taken here are 8, that’s why the mentioned scoring card)
PE Ratio

Sr. No.	Company Name	PE Ratio	Score
1	Havells India	55.11	8
2	Voltas	32.67	1
3	Whirlpool	46.07	5
4	Symphony	53.84	6
5	Blue Star	41.79	3
6	Bajaj Electricals	32.68	2
7	Johnson Hitachi	54.67	7
8	IFB Industries	45.96	4

PE ratio is nothing what price an investor is paying for 1 rupee of earning.

The PE ratio of Havells is the highest and has gotten the score of 1 and Voltas has the lowest PE ratio and that is why its has been scored 8.

ROCE

Sr. No.	Company Name	ROCE	Score
1	Havells India	27.61%	5
2	Voltas	21.69%	3
3	Whirlpool	33.29%	7
4	Symphony	46.29%	8
5	Blue Star	21.05%	2
6	Bajaj Electricals	19.55%	1
7	Johnson Hitachi	29.31%	6
8	IFB Industries	22.04%	4

Symphony has scored 8 for having the highest ROCE and Bajaj Electrics scored 1 for having the lowest ROCE.

ROE

Sr. No.	Company Name	ROE	Score
1	Havells India	19.79	5
2	Voltas	15.86	3
3	Whirlpool	21.41	7
4	Symphony	34.77	8
5	Blue Star	18.36	4
6	Bajaj Electricals	12.97	1
7	Johnson Hitachi	20.56	6
8	IFB Industries	15.37	2

Here too, Symphony scored 8 by having the highest ROE and Bajaj Electricals scored 1 by having the lowest ROE.

D/E Ratio

Sr. No.	Company Name	D/E Ratio	Score
1	Havells India	0.03	6
2	Voltas	0.04	5
3	Whirlpool	0	8
4	Symphony	0.04	5
5	Blue Star	0.45	2
6	Bajaj Electricals	0.77	1
7	Johnson Hitachi	0.02	7
8	IFB Industries	0.04	5

Whirlpool being a 0-debt company has scored 8. Bajaj Electricals has the highest DE ratio and has thus scored 1.

Final Standings

Rank	Company Name	Final Score	1 Year Returns
1	Whirlpool	26	-10.5%
2	Symphony	24	-32.5%
3	Johnson Hitachi	21	-30.7%
4	Voltas	19	-10%
5	Havells India	17	26.3%
6	IFB Industries	16	-38.5%
7	Blue Star	14	-20%
8	Bajaj Electricals	10	6.3%

Whirlpool is on the 1^st position with 26 points, Symphony on 2^nd with 24 points, Johnson Hitachi on 3^rd with 21 points and Bajaj Electricals is on the last position, that is 8^th with 10 points.

We have also mentioned the 1 year returns of these companies. One should not think that the company has scored good but still has negative returns. Last year has been a very turbulent year. For example, a company like Symphony who has even given returns of 300% now has negative returns. But these falls are justified because they have had a corresponding run.

The point here is to focus on the fundamentals of the company. Here, we have analyzed the company based on their current fundamentals. Also, the qualitative analysis of these companies will provide with a better outlook towards them

And quantitative analysis along with qualitative analysis will give a better understanding of which company is worth investing from here on.

Note: –

• We are not, in any case, suggesting buying stocks of any of the companies mentioned above. We have just provided a study on these companies.
• All the data used is of Trailing Twelve Month (TTM)