As part of our year-end special pieces, we will be analyzing the markets to identify those companies that have done exceedingly well over the last 12 months (ending Dec 31, 2015).
As part of this series, in this post, we will talk about the performance of the Large Caps in this market. The Nifty has taken a severe beating this year, and as of now, is 5.1% down for the year! However, there are several Large Cap companies that have not only beaten the Nifty, but have contrived to give their investors some absolutely smashing returns this past year!
1) Rajesh Exports
Wow. What a year it has been for Rajesh Exports. The company’s stock has shot up over 379% from its opening 2015 levels!
Pretty monstrous rise, considering the Nifty has moved down 5.1% this calendar year. Why did the stock perform so well?
At first look, it seems pretty evident why; their most recent Q2 FY16 earnings report (September 2015) showed that quarterly sales was at Rs. 4,432.1 cr. – that’s a 304.4% increase over the same quarter last year! Q2 FY16 EPS was Rs. 9.48, up 75.2% y-on-y. On a TTM basis, EPS was Rs. 30.27 as of Dec 22, 2015 as compared to Rs. 14.52 for the preceding 12 months – an increase of 108.5%.
It is currently valued at 22.3 times trailing earnings, while it started the year at 9.8 P/E. It’s a story of their valuations catching up through the year; the investor getting more bang for the company’s buck basically.
Rajesh Exports is a company involved across the value chain in the gold refinery and retailing business.
- Processes 35% of the gold produced in the world.
- Largest exporter of gold products in India.
- Lowest-cost gold jewellery producer in the world.
- It has 80 branded outlets (SHUBH jewellers) through which it retails gold jewellery.
- Recently acquired 100% of Valcambi, a Switzerland-based gold refinery that is the largest in the world. The company expects this acquisition to add to their top line and bottom line. This acquisition is interesting as the annual revenues of Valcambi are over Rs. 2.2 lakh cr per year – more than 4 times that of Rajesh Exports!
Going forward, their stated objective is to concentrate on
Strengthening it’s direct connect to the retail consumer to ensure that it climbs up the value chain and utilizes a major part of the gold refined by it to manufacture gold jewelry and investment bars and supply them directly to the retail consumer.
Moving further up the value chain and towards the retail consumer, this is the next logical step for their business. Still fairly cheap at 22.3PE, this is a stock to surely watch out for!
2) Essar Oil
What is this? An Oil company has been an out-performer? Yes, pretty surprising given Crude Oil’s rapid descent this year. However, Essar Oil has managed to not only stay above the water, but to paddle away and surf the waves too! A 141.6% gain has greatly surprised their investors.
Essar Oil is a curious case. A closer look at their performance reveals that in the last 12 months, the company had Net Profits of Rs. 1,862 cr. while in the preceding 12 months Net Profits were Rs. 1,985 cr. Borrowings were also slightly up during the period. How then, did the price shoot up so much?
Simple – the company is de-listing their equity shares. And the discovered price through a Reverse Book Building, is way more than the Rs. 107 that its stock was trading at in January 2015!
In June 2015, Essar Oil conveyed to the Exchange, its plans of de-listing the company’s equity shares. At around the same time, news of a Rosneft-Essar Oil deal worked its way through the markets. There was also a major burst in volumes traded in that period, as investors realized what was happening. The promoters were looking to buy back non-promoter share-holding of 28.54% through the de-listing, after which they would sell 49% of the company to Rosneft.
The de-listing began in the first week of December, with the floor price set at Rs. 146.05. However, on December 23rd the discovered price was announced at Rs. 262.80 – a premium of 80%!
Hence, since June 2015, the share price has been steadily climbing from its Rs. 98 levels to its current Rs. 258.20.
3) 3M India
The next best performer is the diversified player, 3M India. They saw their share price jump 76.7% this calendar year.
Looking at the reasons behind its meteoric rise:
- Valuations actually fell in this period, from 92.1 to 82.7 P/E.
- Sales growth has been consistently good.
- Operating margins have been on the rise; from 11.16% in Q2 FY15 to 16.45% in Q2 FY16.
- In July 2015, the share price rose 48.2% in the space of one month! This was on the back of fantastic Q1 results, and reports suggesting that the company was considering India one of their export hubs in the future, as well as participation in the Digital India initiatives.
- TTM Profit growth was 82.76%.
- Reserves are increasing y-on-y and Borrowings have decreased considerably over the last few years.
Having said that, the company is still expensive, so there must be considerable growth opportunities priced into the stock at the moment.
4) Bajaj Finance
The first of the 2 Finance stocks in the Top 10, is Bajaj Finance.
Bajaj Finance has seen good volumes in trading since the turn of the year. Their shares rose 72.5% from Rs. 3,483.95 to Rs. 6,009.95, close to their all-time highs.
Look at this for a reason behind their stock’s surge:
- Consistent Sales and Profit growth over longer periods as well.
- Maintained an average dividend pay-out ratio of 12.96% over the last 5 years.
- On a TTM basis, EPS was Rs. 200.51 as of Dec 31, 2015 as compared to Rs. 156.34 for the preceding 12 months – an increase of 28.3%.
- However, their interest costs have been increasing gradually.
- Since their share prices rose by 69.2% while EPS grew only 28.3%, that would imply that the stock has gotten more expensive as valuations also spiked.
A fantastic interview with Sanjiv Bajaj, MD of Bajaj Finance by Latha Venkatesh at CNBC-TV18.
