Stock Shastra

ITC Ltd. is the largest tobacco company in India with close to 80% market share (value) in cigarettes. The inelastic nature of demand for cigarettes coupled with government regulation has enabled ITC to become a virtual monopoly and given it a moat (a strong competitive advantage). This has reflected in its financials which have been consistently high and made it one of the top performers in the FMCG sector.

The company has also diversified into other FMCG categories and businesses like Hotels and Paper and Agribusiness which could be the growth drivers in the future. However, many of these businesses are yet to turn profitable amidst intense competition in respective categories.

Considering this, should you invest in ITC Ltd.?

Shriram Transport Finance Company Ltd. (STFC Ltd.) is a major player in the pre-owned commercial vehicle (CV) Finance segment. It has over 36000 Cr. asset under management and finances almost 90% of India’s truck owners.

With a huge experience of more than 3 decades, it has developed strong competencies in the areas of loan origination, valuation of pre-owned trucks and collection. However, the increasing inflation and increasing interest rate scenario are a huge threat to the company’s margins. Also, going forward, interest rates are not expected to relax soon.

Looking at this, should you invest in STFC Ltd.?

ABG Shipyard is the largest private sector shipbuilder in India and is also engaged in ship repairing. It was recently awarded the industrial license for design and construction of Indian Defence ships from the Ministry of Commerce and Industry. With this license in hand, ABG is looking all set to tap the opportunity for building ships for Indian Defence.

The financials of ABG Shipyard have been consistent over the ten year period. However, the debt of the company, which has been on a higher side, has reduced its profitability.

Considering this, should one invest in ABG Shipyard?

NTPC Limited is India’s largest state-owned power generation company. It contributes approximately 29% of the country’s annual power generation and has almost 1/5th of India’s total installed capacity. It has maintained an excellent track record in terms of efficiency.

But, the company’s financial performance over the last 10 years has not been very impressive. Though it managed to grow its Sales at a good rate over the years, the same growth has not reflected in its earnings. In the last financial year, especially, the profits took a major hit due to high fuel costs. However, in future the company seems poised for a good growth.

So, considering all these points, should you invest in this Maharatna power company?

Oil India Ltd, a Navratna Company, is the 2nd largest oil and natural gas company in India. It is engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of LPG in India.

The company’s financial performance has been inconsistent over the years on account of its sensitivity to regulatory changes, fluctuations in crude oil prices and exchange rates. However, the strength of a virtually debt-free balance sheet has helped the management manage funds efficiently and post impressive returns on invested capital. So, considering all these factors, should you invest in Oil India?