Wednesday, November 9, 2016

What are the Best Price-to-Book Value Stocks?

Picture explains buying stock at a discount to their book value

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.

Further Related Reading:

Sunday, November 6, 2016

As Indian Economy is Improving is it Good Time to Invest?

There is no good time or bad time for investing. We have to find good stocks at the right price in the market and invest.
Honestly speaking, as the economy is turning around, the stock market is rising and stock have become expensive to buy and I am unable to find enough good stocks at the right price.
Contrary to what most people think, when the economy is in the upswing is NOT the right time to invest. The right time to invest is actually when the economy is in doldrums or shattered - that is when we should have the courage to make massive investments - they will payoff handsomely!
So what shall a person do when economy and markets are booming?
  1. Search, find and make humble investments every month in good stock priced right.
  2. Deeply and carefully study and shortlist great companies, which are expensive right, to make investments in future, when the market crashes.
  3. Accumulate cash - keep ready a war-chest - for that doomsday.

Further Related Reading:
Market is a pendulum with booms and busts, One should invest always
Slide explaining that stock market swings like a pendulum