SAPM –ASSIGNMENT 5

• LIST OF SPA
• THE STOCKS SHORTLISTED MRF LTD, BRITTANNIA INDUSTRIES LTD, PIDILITE INDUSTRIES LTD, V GUARD
INDUSTRIES LTD,BATA INDIA LTD, NESTLE INDIA LTD, PROCTER AND GAMBLE HEALTH LTD,GILLETTE INDIA
LTD,TTK PRESTIGE LTD, COLGATE PALMOLIVE LTD.
• Jyothy Labs –Eliminated as promoters have pledged their holding. ROE 16.6% AND ROCE 16.91% is very
less compared to peers. Peer Companies have >20% <60%
• Maruti Suzuki Ltd-There is drastic reduction in cash flow from operating activity.Mar 18 Rs.11788 crs and
Mar 19 Rs.6601. crs.Intense competition of automobile sector.
• Bombay Dyeing and Manufacturing Ltd –D/E @ 21.50 which is too high-eliminated
• ITC Ltd-Stock price at a stagnating price for the past four years. Market cap high. ROCE on a declining trend
over the past 10 years. Data Mar2008-40% Mar 2013-51% Mar2019-35%.Promoter holding at 0%-
shareholding consists of institutions and non institutions only-eliminated as preference given to stocks of
companies with strong individual promoters backing available in shortlisted list.
 Hero Motor Corp-Promoter Holding change % -34.63% It is better to watch the company for a few years
and then invest. All other parameters good.Therefore ranking not among top 5.
• Kokuyo-Camlin Ltd-Stock prices on a declining trend for the past one year.Company has a low return on
equity of 3.91% for last 3 years.ROCE % is low when compared to peer companies.
 As the data analysis of Banks ,Financial Institutions and Insurance Companies are different
SBI,ICICI Bank,HDFC Bank and LIC not selected in the final portfolio. Eliminated
 Eid Parry India Ltd-There is a declining trend in sales for the past three years.ROCE is low when
compared to peer companies. There is steady decline in operating profit which is not healthy.
Declining trend in the cash flow from operating activity. Eliminated
 Tata Chemicals Ltd-Steep decline in EPS from Mar18-Mar 19.promoter holding low.
 Dabur India Ltd-Tax rate low. As statutory payments are an important criteria when considering
the financial health of company for long tem investment, it is eliminated from top 5 list. But all
other parameters good ROCE,D/E, NPM, Op profit, EPS.ROCE on a declining trend past few years.
 GSK- cash from operating income declining, Other income on a higher side and detailed analysis
not done for other income.ROCE % declining from Mar 14-Mar 19.But all other parameters good.
Selection Criteria
BATA INDIA LTD
Co debt free, promoter holding 52.96%.EPS 4.62 to 25.60 in ten years
ROCE % highest among peer companies.
Cash from operating activities –continuous growth yoy
ROCE % stable
Company with strong promoter background and management.
Global product-presence in 70 countries
Brand image
Rising middle class population which is brand conscious.

