Are consistent wealth creators cheap?

Many investors who haven’t seen the 2008-9 GFC crisis are thinking is the current CORONA virus crisis more severe than the previous one? Is it good time to do some bottom fishing in stock markets?

I did an academic exercise to understand how some of India’s most consistent wealth creators are faring vis a vis 2008-09. First I headed to wealth creation studies done by Motilal Oswal to shortlist India’s most consistent stock market wealth creators. Here is a snapshot from report below

Motilal Oswal exhibit of consistent wealth creators from five studies, split into consumer-facing (Asian Paints, Titan, Kotak, HDFC Bank) and others

Of the above list, I picked top 10 in terms of number of times they appeared in wealth creation studies in the last 5 years and then segregated them in financial services and non-financial services category as below

Non Financials

Bosch Shree Cements Cummins Dabur Titan Sunpharma Asian Paints

Financials Axis Kotak HDFC

Next using Screener.in captured financial information for all of the above companies to derive their 2008-9 PE and PB (For Financial Services business) this will help to run a comparison with their current valuations

Here are the results

Table of 10 consistent wealth creators comparing P/E or P/B in 2008, 2009 and March 2020, with market caps; Bosch, Axis and HDFC flagged for research

Many of the consistent compounders are way off their 2008-09 valuations (still richly valued). The financial services are better-priced vis a vis non-financial services company

The google sheet where this information is collated is available here

I will be updating this sheet frequently to make is more automatic as far too many numbers are currently manually derived

Personally, if I am adding any of the above companies to the scorecard, there will be email updates to premium subscribers

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