India's most profitable companies methodology filters criteria ranking

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30 Wealth Insight June 2021
India’s most
profitable
companies

June 2021 Wealth Insight 31
By Danish Khanna & Rajan Gulati
T
he last one year has been
a particularly testing one
for the economy,
individuals and, of
course, companies. Due
to the outbreak of the pandemic –
the first wave last year and the
second wave this year – business
dynamics have changed like never
before. No wonder business
profitability has been impacted as
well. Many businesses, especially
those belonging to services, are still
struggling.
To be sure, there are many
outliers as well – companies that
actually gained during this phase.
Then there are those which
suffered due to the lockdown but
later bounced back sharply.
Further, there are some that were
unaffected. And what could have
captured all such names better
than our yearly Profit 100 coverage?
PROFIT 100 OR PROFIT 90?
When we started our search for
India’s 100 most profitable
companies based on not just
current numbers but also historical
data, well, we hoped we would find
100 names easily among the
companies that are more than `500
crore in market capitalisation. But
we soon realised, that won’t be the
case. In this list, you will find not
100 but only 90 names as only so
many companies were able to clear
our criteria.
This tells us a lot about the
damage caused by the pandemic,
which is not readily visible from
the financial performance of the
top companies. The last one year
has disrupted the business
dynamics so much that out of 985,
there aren’t even 100 companies
that could clear all our filters,
which assign more weight to the
latest numbers. That wasn’t so last
time when we did this story, though
that time our universe included
companies with a market cap of at
least `1,000 crore.
In some way, this is not very
surprising either. In good times,
maintaining profitability is not
difficult. It’s challenging times that
separate the men from the boys. So,
in these 90 companies, you will find
a rich universe to research further.
Do note that these companies are
not our recommendations.
Basic filters
z Market capitalisation of more
than `500 crore
z Should have a record for the last
10 years and profits in all of them
ROE filters
z Weighted average 10-year ROE
should be more than 15%
z ROE should be more than 15% in
at least six out of the last 10 years
z Current ROE should be equal to
or greater than 15
Profit-growth filters
z Year-on-year profit growth
should be more than 8% in at least
six out of the last 10 years
z Weighted average 10-year profit
growth should be over 8%
Hygiene filters
z Positive cash flow from
operations in eight out of the last
10 years
z Debt-to-equity ratio of less than
two times in at least eight out of
the last 10 years
z Interest-coverage ratio of more
than three times in eight out of the
last 10 years
Final-rank calculation
z Based on weighted average profit
growth, consistency in profit
growth and weighted average ROE.
Equal weights were assigned to
these three parameters.
For detailed methodology, see
the subsequent pages.
2,@-03;,9:

(YYP]PUNH[[OL7YVÄ[
I
n order to pick the Profit 100
companies, we focused not just
on profitability but also on the
reliability and durability of those
profits. That required us to use a
number of filters. Here they are in
detail.
MARKET CAPITALISATION OF MORE
THAN `500 CRORE: Due to
fewer disclosures,
substandard corporate
governance standards and lack of
transparency of smaller companies,
we restricted our analysis to
companies that have a market cap
of at least `500 crore.
LONG-TERM HORIZON: To ensure
analytical strength, we
removed companies that
didn’t have a 10-year record.
However, we included those
companies which were listed within
the last 10 years but have a track
record.
PROFITABILITY: Profits – the
lifeline of our cover story –
were the most important
criterion for our analysis. We
took into consideration companies
that have earned profits in all of
the last 10 years. Further, we zeroed
in on only those companies that
have maintained constant growth
of at least at 8 per cent in their
profitability over the years. Using
this criterion, we removed those
companies which are unable to pass
on their costs. Also, a company
earning similar profits year after
year may not create wealth for its
shareholders in the long run. As
many companies are yet to declare
their FY21 results, we have taken
trailing 12-month (TTM) profit
growth till December 2020 for the
latest year.
RETURN ON EQUITY (ROE): An
investor should prefer
investing in a company
with a high ROE as it shows
the company’s ability to deploy its
funds efficiently. To remove low-
ROE companies, we applied a
minimum threshold of ROE equal
to or more than 15 per cent. The
ROE for the current year has been
calculated by taking TTM earnings
as of December 2020 over total
equity as per the latest balance
sheet available.
