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Victims of a Battered Market

2008 was a dismal year for all companies, but some ended it in red despite being the earning leaders

A year full of negative news about the Indian stock markets is perhaps how one would remember 2008. Day in and day out, we got to hear snippets about which company's stock fell the most. While the reasons behind the plummeting stocks prices are a plenty, we decided to take a look at the stocks that were a victim of the negative vibes flowing through the markets. These are the companies that actually did well, and yet, their stocks prices were dragged down by unfavourable sentiments.

For this, we took the BSE listed companies and introduced a set of criteria. Based on that we concluded on the eight companies that ended 2008 in the red despite having performed well.

Tata Chemicals
Stagnant regular earnings and high borrowing dragged the stock price of this company. Its recent acquisition of General Chemical Industrial Products of US also stretched its balance sheet with a 160 per cent rise in borrowings. Currently, the stock is trading at a trailing PE of 3.84 at a price which is less than the book value of the company. Considering the size of the business, the prices have already factored the gloomy outlook of the company.

Sesa Goa
This company is involved in mining iron ore. With iron ore prices having fallen by 50 per cent in December 2008 quarter, the sales will decline further due to falling demand. Moreover, looking at its peer-set, it needs to improve upon its profit margin to deserve its current valuation.

Akruti City
The only player standing tall in the crumbling real estate sector, this may not be much of a surprise package. Unlike much of its peers, the company's strength lies in slum rehabilitation. This bottom of the pyramid business strategy has enabled the company to acquire land at lower rates than its competitors. Trading with a trailing PE of 7.85, valuation of the stock is in line with the market.

Titan Industries
This JV between the Tatas and the Tamil Nadu Industrial Development Corporation is a market leader in watches and branded jewellery. With revenues of over Rs 3,000 crore, the company enjoys an enviable position at the top. Despite 40 per cent fall in prices, it still commands a PE of 19.82 and a premium of 7.18 times the book value, highest in our list.

United Phosphorus
This an agri-chemical company creating inputs for fertilizers and pesticides. In an expansion mode, it plans are to get a foothold in the European market through acquisition. It has already acquired a Netherlands-based company, Avanta, a leading supplier in seed and seed technology. Trading at a premium of 2.23 times to its book value, the stock is one to watch out for.

Crisil
This S&P's affiliate is the dominant Indian rating agency. Despite a hefty profit margin of over 30 per cent and good growth outlook, the stock currently trades at a trailing PE of 12.54. It remains a growth business with a stable outlook for its mainstay rating business and a diversified revenue stream from research and risk advisory offerings.

Tata Tea
A true Indian MNC in the global branded tea market, the company has transformed totally from a tea plantation company into a branded tea company. The company is the largest player globally in its area of business. With a dividend yield of 5.92 per cent, the stock is presently trading at a premium of 190 per cent to its book value. Considering the current slowdown in the tea prices, the company is in for some improvement in its profit margins.

Coromandel Fertilisers
The second agri-chemical company on our list, this one's a fertilizer company. In fact, it is one of the largest fertilizer companies in India. But being associated with agriculture, its fate is very much linked to external factors such as government policies, monsoon, etc. Considering these factors the company is trading in a very attractive range of Rs 90, which is very close to its accounting value of Rs 83.



The VICTIMS of 2008
Company  Industry  Price (Rs)  P/E Ratio   P/B Ratio  Earnings Growth (%)  YTD (%)  Dividend Yield (%)  PAT* (Rs cr)  Book Value (Rs)
Tata Chemicals Soda Ash 156.9 3.84 0.96 132.99 -61.97 5.74 216 164.7
Sesa Goa Minerals 84.15 2.96 1.7 285.83 -55.92 2.67 306 47.53
Akruti City Real Estate 628.6 7.85 3.65 170.58 -47.73 0.4 192 171.09
Titan Industries Gems & Jewellery 940.65 19.82 7.18 101.49 -39.79 0.85 87 125.15
United Phosphorus Pesticides 109.5 27.1 2.23 408.81 -37.21 0.91 69 46.14
Crisil Rating agency 2321.6 12.54 4.94 144.97 -36.76 2.58 45 482.63
Tata Tea Tea 591.7 22.6 1.91 217.43 -34.67 5.92 44 301.37
Coromandel Fertilisers Fertilisers 91.15 4.48 1.08 156.35 -28.06 3.84 182 83.68
*As of September 2008
All data are of December 24, 2008