Compounded Sales Compounded Profit

Return on Equity Growth Growth
10 Years: 20.07% 10 Years: 11.50% 10 Years: 18.84%
5 Years: 17.49% 5 Years: 7.25% 5 Years: 10.65%
3 Years: 17.00% 3 Years: 6.56% 3 Years: 25.05%
Last Year: 20.54% TTM: 11.27% TTM: 49.07%
• NESTLE INDIA LTD
• Company is virtually debt free.
• Company has a good return on equity (ROE) track record: 3 Years ROE 38.60%
• Company has been maintaining a healthy dividend payout of 65.78%
• Highest ROCE % among the peers.
• Promoter holding 62.76%.
• ROE % and healthy dividend pay-out
• Company is coming out with new products,innovating to capture new market segments.
• Brand image
• Major fund houses invested in the stock.
• Following all accounting and disclosure practices-timely results.
• TTK PRESTIGE LTD
• Strong family business group.
• Company has reduced debt.
• Company is virtually debt free. D/E .0.08
• Company has been maintaining a healthy dividend payout of 17.36%
• ROCE % good –moderate among peers
• EPS 7.96 to 138.61 in a span of 10years
• Promoter holding 70.41%
• Brand image
• Marketing of product good
• Diversification to new segments and target market
• Rising middle class and upper middle class attracted to brand image.
• Pricing higher.
• Investor can invest based on good financials and strengths of company.
• COLGATE PALMOLIVE LTD
• Company is virtually debt free.
• Company has a good return on equity (ROE) track record: 3 Years ROE 49.89%
• Company has been maintaining a healthy dividend payout of 74.90%
• Steady increase in cash from operating activity
• Promoter holding @ 51%
• ROCE % @ 73%
• American based company. Indian subsidiary a leading company in oral care products.
• Peer companies are Gillette India ltd & P & G.
• Steady growth in operating profit.
• Strong management and following all disclosures and accounting practices.

Compounded Profit Compounded Sales Growth

Return on Equity Growth
10 Years: 10.17%
10 Years: 70.92% 10 Years: 10.22%
5 Years: 56.50% 5 Years: 8.96% 5 Years: 4.51%

3 Years: 49.89% 3 Years: 7.78% 3 Years: 4.88%

Last Year: 50.87% TTM: 3.95% TTM: 5.99%
• V GUARD INDUSTRIES LTD
• Company is virtually debt free.
• Company has been maintaining a healthy dividend payout of 21.19%
• Promoter Holding 64.10%
• Kerala based company ,so well aware about the strong management and promoters.
• Operating profit growth –Continuous YOY growth.
• EPS also on positive trend.
• ROCE % stable
• Strong promoter and entrepreneur
• Diversifies into various products yoy
• Captured new markets and market segments.
Compounded Sales Compounded Profit Return on Equity
Growth Growth
10 Years: 22.76%
10 Years: 23.89% 10 Years: 25.31%
5 Years: 22.04%
5 Years: 11.26% 5 Years: 18.77%
3 Years: 11.63% 3 Years: 21.45%
3 Years: 14.06%
TTM: 10.22% TTM: 27.27% Last Year: 20.07%
• PIDILITE INDUSTRIES LTD
• Promoter Holding @ 69.75%
• Pidilite Industries is engaged in manufactures/provides Adhesives & Sealants, Construction
Chemicals/ Paint Chemicals, Art & Craft Materials.
• Strong Brand image and Global presence.
• ROCE % highest among peer companies.
• Founder highly regarded entrepreneur with strong ethics and values and family involvement high.
• Steadily increasing operating profits yoy.
• PEG Ratio @ 4.39

Return on Equity Compounded Sales Growth Compounded Profit Growth

10 Years: 27.31% 10 Years: 13.55% 10 Years: 23.75%
5 Years: 27.10% 5 Years: 10.57% 5 Years: 16.09%
3 Years: 26.42% 3 Years: 9.71% 3 Years: 5.34%
Last Year: 24.31% TTM: 13.60% TTM: 0.47%
• GILLETTE INDIA LTD
• Subsidiary of foreign company
• Strong promoter holding 75%
• D/E Ratio zero
• Company is virtually debt free.
• Company has a good return on equity (ROE) track record: 3 Years ROE 32.60%
• Company has been maintaining a healthy dividend payout of 101.35%
• Steady increase in EPS for 10 years
• Strong company with good accounting practices and disclosure norms.
• Rural and semi urban market preferring and purchasing the product thereby increasing sales .
• Catering to various markets.

Compounded Profit
Growth Compounded Sales Growth Return on Equity
10 Years: 7.93% 10 Years: 11.04% 10 Years: 22.68%
5 Years: 21.52% 5 Years: 3.27% 5 Years: 26.61%
3 Years: 9.75% 3 Years: -3.73% 3 Years: 32.60%
TTM: 10.42% TTM: 11.02% Last Year: 38.92%