Intrinsic Value of 20 Indian Stocks – HDFC Bank, SBI, Reliance Industries, Adani Ports, Tata Motors, Ashok Leyland, Infosys, TCS, Sun Pharma, Dr. Reddy, Meghmani Organics, Jiya Eco, Wonderla Holidays, PSP Projects, Associated Alcohol, SRG Housing, CanFin Housing, Maithan Alloys, Bhageria Industries, Caplin Point, Veto Switchgears, KEI Industries, Gulf Lubricants, Acrysil, BCL Industries, Hester Bioscience, Aster DM & More

One should not take decision based on Price.  It should be based on Price & Growth aspects.  That is the reason Big Investors like Warren Buffet relies on Intrinsic Value & Fair Value.

Intrinsic Value is the present value of the company after applying the past growth rate for the future next 10 years.

Fair Value is discount of 30% on Intrinsic Value.

Rule of Thumb

  • If the CMP is less than Fair Value then BUY.
  • If the CMP is greater than Fair Value & less than Intrinsic Value then HOLD.
  • If the CMP is greater than Intrinsic Value then SELL

Intrinsic Value & Fair Value of Largecaps

Company CMP Intrinsic Value Fair Value Recommendation
HDFC Bank 1289 971 680 Sell
SBI 332 187 131 Sell
Reliance Industries 1546 1747 1223 Hold
Adani Ports 368 681 477 Buy
Tata Motors 175 Loss Loss Sell
Ashok Leyland 80 60 42 Sell
Infosys 733 490 343 Sell
TCS 2216 1865 1306 Sell
Sun Pharmaceuticals 430 678 475 Buy
Dr. Reddy’s Laboratories 2896 8844 6191 Buy

Intrinsic Value & Fair Value of Smallcaps & Midcaps


Company CMP Intrinsic Value Fair Value Recommendation
Meghmani Organics 56.65 539.32 377.53 Buy
Assoc.Alcohols 185.6 781.22 546.86 Buy
PSP Projects 495.55 1682 1177.4 Buy
KEI Inds. 474.95 1375.16 962.61 Buy
Gulf Oil Lubricants 812.1 1197.69 838.38 Buy
Tata Elxsi 827.85 277.79 194.46 Sell
Automotive Axles 819.6 1304.42 913.09 Buy
Acrysil 95.2 334.84 234.39 Buy
BCL Industries 74.45 1231.71 862.2 Buy
Bharat Parenterals 168 4183.17 2928.22 Buy
Sandhar Tech 250.1 372.92 261.05 Buy
Aster DM Health 162.7 131.47 92.03 Sell
Hester Bios 1452.1 3100.36 2170.25 Buy
Bella Casa 119.75 357.1 249.97 Buy
Bhageria Indust. 116.85 605.03 423.52 Buy
SRG Housing 83.1 1128.7 790.09 Buy
Can Fin Homes 395.35 354.21 247.95 Sell
Jiya Eco-Product 26.65 730.91 511.64 Buy
Veto Switchgears 36.55 -266.29 -186.4 Hold
Caplin Point Lab 294.6 938.35 656.85 Buy
Maithan Alloys 464.85 -1193.73 -835.61 Hold
Wonderla Holiday 246.9 595.92 417.15 Buy

Is Ashok Leyland a Multibagger Stock based on Warren Buffet Analysis?

Ashok Leyland Ltd.

NSE Code ASHOKLEY.NS
BSE Code 500477
URL https://www.ashokleyland.com
CMP 88
Free Report Yes
Publish Date Jun-14-2019

In this post we would like to Explore the Multibagger Stock Potential of Ashok Leyland based on a blog reader request.

Ashok Leyland Multibagger Stock
Screener: https://www.screener.in/company/ASHOKLEY/

About Company

Ashok Leyland is an Indian automobile company headquartered in Chennai, India. It is owned by the Hinduja Group. Founded in 1948, it is the second largest commercial vehicle manufacturer in India and fourth largest manufacturer of buses in the world and 10th largest manufacturer of trucks globally.  Company is mainly into LCV & MCV business & also generates Revenue from Power Solutions, Aftermath Accessories, Defense Vehicles, Foundry Division too.  The company have plants across 10 locations in Tamil Nadu, Uttarkand, Rajasthan and Maharashtra.

Indian Commercial Vehicle Industry grew 23% past year & this growth is going to stay for next 5 years based on Government push on Infrastructure growth & New Roads.

Bharat Stage IV (BS-IV) emission norms is boosting the Sales of Ashok Leyland. Union Budget is in Favor of Infrastructure & Automobile Sector.

