This
analysis is based on Water Schloss’s theme, “Buy Assets at a Discount”.
Applying Walter Schloss’s philosophy we scanned good Indian stock that are
trading at a discount to their book value. We conducted a preliminary screening
od all the Indian stocks using HDFC Securities’ stock screener, using the basic
criteria of market capitalization over Rs.1000 crores (Rs.10 Billion) and a
price to book value below 0.50 and obtained a two page list.
Banking
stocks, especially the public sector ones, as whole are not favoured by the
market as well as by us under the present circumstances as they are saddled
with non performing assets. Most of
the bank stocks are selling at a discount to their book values. Therefore, after
eliminate banks, the list becomes shorter as follows:
|
|
|
|
From
|
To
|
|
|
|
Market
Capitalisation
|
Rs. Crores
|
1000
|
434067
|
|
|
|
Price
to Book Value (P2BV)
|
Nimber
|
0.01
|
0.8
|
|
|
Sl. No.
|
Company
Name
|
P/E
|
M Cap(Rs. Cr)
|
EPS(Rs.)
|
LTP(Rs.)
|
|
1
|
Aban Offshore Ltd
|
8.01
|
2,351.18
|
67.45
|
219.3
|
|
2
|
ABG Shipyard Ltd
|
11.77
|
1,125.59
|
18.77
|
31.85
|
|
3
|
Alok Industries Ltd
|
2.75
|
1,067.27
|
2.82
|
3.1
|
|
4
|
Amtek Auto Ltd
|
10.58
|
3,992.73
|
17.25
|
38.5
|
|
5
|
Anant Raj Ltd
|
48.03
|
1,764.70
|
1.24
|
43.95
|
|
6
|
Bajaj Hindusthan Ltd
|
0
|
1,221.25
|
0
|
15.3
|
|
7
|
Chennai Petroleum Corporation
Ltd
|
0
|
1,198.71
|
0
|
270.05
|
|
8
|
D B Realty Ltd
|
0
|
1,545.92
|
0
|
40.15
|
|
9
|
Dalmia Bharat Ltd
|
63.46
|
2,148.55
|
4.17
|
1,994.60
|
|
10
|
Financial Technologies (India)
Ltd
|
6.07
|
1,194.91
|
42.78
|
73.95
|
|
11
|
Gateway Distriparks Ltd
|
14.82
|
2,017.43
|
12.51
|
249.35
|
|
12
|
Great Eastern Shipping Company
Ltd
|
9.04
|
5,202.95
|
38.06
|
359.45
|
|
13
|
Gujarat Alkalies &
Chemicals Ltd
|
6.45
|
1,304.29
|
27.38
|
382.7
|
|
14
|
Gujarat Industries Power Co Ltd
|
6.37
|
1,126.81
|
11.75
|
104.35
|
|
15
|
Gujarat Narmada Valley
Fertilizers & Chemicals Ltd
|
4.89
|
1,347.49
|
17.69
|
190.75
|
|
16
|
Gujarat State Fertilizers &
Chemicals Ltd
|
9.28
|
2,462.73
|
6.69
|
89.5
|
|
17
|
GVK Power & Infrastructure
Ltd
|
0
|
2,345.11
|
0
|
6.25
|
|
18
|
HCL Infosystems Ltd
|
0
|
1,058.78
|
0
|
45.05
|
|
19
|
Hindalco Industries Ltd
|
10.72
|
29,152.69
|
13.17
|
162.1
|
|
20
|
Housing Development &
Infrastructure Ltd
|
15.31
|
3,458.85
|
5.4
|
61.95
|
|
21
|
Hubtown Ltd
|
0
|
1,004.54
|
0
|
89.4
|
|
22
|
IFCI Ltd
|
9.13
|
4,894.71
|
3.23
|
23.45
|
|
23
|
India Cements Ltd
|
13.62
|
2,411.36
|
5.77
|
147.3
|
|
24
|
Indiabulls Power Ltd
|
0
|
2,378.46
|
0
|
7.7
|
|
25
|
Indiabulls Real Estate Ltd
|
13.03
|
2,917.12
|
5.28
|
65.9
|
|
26
|
Jai Corp Ltd
|
13.11
|
1,310.19
|
5.58
|
62.65
|
|
27
|
Jaiprakash Power Ventures Ltd
|
13.68
|
4,803.63
|
1.2
|
4.1
|
|
28
|
Jaypee Infratech Ltd
|
8.91
|
3,868.17
|
3.13
|
7.6
|
|
29
|
Jindal Saw Ltd
|
22.95
|
1,644.77
|
2.59
|
57.15
|
|
30
|
Lanco Infratech Ltd
|
0
|
1,998.47
|
0
|
3.9
|
|
31
|
