Time was when these companies had the entire world at their feet; but now, they are struggling even to hold their own in these trying times. Read about 10 such companies that are struggling to maintain even positive earnings growth in the latest issue of Wealth Insight. And find out what you should do if they find a mention in your portfolio.
These are industry titans. Well known, well respected. Yet, little known is the fact that their earnings have seen zero growth in the last five years. Also featured are some of the most promising companies. Some like Punj Lloyd were tagged as the next L&T. They are down and out too.
The Wealth Insight cover story does not feature the usual suspects the Kingfishers, the Aban Lloyds and the Suzlons they are stories we already know about. We have featured some of the leading companies in large and niche segments. Even though these companies have recorded positive topline growth, when it comes down to earnings, not one of them has seen any growth. Earnings remain at or below those levels seen five years earlier.
"You only find out who is swimming naked when the tide goes out" - Warren Buffett
What went wrong for these industry leaders?
Some took on more projects than they could deliver. Others took the acquisition route a sure shot ticket to faster growth. The emboldened markets in the height of the bull-run cheered. Stock prices jumped higher. Earnings estimates were promptly pencilled higher and fair prices moved up in DCF calculations done in Microsoft Excel. Buy was the call for all these companies. Valuations were justified even at record highs. The party would never end, it seemed.
Yet, when the markets collapsed, these companies found themselves caught on the flip side of aggressive growth mostly fuelled by obscene amounts of debt. The cheering crowds are now long gone. Many of these now have to deal with bankers knocking on their doors. Some have restructured their debts, others are still grasping for ways. Buffett put it best when he said you only find out who is swimming naked when the tide goes out. A warning call to all?. Subscribe Wealth Insight now, to know which are these companies.