5 largecap stocks with right mix of RoE & ROCE: There are two kinds of risk in equity markets, first the overall market or asset class risk. Second is individual risk. First risk is not under control of anyone, because it can hit the market due to any reason, right from any geopolitical uncertainty to any monetary event in any part of the world. Probably the first kind of risk got played recently with the flip flop of the US and development in the middle east. The second risk which is individual risk is about the choice of the stock which one buys. In equities after a point of time it is more important to manage individual risk than to take risk. If one looks at India, it could not have been better. All estimates indicate continued strong GDP growth. No sharp rise in oil prices despite all the tension in the middle east. and clear indications from RBI sooner than later interest rate might come down. So while macros are bullish and could not get better, it is time to spend some time in understanding what stocks are you buying and why that stock at this point of time only. The reason, in equities after a point of time it is more important to manage risk than to take risk. In equities the risk is more in the short term, over longer term, it is not very high. One way to manage risk is that when valuations are high, move to companies which have strong and large balance sheets and have seen many economic cycles and have survived the slowdowns in the past. Everything is dependent on the underlying business and every industry has a different normal range. But in all cases, it becomes extremely important to look at how efficiently the management uses capital that it has been able to raise at various points of time so that shareholder returns are maximized. In April 2024, a catch up trade took place in large cap stocks space, as some of them witnessed a sharp run up. Now in the last one week there has been a fall which has been largely led by large cap stocks which form part of Nifty. But the others have not seen much decline, because they probably do not form part of overseas. Large Cap Stocks with Net Margin & RoE May 11, 2024 Company Name Avg Score Reco Analyst Count Upside Potential % PI Industries 10 Buy 25 60.0 LIC Housing Finance 10 Buy 28 27.7 Bank of Baroda 10 Buy 27 23.6 Tata Consultancy Services 10 Hold 42 23.0 Canara Bank 10 Buy 15 22.2 Calculated from highest price target given by analysts source: et
May 12 2024, 08:30
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