The markets have touched new peaks in recent weeks and at 18.5, the Sensex PE is at a two year high, which has automatically resulted in several companies also trading at their record high levels. Having arrived at the list of six stocks that won't go wrong on qualitative basis, we looked for stocks that would pass the test of times on quantitative parameters. Yes, the present times are challenging for value investors, so, we refined the idea based on fundamentals.
As a first step, we extracted only those companies which have consistently grown their revenue, operating profits and net profit in the last six years without a single year of fall. Next, to keep check on the efficiency we also checked the return on net worth and added a filter to check that this should not be more than 20 per cent in the six year period. To further ensure quality stocks, we added a clause that the growth in these companies should have come up with the backing of cash. Hence, companies with positive cash from operations were only considered. With this filter, we dropped those companies with debt to equity more than 1 to stay off overleveraged companies. Lastly, to ensure the stocks are attractive in the current market, we short-listed companies that have their price to earnings below their five year median to arrive at seven companies in all.
| Company Name | Industry | Market Cap (₹cr) | Revenue (₹cr) | Profit (₹cr) | Average RoE (%) | TTM (PE) | Median (PE) |
| Gujarat Gas Company | Industrial Gases | 3462 | 3113 | 371 | 29.8 | 14.1 | 16.4 |
| Navneet Education | Printing And Publishing | 1334 | 837 | 110 | 23.9 | 13.1 | 15 |
| Infosys | IT - Software | 1,89,153 | 47712 | 10050 | 31.5 | 18 | 20.4 |
| Titan Company | Diamond & Jewellery | 22621 | 10621 | 720 | 41 | 31.7 | 35.7 |
| Nestle India | Consumer Food | 46231 | 9062 | 1117 | 103.4 | 41.1 | 43.2 |
| Lupin | Pharmaceuticals | 42623 | 10572 | 1721 | 32.4 | 22.7 | 23.7 |
| Emami | FMCG | 10088 | 1826 | 385 | 36.3 | 28.6 | 28.9 |
To leave you with a longer wish list, we have also listed 14 companies that passed through all the tests, but are not as attractively priced because their current PE is more than their five year average PE. Prudent investors can keep these companies on their watch-list as they can qualify to be future investment options, whenever they are available at lower valuations. Use a judicious mix of qualitative factors when investing in this list that has passed stringent quantitative filters.
| Company Name | Industry | Market Cap (₹cr) | Revenue (₹cr) | Profit (₹cr) | Average RoE (%) | TTM (PE) | Median (PE) |
| TCS | IT - Software | 416337 | 76688 | 17580 | 41.9 | 23.5 | 22.8 |
| Wipro | IT - Software | 140078 | 41657 | 7185 | 27.2 | 19.5 | 18.7 |
| ITC | Tobacco | 283432 | 31918 | 8435 | 31.3 | 33.3 | 31.3 |
| CARE | Ratings | 2117 | 217 | 123 | 38.5 | 18.9 | 17.2 |
| CRISIL | Ratings | 8266 | 1111 | 298 | 46.8 | 30.6 | 26.2 |
| Muthoot Finance | NBFC | 5899 | 5151 | 819 | 39.9 | 8.1 | 6.8 |
| GSK Consumer | FMCG | 18189 | 3604 | 503 | 30.5 | 36.5 | 30.3 |
| Page Industries | Textile | 7529 | 1103 | 142 | 48 | 45 | 33.6 |
| Dabur India | FMCG | 31301 | 6835 | 884 | 54.6 | 48.5 | 31.4 |
| Kaveri Seed | Agriculture | 4122 | 1046 | 217 | 27.4 | 19.6 | 11.7 |
| Dhanuka Agritech | Pesticides | 1314 | 718 | 89 | 35.8 | 14.7 | 8.6 |
| Zensar Technologies | IT - Software | 1727 | 2221 | 221 | 31.9 | 9.9 | 5.7 |
| Godrej Consumer | FMCG | 25990 | 7372 | 907 | 50 | 52.1 | 28.8 |
| Gruh Finance | Housing Finance | 4936 | 805 | 166 | 29.3 | 33.7 | 18.4 |
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