EXCEPTIONALS: Many
companies report
exceptional incomes or
losses arising from asset
write-offs, litigation expenses or
disposal of assets. Some companies
report these items on a regular
basis. Such occurrences obscure the
true picture of a company’s
profitability. To avoid such cases, we
have removed companies which tend
to report huge exceptional items on
a regular basis. The companies
which had median exceptional items
of more than 10 per cent of their
profits in the last 10 years were not
covered in this list.
CONSISTENT PERFORMANCE:
Many companies are able to
deliver exceptional
performance in the short
term but cannot replicate it in the
long term and turn out to be wealth
destroyers for investors. To remove
companies with such exceptional
performance, we applied another
criterion: a minimum return on
equity of equal to or more than 15
per cent in at least six out of the
last 10 years. A similar criterion
was applied in the case of
profitability. Companies with year-
on-year profit growth of less than 8
per cent in six out of the 10 years
have been removed. However, we
gave a relaxation for four years to
adjust for cyclicality.
CASH FLOWS: In investing,
there is a popular saying:
turnover is vanity, profit
is sanity and cash is
reality. Many businesses have a
robust track record of profitability
but suffer from subdued operating
cash flows. Profits have no meaning
until they are converted into cash.
It is also considered a potential red
flag if a company earns handsome
profits but its cash flows are not in
order. We removed companies
having no positive cash flows in at
least eight years out of the last 10
years. We kept this criterion more
stringent than our return on equity
and profitability criteria, given the
fact that historically, the absence of
cash flows has translated into
potential corporate-governance
issues and subdued stock returns.
We excluded banking and financial
companies from these criteria as
cash flows are not relevant to them.
DEBT TO EQUITY: We removed
companies with debt-to-
equity of more than two
times in three or more
years over the last 10 years. Hence,
we filtered out companies which
are excessively dependent on
leverage for their healthy ROE or
profitability. We provided a
relaxation of two years to
incorporate companies which once
The methodology and the rationale for the filters used to find out India’s 100
most profitable companies

raised debt for heavy capital-
expenditure requirements but later
paid it off and generated wealth.
The debt-to-equity ratio for the
latest year has been calculated by
using the latest available balance
sheet. We also exempted financial
companies and those with financial
subsidiaries from this criterion.
INTEREST-COVERAGE RATIO:
Several companies have
low debts but still their
profits are not enough to
cover interest payments,
which leads to defaults,
specifically in a weak demand
environment. To overcome this
problem, we applied an additional
filter for interest-coverage ratio.
According to it, a company should
have an interest-coverage ratio of
over three times in at least eight
of the last 10 years.
DEVIATION IN PROFIT GROWTH:
After arriving at the final
list, we also evaluated
companies based on the
deviation of their profit growth
in comparison to the average
profit growth of the last 10 years.
We used the ‘coefficient of
variation’ as a measure to
calculate the deviation in profit
growth. It measures the standard
deviation (volatility) of the
company’s profit growth and
divides it with the average profit
growth. The lower the coefficient
of variation, the lower the
fluctuation in profits. Further, we
ranked the companies which
qualified our list based on this.
WEIGHTAGE: Companies may
have an extraordinary
phase of profitability,
which may last for some
years but may not sustain in the
long term. To weed out such
companies which may qualify
because of those extraordinary
years, we gave different weights to
all 10 years, with the recent years
carrying the more weights than
the older years. We then removed
companies with weighted average
profit growth and return on
equity of less than 15 per cent.
FINAL RANKING CRITERIA:
Then we ranked the list
of companies qualifying
all our criteria based on
three parameters: weighted
average profit growth, weighted
average ROE and coefficient of
variation of profit growth. Finally,
we ranked this list based on the
combined score of all three
parameters. And that’s how we
arrived at the Profit 100.
M-CAP (` CR): The total market value
of the company. It is calculated by
multiplying the total outstanding
shares and the current market
price of the company.
WEIGHTED AVERAGE 10-YEAR PROFIT
GROWTH (%): Calculated by
multiplying the profit growth in
each year by the weightage
assigned to that particular year.
The sum of all these years is
considered to be the weighted
average profit growth.
WEIGHTED AVERAGE 10-YEAR ROE (%):
Calculated by multiplying the
return on equity of each year by
the weightage assigned to that
particular year. The sum of all
these years is considered to be the
weighted average ROE.