5) Ashok Leyland
Next up on the list is a Vehicle manufacturer – Ashok Leyland.
As you can see, a beginning-year price of Rs. 51.40 to a closing price of Rs. 87.90 – a gain of nearly 71.0%. It has been a steady rise throughout the year. Let’s see what prompted such a fantastic performance.
- Sales increase has been substantial; Rs. 16,380.3 cr. in the last 12 months from Rs. 10,509.23 cr. in the preceding 12 months; A 55.90% increase.
- Operating Margins have been on the rise over the last 12 quarters.
- Interest costs have reduced over time.
- The above factors seem to have had a direct effect on the bottom line; Net Profit has also been increasing (at Rs. 286.81 cr. for Q2 FY16).
- Ashok Leyland has been posting fantastic sales data in FY 2016. An average 37.10% increase in Total Monthly Sales this year.
The interesting point to note, is that the stock has actually become cheaper compared to its December 2014 valuation levels. From a P/E of 52.45 to a current level of 35.50.
6) Britannia Industries
Britannia shares rose 61.2% this year.
- Fantastic RoE.
- Consistent Sales and Profit growth.
- Consistent dividend payouts.
- Almost no debt – just Rs. 97 lakh at the end of March!
Consumer demand could pick up the next few months.
7) Indiabulls Housing Finance
Coming in at a close No: 7, is IndiaBulls Housing Finance, our 2nd Finance company in this list. This sector that has been ripe with good stock picks and investor darlings. Gruh Finance, Can Fin Homes, Repco Home Finance have performed well with the latter appearing time and again in our Capital Mind Outliers.
IndiaBulls Housing Finance stock returned 60.2% this year.
- Their 5-yr growth story has been fantastic. Sales has grown 109%, Profit has grown 154.70% and RoE was 33.52%!
- The stock has seen plenty of positive news for its business this year. It had raised Rs. 3,000 cr. via bonds, RBI rate cuts and so on.
- A history of strong dividend payouts.
8) Abbott India
Abbott India is the first among our 3 pharma entries in the Top 10 this year. The company’s stock has returned nearly 58.0% in 2015!
Abbott India is a subsidiary of the Chicago-based Abbott Global. Abbott India has reported latest quarter (Q2 FY16) Sales of Rs. 632.81 cr. and Earnings of Rs. 61.70: a growth of 9.59% in Sales, but a reduction of 3.20% in Earnings. The stock also hit its all-time high earlier in September 2015, of Rs. 6,177.70. Since then, the price has fluctuated but has been hovering around the Rs. 6,000 mark.
So why did its stock price shoot up so much?
- The company has fantastic RoE figures; Sales and Profit growth over 5 years has also been incredible.
- TTM EPS has gone up by 21.79%;
- Valuations have increased from 40.26 to a PE of 52.23!
- The price rise until September, was mainly on the back of fantastic June quarter (Q1 FY16) results. Abbott reported a 22.32% jump in Sales, and a massive 34.62% increase in Net Profits!
- Since then, the results have not been overly optimistic, and hence the price has consolidated around the Rs. 6,000 levels.
- The company has a constant Dividend Payout policy.
From start to finish, Abbott India’s name was on top of everyone’s list as the company has emerged as one of the fastest growing pharmaceuticals companies in the country.
With key business segments showing high double-digit growth, Abbott’s revenue in 2014-15 grew an impressive 25.7 per cent and net profit was 44 per cent higher compared to the annualised figures of the previous year. While it has best-sellers such as Brufen and Digene, three of its products feature in the top 10 domestic products by sales in the last 12 months ending October. Abbott also has a portfolio of over 400 branded generics in India and launched 24 new products in 2014-15.
9) Alembic Pharma
The 2nd Pharma company on this list is Alembic Pharmaceuticals. As stated earlier, 2015 has been a wonderful year for Pharma companies, and Alembic Pharma has performed admirably during the course of the year. A return of 56.4% for its investors is pretty special indeed.
Indeed, why did Alembic Pharma do so well as compared to its peers in the large-cap Pharma space?
- Steady TTM Sales and Profit growth (30.93% and 85.68% resp). This seems to be the biggest reason for our Top 10 gainers this year.
- RoE of 37.61% for the last 3 years, and 36.27% for the TTM period.
- At a current valuation of 26.27 times Earnings, Alembic Pharma is among the lesser valued companies in the space compared with its peers.
10) Aurobindo Pharma
Aurobindo Pharma rounds up our Top 10, with its stock returning 54.30%, thus marking an incredible year for the Pharma story in India in 2015. Auro Pharma’s stock too, hit its all-time high of Rs. 891.5 in the 2nd last day of the year!
Reasons behind its rise:
- Operating Margins are great at 24.0%.
- Annually, their Sales growth was phenomenal. FY15 saw a Sales growth of 49.64% and Earnings grew 34.35% Y-on-Y!
- 10-yr Return on Equity (RoE) is 22.64%, Profit Growth is 48.3% and Sales Growth is 25.28%!
- The company is valued at 30.60, considerably less than a lot of its peers.
And there we have it. The Top 10 Large-Cap stock performers for the 2015 calendar year. There have been some stand-outs there, but the interesting thing would be to see if these companies can continue their incredible growth stories in the year ahead, or if they will suffer in yet another of those dreaded bear market runs.
Next up, is our list of the Top 10 performers in the Mid Cap space. Watch out for that soon, only at capitalmind.in!