Maharashtra Seamless Ltd
|
14.78
|
1,725.43
|
17
|
238.95
|
|
32
|
Nava Bharat Ventures Ltd
|
8.03
|
1,436.39
|
20.11
|
139.3
|
|
33
|
NCC Ltd
|
137.09
|
1,730.43
|
0.49
|
79
|
|
34
|
NHPC Ltd
|
9.92
|
22,860.93
|
2.09
|
25.3
|
|
35
|
Parsvnath Developers Ltd
|
20.58
|
1,109.71
|
1.24
|
12.45
|
|
36
|
Prakash Industries Ltd
|
8.03
|
1,203.01
|
11.13
|
53.2
|
|
37
|
PTC India Financial Services
Ltd
|
5.2
|
1,087.62
|
3.7
|
41.4
|
|
38
|
PTC India Ltd
|
11.29
|
2,120.91
|
6.35
|
72
|
|
39
|
Punj Lloyd Ltd
|
0
|
1,149.07
|
0
|
20.2
|
|
40
|
Rain Industries Ltd
|
3.39
|
1,098.18
|
9.6
|
49.7
|
|
41
|
Reliance Capital Ltd
|
13.62
|
10,183.82
|
30.41
|
477.55
|
|
42
|
Reliance Communications Ltd
|
25.17
|
26,378.18
|
5.07
|
42.25
|
|
43
|
Reliance Infrastructure Ltd
|
7.71
|
15,520.35
|
76.57
|
483.3
|
|
44
|
Ruchi Soya Industries Ltd
|
4.66
|
1,272.73
|
8.14
|
21.55
|
|
45
|
Sesa Sterlite Ltd
|
8.95
|
58,449.06
|
22.02
|
217.65
|
|
46
|
Shipping Corporation of India
Ltd
|
0
|
1,981.98
|
0
|
64.55
|
|
47
|
Simplex Infrastructures Ltd
|
21.4
|
1,062.68
|
10.03
|
316.25
|
|
48
|
Sintex Industries Ltd
|
4.91
|
1,847.29
|
12.03
|
79.3
|
|
49
|
SREI Infrastructure Finance Ltd
|
10.22
|
1,821.19
|
3.56
|
86.6
|
|
50
|
Steel Authority of India Ltd
|
13.36
|
30,978.98
|
5.61
|
49.75
|
|
51
|
Unitech Ltd
|
19.33
|
4,931.73
|
0.98
|
5.3
|
|
52
|
Usha Martin Ltd
|
26.17
|
1,112.16
|
1.39
|
14.85
|
|
53
|
Welspun Corp Ltd
|
28.79
|
2,108.78
|
2.79
|
61.4
|
Most of the companies appearing in the table did not comply with our other usual screening criteria and therefore had escaped full evaluation. However in the light of Walter Schloss’ prescription we will certainly revisit the list and in case we find any good stocks we will inform you.
In
the mean time three stocks which we had already evaluated (highlighted in bold yellow)
in the table are:
|
Sl. No.
|
Company
Name
|
Remarks
|
|
12
|
Great Eastern Shipping Company
Ltd
|
Already in Portfolio Y2K15
|
|
34
|
NHPC Ltd
|
Already in Portfolio Y2K15
|
|
46
|
Shipping Corporation of India
Ltd
|
Earlier rejected as the company
had been in losses. Now, in the past few quarters, showing profits.
|
Value
Investors can make long term investments in Great Eastern and NHPC without
hesitation. As far Shipping Corporation of India is concerned, even though
generally as value investors we do not invest unless all the filtering criteria
are strictly met, considering that the stock is selling at an extremely low
price to book value ratio of 0.30 (that is the stock is trading at 70% discount
to its book value), we are considering taking a cautious, small and risky bet,
after a thorough comparative evaluation with Great Eastern Shipping.
Conclusion:
In
this November 2016, following Walter Schloss’ theme of buying assets at a discount, Great Eastern Shipping and NHPC can be
bought without any doubt and a small and slightly risky long-term bets may be
made in Shipping Corporation of India stock.