DEVIATION IN PROFIT GROWTH: It refers
to the difference in the profit
growth of the company from its
average profit growth of the last 10
years. The higher the standard
deviation or difference in the
profits from the average, the higher
the deviation. To compare it, we
have divided the deviation in profit
growth with the average profit
growth.
CURRENT PROFIT GROWTH (%):
Percentage growth in the TTM
profits (as of December 2020) of the
company as compared to the
previous year.
ROE (%): It signifies a company’s net
profit as compared to the total
equity invested by the company. For
instance, if a company has earned
a profit of `150 on the equity capital
of `1,000, that translates into an
ROE of 15 per cent.
DEBT TO EQUITY: Total debt of the
company as compared to the total
equity capital of the company. The
lower this ratio is, the better.
INTEREST-COVERAGE RATIO: It shows
the number of times a company’s
earnings (before interest outgo)
cover the total interest expense.
The higher the coverage ratio, the
better.
PROFIT AND ROE RANK: Based on the
weighted average profit growth and
ROE of the company. The higher
the profit growth or ROE, the
higher the rank.
RANK FOR DEVIATION IN PROFITS: Based
on the deviation in the company’s
profitability. The lower the
deviation, the higher the rank.
RETURNS (1, 5 AND 10 YEARS, %): All
returns refer to the total returns,
comprising change in stock price
and the total dividends received
during that period. Returns of
more than one year are
compounded per annum.
TTM P/E: Ratio of the market price
of the stock to the latest 12-month
earnings per share of the company.
MEDIAN P/E: Median of five-year
daily price-to earnings of the
company.
*6345:05;/,796-0;;()3,

Britannia
Industries
Britannia
Industries, with
direct reach to
23.7 lakh outlets
as of March 2021, is
the market leader in
the biscuits segment in India.
Britannia’s product portfolio
includes biscuits, bread, cakes and
others and it is well-known for
brands like Good Day, Tiger, etc.
The company has turned
around since its current CEO,
Varun Berry, joined in 2013. A
number of measures – launch of
innovative products (milk shakes,
cakes); deeper penetration,
especially in rural India; cost-
control measures, premiumisation
of products; and others – have led
to business transformation. As a
result, the company’s profit margin
has improved to 14.1 per cent in
FY21 from just 4.1 per cent in
FY13. This has aided profits to
grow from `260 crore to `1,850 crore
during the same period, a rise of
27.8 per cent per annum.
Though around 80 per cent of
sales still come from biscuits,
Britannia aspires to become a full-
fledged FMCG player.
Alkyl Amines
Set up in 1979, the company is a
leading manufacturer of aliphatic
amines in India. Derived from
ammonia, aliphatic amines find
their applications
mainly as
solvents and
intermediates
in industries
like pharma,
speciality
chemicals, etc.
Final M-cap Weighted average Weighted average Deviation in profit growth TTM profit
rank Company name Sector (` cr) 10Y profit growth (%) 10Y ROE (%) over 10 years (times) growth (%) ROE (%)
1 Britannia Industries FMCG 84,312 27.6 46.1 0.6 41.6 69.6
2 Alkyl Amines Chemicals Chemicals 18,844 48.3 30.3 0.9 52.5 39.7
3 Bharat Rasayan Chemicals 5,429 35.9 29.3 0.9 1.8 23.8
4 HDFC AMC Finance 59,667 19.4 38.1 0.6 -2.3 30.9
5 Eris Lifesciences Healthcare 9,101 24.5 38.2 1.0 16.7 24.2
6 Larsen Toubro Infotech IT 63,003 17.9 35.5 0.6 23.7 28.8
7 ICICI Securities Finance 15,973 81.0 62.7 2.1 76.1 60.7
8 Alembic Pharmaceuticals Healthcare 18,448 35.9 29.5 1.2 48.3 23.6
8 Ajanta Pharma Healthcare 16,958 24.6 28.2 1.0 45.9 21.4
10 Avanti Feeds FMCG 7,221 48.7 37.6 1.8 17.3 26.4
11 Colgate-Palmolive FMCG 42,626 15.4 61.5 0.6 14.2 56.6
12 Bombay Burmah Trading Agri 8,410 23.2 30.1 1.1 42.0 29.2
12 SBI Cards And Payment Finance 91,194 41.6 27.9 1.4 -36.7 15.2
12 Kellton Tech Solutions IT 615 39.5 25.4 1.2 -11.6 14.8
12 Aarti Drugs Healthcare 7,622 63.4 24.5 1.3 161.5 35.3
16 Hindustan Unilever FMCG 5,58,445 15.7 65.2 0.8 7.5 15.7
16 Abbott India Healthcare 34,208 22.0 26.0 0.9 9.1 28.7
18 KSE FMCG 672 560.6 31.9 2.2 2661.2 52.9
19 Muthoot Finance Finance 46,872 29.7 23.8 1.0 26.0 26.9
20 Tata Elxsi IT 21,687 32.5 33.0 1.7 36.6 29.5
20 Deepak Nitrite Chemicals 23,572 101.6 24.3 1.4 24.1 35.8
Profit 100
Here is the list of India’s most profitable companies, based on 10-year
profit growth, consistency of profit growth and return on equity

With a technocrat promoter at
helm, over the years, Alkyl has
successfully diversified into value-
added products like amine
derivatives and speciality
chemicals. Strong focus on RD
has led to a scale-up to nearly 100
products. Also, the company’s
speciality chemical Acetonitrile
has been a major success and now
contributes 25 per cent to its top
line. The clampdown in China on
pollution-causing industries,
coupled with ongoing supply-chain
shifts, has led to Indian buyers
fulfilling their needs locally
.