The company was able to generate 15% growth in M&HCV segment i the past 5 years as displayed below.  IMF projecting India GDP growth of 7% should benefit the company.

Ashok Leyland Multibagger Stock
Ashok Leyland Multibagger Stock

Positive Factors

Here are the positive factors regarding Ashok Leyland.

  • Past year company launched 17 new products.  This will reflect in future sales.
  • Company is entering into Electrical Segments.  Aligned with Government initiatives this will support future growth
  • The LCV business recorded 37% growth and is growing 20% CAGR
  • The Defense business also grew by 32% with a 20% CAGR
  •  Credit Rating of the company was Improved after 18 years as AA+ rating
  •  Company has Unique iEGR innovation regarding BS IV standards.   This will give edge against competitors
  •  Company crossed 100 Thousand Unit Sales in Medium & Heavy Vehicle Segment, and 43 Thousand Unit Sales in LMV segment.
  •  Crude Oil Prices being supportive to Company operations.
  •  Government push on Hybrid & Electrical Vehicles will be Future Determination of Growth for Ashok Leyland.
  • Advantage of Price Crash will give Margin of Safety at Current Price.  There is a 50% discount to Fifty Two Week High Price on the company
  • Ashok Leyland have a Good Brand Reputation & Hence Low Risk Investors prefer to hold to this company
  • High Dividend Yield of 3%

Concern Factors

Here are the concern factors regarding Ashok Leyland.

  • High Capitalization  of 25000 Crore.  To become a 10-bagger it will be 2.5 Lakh Crore Capitalization which is too high to achieve.
  • Limited expected Multibagger Returns around 300%.
  • Pledged Shares exists which is a Red-mark on the company.  However the promoters are buying back more shares too.
  • High capex required for expansions.
  • No high massive expansion plans through new factory Or new market penetration.
  • Company is more dependable on India automobile industry
  • Company have only 5% share in the Indian Bus Market
  • BS VI norms becoming mandatory from 2020 will be a Challenge for the company
  • Threat of Low Sale Continuity in Auto-Sectors can adversely affect the Profitability of the company & thereby Price too Link

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization 25000 Crore (Largecap) – already a Blue Chip level growth happened yellow
History of Consistently Increasing Sales, Earnings & Cash Flow Yes. green
Durable Competitive Advantage Moderate. green
Future Growth Drivers / Sector Growth Yes.

(Electrical Segment)

green
Conservative Debt (long term debt < 3 Net Profit) Yes green
Debt Equity Ratio, Current Ratio Debt is Almost Zero.Current Ratio is 0.93 green
Return on Equity must be Above Average 23% superb
Low CAPEX required to maintain current operations No. yellow
Inventory Turnover Ratio, Debtor Days, ROCE Good.  Debtor Days reduced to 9 days.  ROCE is 28% superb
Management is holding / buying the stock Yes

*But pledging exists

red
Market Price < Intrinsic Value Yes. Intrinsic Value at Rs. 200 which gives 50% Margin of Safety.

See Futurecaps specific Intrinsic Value Calculator

green
Stock Price is consolidating (now) Yes green
Stock Price is growing in past years along with EPS growth Yes. green
Consolidated PE, PB Ratio, PEG Ratio PE 13 (okay)PB 3 (good)

PEG 0.23 (good)

yellow
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: Negative

Net Profit %: Yes

green
Paying Dividends, Tax Yes green
EPS Growth Rate 15% above yellow
Jump in Trailing Result EPS Yes green
Jump in Quarterly Result EPS Yes

But, March q-o-q shows decline in profits

yellow
Expected Gain in 5 Years 200-300% yellow
Price Movement Graph, 52 Week High & Low Okay green
Volume Analysis 88 Lakh

(high liquidity / stable growth expected)

yellow
Power of Brand Yes green
Corporate Governance, Reputation of Leaders Yes green
Fraud reported No. green

Summary

Based on the above analysis I would like to say that the Ashok Leyland possess Multibagger Stock properties and one can Invest in 2019.  However one should not expect high compounded returns from this stock.  It can be considered as Low Risk Low Returns investment.

image

Premium Services

This stock analysis is part of our Free Services where Tracking & Updates will Not be provided.  We encourage Serious Investors to Buy our Premium Service where our Adviser Team is investing along with Tracking & Updates.

Free Multibagger Stocks

You can find More Free Multibagger Stocks here.

https://futurecapsblog.wordpress.com/free-multibaggers-2019/

Disclaimer Futurecaps is an independent equity research team. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advice.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

 

Blog at WordPress.com.

Up ↑