MUMBAI, INDIA: Based on the theme of companies which generate profits and cash on a sustainable basis, Ambit Capital has released a list of “Good & Clean4.0: Great 50” companies across sectors.
Those who have made it to the list include Oracle Financial Services, Tata Consultancy Services, Tech Mahindra, HCL Technologies along with Idea Cellular and Bharti Airtel.
The first four companies share an equal portfolio weight of 3.5 percent compared to 1.6 percent by Idea Cellular and Bharti Airtel.
The portfolio weight has been calculated on the basis sector weights with reference to BSE 200’s weights and selection of stocks. The great 50 stock lists have also been filtered through quantitative forensic accounting models and qualitative corporate governance filters.
As per the market (BSE200) weight, the IT sector weighed 10.1 against 2.5 by telecom sector. However, both the verticals enjoyed the “overweight” status, according to Ambit Capital’s report.
Moreover, the great 50 list is created on Ambit Capital’s greatness framework that takes into account how the companies have performed at different cycles starting with investments, conversion of investments to sales, pricing discipline, followed by balance sheet discipline, cash generation and back to investments.
TCS was top among the other IT companies with $ 46,833 million market capitalization with 57 percent price CAGR for 3 years period between FY2009-11. Oracle Financial Services followed TCS. HCL and Tech Mahindra’s market capitalizations stood at $6,781 million and $1,666 million respectively, while price CAGR of HCL was almost double of Tech Mahindra at 50 percent.
Though Oracle Financial Services’ market capitalization is low at $4,111 million its price CAGR is high at 42 percent.
While the tech firms showed strong numbers, it was not the case with those telecom firms. Idea Cellular’s market capitalization of $ 5,029 has been far below Bharti’s $22,799, however price CAGR for 3-year period for Idea is decent at 9 percent compared to Bharti’s negative 6 percent.
Do you agree that these companies are good and clean enough to become part of your investment portfolio that make them among the great 50?