The momentum in the pharma
sector continues to be a strong
tailwind for Alkyl. The company
plans to invest `150–200 crore in
the coming year to expand its
production capacity from the
current 80–90 kilo tonnes per
annum.
Bharat Rasayan
Bharat Rasayan is the flagship
company of the Bharat group and
is involved in the
manufacturing
of technical-
grade
pesticides,
which are a key
ingredient for
pesticides
formulations.
Formulation is the process of
making the final product. The
company’s operations are B2B in
nature and it counts major
players like Syngenta and
Sumitomo amongst its customers.
It derives almost 50 per cent of its
revenue from exports.
The start of its 5,000 MTPA
Dahej plant in Gujarat in 2013
was a game changer as its
product basket expanded. The
company has a product mix of
more than 200 varieties of
pesticides. Further, clampdown in
China against chemical
companies has also benefited the
domestic agrochemical players as
they could increase their export
revenue.
The demand for domestic
agrochemicals is expected to
remain elevated on the back of the
government’s focus on enhancing
farmers’ income. However, related-
party transactions and the
company’s reliance on large
working capital require a careful
assessment.
Debt to equity Interest coverage Final
(times) ratio (times) Proﬁt ROE Deviation in proﬁts 1Y 5Y 10Y CurrentTTM Median Company name rank
0.9 23 29 6 8 18.3 21.2 36.4 45.5 55.5 Britannia Industries 1
0.1 50 9 18 19 400.9 96.6 72.8 90.1 18.8 Alkyl Amines Chemicals 2
0.1 43 17 23 18 96.3 62.1 51.2 34.4 22.3 Bharat Rasayan 3
- - 55 11 3 13.7 - - 45.5 43.1 HDFC AMC 4
0.0 231 36 10 24 49.0 - - 27.6 23.6 Eris Lifesciences 5
0.0 31 60 14 2 128.2 - - 32.8 22.5 Larsen Toubro Infotech 6
- - 3 2 75 58.5 - - 15.8 18.7 ICICI Securities 7
0.1 64 16 22 47 8.4 11.6 - 16.2 19.3 Alembic Pharmaceuticals 8
0.0 92 34 25 26 30.0 4.6 59.3 25.3 25.3 Ajanta Pharma 8
0.0 335 8 12 67 28.9 30.4 79.1 19.7 17.7 Avanti Feeds 10
0.0 158 84 3 6 23.1 16.4 15.6 41.5 45.5 Colgate-Palmolive 11
0.6 16 40 20 34 41.7 24.0 32.2 22.6 12.8 Bombay Burmah Trading 12
- - 12 26 56 86.5 - - 94.9 67.9 SBI Cards And Payment 12
0.2 7 14 36 44 307.8 -8.5 - 9.1 7.3 Kellton Tech Solutions 12
0.4 15 5 39 50 251.5 46.2 48.6 25.2 16.7 Aarti Drugs 12
0.0 72 78 1 16 18.1 24.7 25.3 69.8 64.0 Hindustan Unilever 16
0.0 54 44 31 20 -7.7 28.9 27.3 49.4 38.5 Abbott India 16
0.1 97 1 17 79 70.8 35.1 33.7 6.8 15.6 KSE 18
- - 26 44 29 56.1 44.0 24.8 14.1 12.5 Muthoot Finance 19
0.0 85 20 16 64 374.7 32.1 42.0 62.0 27.2 Tata Elxsi 20
0.4 11 2 41 57 239.6 89.7 59.2 31.5 19.3 Deepak Nitrite 20
Returns (% pa) P/E
Rank
See page 33 for the explanation of the columns of this table.

