This is what blue chips can do to your wealth!
Most industry leaders, which are part of equity benchmarks Sensex and Nifty, have given handsome returns to investors over the past 10 years.
Check this: Five companies from the Nifty50 index have swelled investor money up to 70 times in last 10 years since November 2007.
Royal Enfield manufacturer Eicher MotorsBSE 0.56 % has emerged the biggest wealth creator. An investment of Rs 10,000 in Eicher Motors on November 21, 2007 would have become Rs 6,92,951 on November 21, 2017. That, without taking into account the dividend paid by it through these years.
Eicher stock price jumped from Rs 439 to Rs 30,420 during this period.
Is it worth buying at present levels?
EdelweissBSE 2.52 % Securities in a research note said the Eicher Motors management has indicated that Royal Enfield’s (RE) order intake continues to be higher than billing and average waiting period for Classic 350 is around 1.5-2 months.
New 650cc twin motorcycles (showcased at EICMA, Milan) — Interceptor and Continental — have been built on an all-new platform. Commercial launch is expected in April 2018 (first across Europe, followed by India), it said.
Edelweiss believes that scale benefits will support margins of the auto firm and maintains a ‘buy’ rating with a target price of Rs 34,945.
The other big gainer on the list is Bajaj FinanceBSE 1.22 %. Shares of the NBFC firm converted Rs 10,000 into Rs 5,63,083, as the stock surged from Rs 32.14 on November 21, 2007 to Rs 1,809.75 on November 21, 2017.
IndusIndBSE 2.11 % Bank, Aurobindo PharmaBSE 2.69 % and Asian paintsBSE -0.10 % converted an investment of Rs 10,000 into Rs 1,68,569, Rs 1,36,817 and Rs 1,15,499, respectively, in 10 years.
Shares of Maruti SuzukiBSE 0.07 %, BPCLBSE 0.92 %, LupinBSE 0.30 %, HPCLBSE 1.35 %, YES BankBSE 0.14 %, HULBSE -0.19 %, HDFC BankBSE 0.24 %, HCL TechnologiesBSE 0.61 %, TCSBSE 0.22 % and Hero MotoCorpBSE -0.66 % swelled five times to turn Rs 10,000 into over Rs 50,000 in last 10 years. Shares of these companies spurted between 400-800 per cent since November 2007.
Arihant Capital Markets in a research report said strong product portfolio and favourable interest rates should benefit Maruti. Uncertainty on foreign exchange and commodity prices is a concern.
“We value the stock at 25.5 times FY19EPS of Rs 340, and assign a price target of Rs 8,670 with a ‘hold’ rating,” it said.
Emkay Global Financial ServicesBSE 9.99 % has an ‘accumulate’ rating on BPCL with a target price of Rs 529.
Among others, Sun PharmaBSE 0.70 %, UPL, Bosch, UltraTech CementBSE 0.95 %, ITCBSE 0.85 %, M&M and Dr Reddy’s Labs also multiplied investor wealth by up to four times between November 2007 and now.
JM FinancialBSE 1.28 % has a ‘buy’ rating on Sun Pharma with a target price of Rs 590. For Sun Phama, margins seem to have troughed last quarter and are expected to improve going forward. The increasing profitability skew and sensitivity towards more stable branded generics business reduces its earnings volatility. Furthermore, an unchanged topline and margin guidance for FY18 implies a healthy exit run rate.
Regulatory clearance for the Halol facility remains a key near-term catalyst, while acceleration of launch momentum and successful commercialisation of the specialty pipeline will determine medium-to-long term earnings growth trajectory for Sun Pharma, the brokerage said.
Other stocks including Kotak Mahindra Bank, Zee EntertainmentBSE -0.07 %, CiplaBSE -0.46 %, HDFC, Tata MotorsBSE -0.27 %, IndianOil Corporation, Axis BankBSE 0.10 %, InfosysBSE 1.87 %, WiproBSE -0.29 % and GAILBSE 1.99 % have more than doubled over the past 10 years.
Tech MahindraBSE 0.89 % grew at a much slower pace, converting Rs 10,000 into just Rs 19,722. Others laggards include VedantaBSE -0.83 % (Rs 10,000 to Rs 18,819), Ambuja Cement (Rs 10,000 to Rs 17,842), State Bank of IndiaBSE -0.79 % (Rs 10,000 to Rs 16,251) and ICICI BankBSE -0.64 % (Rs 10,000 to Rs 15,902).
Hindalco, Power GridBSE 0.91 %, Reliance IndustriesBSE 0.46 %, Larsen & Toubro and Bharti AirtelBSE 0.05 % also failed to double investor money during the same period.
ONGC, Tata SteelBSE -0.49 % and NPTC were among the top wealth destroyers, having declined 9 per cent, 14 per cent and 24 per cent in last 10 years.