NEWS
COLUMNISTS
STOCKS
MUTUAL FUNDS
TAX
INTERVIEW
REAL ESTATE
GOLD
CURRENCY

India's Top 50 companies by EPS

You have been reading about how things have been looking up for Corporate India. Everybody is talking about an industrial and economic recovery that is quietly taking place. In the latest quarter of this financial year (July to September), most companies have been reporting better performances.

But what do these quarterly results actually mean to you, the individual investor? The Rediff Money Channel goes beyond mere audited financial results to look at informative trends. By examining each criteria that is of value to shareholders- earning per share, market capitalisation, net profit, highest sales, operating profit margins, etc- theMoney Channel presents data you can use.

In the first part of our series, we present companies that gave you the best Earnings Per Share.

The most widely used term in the stock markets is the Earnings Per Share better known as EPS. The EPS is the earnings of a company at any point of time divided by the number of equity shares. This is one of the most important ratios that you should look at before arriving at an investment decision. The EPS is a good indicator of the kind of money you will receive from the company either in the form of dividends or bonus shares.

EPS helps in arriving at a compartive investment decision among various stocks, though it is not the sole criteria for stock picking. The current market price divided by the latest EPS gives the Price to Earnings (P/E) ratio. For example if the current market price of Inofsys is Rs 8, 700 and its EPS is 79.4, then its P/E ratio is 109 times its latest discounting. However, in the same sector, Wipro or Satyam are quoting at much lower P/E ratios. This indicates the market expectation of the kind of growth that Infosys can post.

Most importantly this list contains EPS that has been adjusted for differences in paid value of shares. After all, it makes little sense to compare the EPS of a company that has a paid up value of Rs 2 per share to one with Rs 10 per share.

For the second quarter (July to September 1999), the Money Channel presents an exclusive list of India's top 50 EPS rated companies. The list has a lot of surprises.

Topping the EPS Club is a dealer of Telco vehicles in Mumbai, United Motors India Ltd. The reason why it is numero uno is because of its small equity base--a closely held equity of Rs.80 lakhs.

The number two is VSNLwhich maintained it's rank. But its profitability has taken a severe beating since the reduction in international call rates has not yet been compensated by an increase in traffic. So despite having a high EPS, VSNL's net profit is lower than in the corresponding period previous year. That's not good news for its shareholders, who happen to be primarily FIs and the Government of India. On the other hand, another PSU, Engineers India Ltd, has scored better. It has consistently improved its performance and has also announced a bonus in the ratio of 2:1.

Kirloskar Oil Engines (KOEL), Machino Plastics (MPL) and Knoll Pharma (KPL) appear in the top 10 largely due to the extra ordinary income. KOEL has earned Rs 63 crores, thanks to a part sale of its holding in Cummins India to the foreign partner.

MPL has earned Rs 8.7 crs (PAT 10.2 crs.) from part sale of its equity in its Joint Venture, Machino Montell India Ltd.

Knoll Pharma has earned Rs 29.9 crore from part sale of its Sion property.

If you exclude these companies from the top 10 then the companies investors should watch out for are the likes of Hindalco, Madras Cement and Electro Steel Castings. These are amongst the best in their industry.

For those who thought software is the flavour of the day, there are some lessons. Only Infosys appears in the top 10. Is there a clue here of why some people say the infotech bubble may burst soon?

Note:

1. The EPS has been adjusted for differences in paid up value per share.
2. EPS are annualised.
3. OINC- Other Income
4. TINC- Total Income
5. PAT- Profit After Tax (Net Profit)
6. LAT Price- Latest Price
7. EPS- Earning Per Share
8. PE- Price to Earnings per share
9. MKTCAP- Market Capitalisation
10. ADJEPS- Adjusted Earnings Per Share

Stocks

Tell us what you think of this feature