22 Dr. Lal Pathlabs Healthcare 22,682 17.1 27.8 0.7 0.7 21.1
23 Granules India Healthcare 7,966 49.3 19.1 0.9 95.8 26.9
24 Asian Paints Chemicals 2,66,043 11.5 28.2 0.6 2.0 25.3
25 Cholamandalam Financial Finance 10,609 60.9 30.2 2.4 12.2 32.0
26 Procter Gamble Hygiene FMCG 43,857 17.7 44.5 1.1 56.9 57.4
27 Torrent Pharmaceuticals Healthcare 46,067 48.3 25.1 1.6 122.2 22.5
28 HCL Technologies IT 2,47,025 20.1 26.7 1.0 26.8 23.4
28 Can Fin Homes Finance 6,786 29.5 19.2 0.8 26.5 18.8
30 Tasty Bite Eatables FMCG 4,103 35.2 25.9 1.7 -15.8 18.9
30 Relaxo Footwears FMCG 22,980 20.9 22.2 0.7 5.4 17.6
32 Indian Energy Exchange Power 11,178 14.8 45.7 1.2 13.2 40.0
32 Expleo Solutions IT 693 32.6 26.7 2.0 51.5 29.8
34 Tata Consultancy Services IT 11,28,488 10.4 36.1 1.0 -3.5 33.0
34 Astral Plastic Products 33,697 21.8 19.2 0.6 10.0 18.1
36 APL Apollo Tubes Iron Steel 14,909 29.3 20.3 1.1 30.0 23.3
37 Marico FMCG 61,224 10.4 35.2 1.0 -5.8 32.0
38 IRCTC Hospitality 27,957 21.7 30.1 1.6 -48.8 17.7
38 NGL Fine-Chem Healthcare 992 41.8 23.1 1.8 176.0 34.8
40 Infosys IT 5,61,106 10.1 24.9 0.6 14.0 26.3
40 Mindtree IT 34,705 22.5 24.0 1.2 60.4 27.1
40 HDFC Bank Bank 7,65,035 21.0 17.9 0.2 16.7 16.0
43 Manappuram Finance Finance 12,738 69.5 21.6 2.0 18.9 25.7
44 Just Dial Miscellaneous 4,859 23.4 22.5 1.2 -0.8 22.0
KSE
Founded in 1963,
KSE is a leader
in the cattle-feed
industry in
Kerala, with
more than one-
third market share. It
is also involved in oil-cake and
dairy processing. The company
has managed to build this market
position on the back of a network
of 600 dealers, quality products
and efficient customer support
through services such as on-call
veterinary doctor.
The company derives about 85 per
cent of its revenue from the cattle-
feed business, which is susceptible to
fluctuations in raw-material
(coconut oil cake) prices. On the
demand side, milk prices influence
the cattle-feed-buying habits of dairy
farmers. Soft raw-material prices,
driven by a good monsoon, led to a
dramatic increase in the company’s
earnings for the last 12 months (as of
December 2020). Because of this
spurt in profit, KSE has featured at
the top of the list
Though the business has shown
strong recent performance, the
long-term superior profit growth
drivers remain missing because of
high competition in the cattle-feed
industry.
Deepak Nitrite
Founded in 1970, Deepak Nitrite
makes over 100 basic, fine and
specialty chemicals and
performance products. It is the
largest producer of phenol and
acetone in the country.
The company’s
products are
used in a
diverse set of
industries,
ranging from
dyes to
detergents.
A clampdown on chemical
companies in China for causing
pollution gave Indian companies
an opportunity to fill the gap.
