Let’s study some consumer durable companies, we have selected the following companies for study and analysis: –
- Havells India
- Blue Star
- Bajaj Electrical
- Johnson Hitachi
- 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)|
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: –
- Price-to-Earnings (PE) Ratio
- Return On Capital Employed (ROCE)
- Return On Equity (ROE)
- 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)
|Sr. No.||Company Name||PE Ratio||Score|
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.
|Sr. No.||Company Name||ROCE||Score|
Symphony has scored 8 for having the highest ROCE and Bajaj Electrics scored 1 for having the lowest ROCE.
|Sr. No.||Company Name||ROE||Score|
Here too, Symphony scored 8 by having the highest ROE and Bajaj Electricals scored 1 by having the lowest ROE.
|Sr. No.||Company Name||D/E Ratio||Score|
Whirlpool being a 0-debt company has scored 8. Bajaj Electricals has the highest DE ratio and has thus scored 1.
|Rank||Company Name||Final Score||1 Year Returns|
Whirlpool is on the 1st position with 26 points, Symphony on 2nd with 24 points, Johnson Hitachi on 3rd with 21 points and Bajaj Electricals is on the last position, that is 8th 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.
- 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)