Deepak’s performance division
saw a swift turnaround as the
supply of chemicals such as OBA
and DASDA dwindled after the

0.0 22 64 27 10 77.6 24.7 - 96.8 50.3 Dr. Lal Pathlabs 22
0.4 27 7 74 21 109.4 20.3 44.4 14.7 17.0 Granules India 23
0.0 45 77 24 5 82.0 25.1 27.1 86.2 60.9 Asian Paints 24
- - 6 19 82 122.9 6.0 16.0 13.2 14.8 Cholamandalam Financial 25
#N/A 154 62 8 38 35.9 18.0 22.9 64.7 74.7 Procter Gamble Hygiene 26
0.7 5 10 37 62 13.5 15.7 26.7 36.8 37.1 Torrent Pharmaceuticals 27
0.0 35 52 29 31 87.4 22.9 24.8 22.7 14.8 HCL Technologies 28
- - 27 73 12 78.9 17.2 37.5 15.4 16.3 Can Fin Homes 28
0.4 21 18 32 63 57.0 42.9 59.3 102.8 71.7 Tasty Bite Eatables 30
0.0 22 49 53 11 65.7 33.2 54.4 94.5 58.6 Relaxo Footwears 30
0.0 120 70 7 42 137.9 - - 54.8 31.6 Indian Energy Exchange 32
0.0 68 19 28 72 343.7 -8.4 37.7 13.3 13.4 Expleo Solutions 32
0.0 57 83 13 27 64.4 21.6 20.9 35.2 24.6 Tata Consultancy Services 34
0.1 41 45 71 7 195.3 47.6 56.7 89.3 66.6 Astral 34
0.5 7 28 64 33 398.9 49.5 47.5 52.5 23.2 APL Apollo Tubes 36
0.1 41 82 15 30 50.7 14.8 23.1 52.0 46.9 Marico 37
0.0 46 47 21 60 39.8 - - 124.0 59.9 IRCTC 38
0.2 28 11 48 69 391.0 48.5 62.0 23.9 17.0 NGL Fine-Chem 38
0.0 134 87 38 4 109.3 19.4 16.1 29.5 18.7 Infosys 40
0.0 27 41 43 45 146.8 28.1 39.5 31.0 21.2 Mindtree 40
- - 48 80 1 63.6 21.0 21.5 25.6 27.5 HDFC Bank 40
- - 4 54 73 24.6 29.8 12.7 8.2 11.3 Manappuram Finance 43
0.0 40 38 51 43 107.3 0.1 - 21.3 20.9 Just Dial 44
Returns (% pa) P/E
Rank
Chinese intervention, leading to
margin improvement. The `1,400
crore investment in phenol, for
which the country was nearly 80
per cent import-dependent, has
contributed to the business.
Additionally, the spread of COVID
led to a drastic increase in use of
IPA-based (isopropyl alcohol)
sanitisers.
The company is doubling its
IPA plant capacity, along with
adding new chemistries to its
product offerings. Medium-term
growth looks tapered, as its phenol
plant is already running at 115 per
cent utilisation and for further
business growth, the company will
need to demonstrate its
competencies in new chemistries.
ICICI Securities
It is the equity securities arm of
the ICICI Group. The company
derives its revenue primarily
from broking (60 per cent in FY21)
and distribution of mutual funds
(25 per cent). With a client base of
around 15.6 lakh, it is
the third-largest
broking firm in
India.
The broking
industry has
been
experiencing
strong tailwinds
for the past few years due to
penetration of internet trading
apps and sites, growing interest in
equity markets and
financialisation of savings. These
trends have gained speed due to
COVID. The company gained over
3.5 lakh clients in Q4FY21, with
majority of them coming from
tier 2 and 3 towns. While
revenues got a leg-up from this
trend, improving from `1,200
crore in March 2020 to `2,584
crore in March 2021, net profit
grew by more than three times on
the back of an improving cost-to-
income ratio.
However, the cyclical nature of
equity markets is likely to
normalise the brokerage income
sooner or later. Additionally, the
industry is seeing the entrance of
many new fintech players backed
by deep-pocket investors.

45 Berger Paints Chemicals 73,105 14.1 23.7 0.9 -7.2 21.7
45 Adani Total Gas Trading 1,31,229 32.3 21.2 1.5 15.2 27.3
47 Kaveri Seed Company Agri 4,422 30.3 25.6 2.1 39.6 26.5
47 CCL Products Agri 4,084 15.8 20.6 0.7 10.0 17.2
49 Vinati Organics Chemicals 17,245 20.5 25.8 1.4 -20.1 19.4
50 Balkrishna Industries Automobile Ancillaries 36,644 18.6 20.6 0.9 20.6 19.6
51 Bajaj Finserv Finance 1,74,544 12.7 22.9 0.8 -10.5 18.3
52 Poly Medicure Healthcare 9,609 22.4 23.7 1.4 25.3 23.6
52 Dhanuka Agritech Chemicals 4,139 18.9 23.4 1.1 55.6 24.3
52 Atul Chemicals 24,266 24.1 19.4 1.1 -2.6 17.5
55 Nestle India FMCG 1,66,004 17.2 57.8 2.1 5.8 105.8
56 Advanced Enzyme Tech Healthcare 5,100 26.0 21.5 1.5 12.3 16.8
56 Saksoft IT 530 20.0 18.8 0.8 8.2 18.6
58 Triveni Turbine Capital Goods 3,125 21.8 38.3 3.0 -29.9 15.3
58 ITC FMCG 2,61,378 8.0 10.0 1.0 -11.5 22.8
60 Divis Laboratories Healthcare 1,06,771 19.9 22.2 1.1 46.1 22.5
61 Honeywell Automation Consumer Durables 37,200 24.6 19.0 1.1 0.9 20.1
62 Newgen Software Tech IT 2,299 23.4 21.1 1.4 22.9 20.0
63 Garware Technical Fibres Textile 5,399 20.8 18.4 0.9 -0.4 17.6
64 R Systems International IT 1,542 32.3 20.9 2.0 41.4 21.5
65 SBI Life Insurance Co Insurance 97,732 12.3 19.2 0.8 7.8 15.0
66 Hawkins Cookers Consumer Durables 2,962 9.1 10.1 1.9 -13.8 51.0
66 Alkem Laboratories Healthcare 35,810 25.3 18.9 1.4 38.3 22.3
Hindustan Unilever
The largest FMCG brand in India,
Hindustan Unilever (HUL) is a
household name. Its portfolio
includes home-care, beauty and
personal care, and
food products.
Most of the
company’s
brands hold the
top two spots in
their categories.
During the past
decade till FY20, the
company has achieved an average
ROE of around 90 per cent due to
various factors. Superior
operational efficiency has led to the
company being able to churn out
more sales from total assets year on
year (average 10-year asset turnover
is over 2.3). Another important
factor is the dividend-payout ratio
which has averaged about 80 per
cent for the past decade. High
payout meant that equity remains
stable with improving earnings,
resulting in a high ROE.
Last year, HUL merged with
GSK Consumer Healthcare,
acquiring brands such as Horlicks
and Boost, which complemented
its food business. Going ahead, the
company intends to focus on
volume-led growth, especially in
rural India, along with utilising
e-commerce channels.
Colgate-Palmolive
Colgate is the leader in the
toothpaste and toothbrush
business in India, with around 50
per cent market share as of FY19.
Oral care contributes
around 90 per
cent to the
company’s top
line, while the
rest comes
from personal-
care products
under Palmolive.
In India, Colgate is synonymous
with toothpastes.
During the last few years, the
company has lost its market share
owing to the entry of new players
such as Patanjali. As a result, its
sales grew by only 3 per cent YoY
during five years till FY20, while

0.2 20 73 45 17 75.0 31.9 38.7 123.3 64.0 Berger Paints 45
0.2 16 21 56 58 1097.2 - - 318.8 62.9 Adani Total Gas 45
0.0 660 24 35 77 101.3 12.3 28.0 13.7 15.2 Kaveri Seed Company 47
0.4 14 67 60 9 66.1 7.6 31.9 22.8 21.9 CCL Products 47
0.0 969 51 33 53 88.0 51.3 49.0 69.1 34.0 Vinati Organics 49
0.2 128 58 59 22 126.1 46.2 41.2 34.8 22.6 Balkrishna Industries 50
- - 75 50 15 135.3 43.3 36.7 40.6 32.5 Bajaj Finserv 51
0.3 9 43 46 52 260.8 43.9 41.8 81.0 33.6 Poly Medicure 52
0.0 137 57 47 37 81.2 7.8 29.1 21.0 20.8 Dhanuka Agritech 52
0.0 90 37 69 35 84.8 35.4 48.3 38.2 24.9 Atul 52
0.0 18 63 4 76 7.9 24.4 16.5 76.7 71.1 Nestle India 55
0.0 112 30 55 59 208.1 - - 36.3 18.7 Advanced Enzyme Tech 56
0.1 15 53 77 14 248.2 19.9 28.6 12.1 10.1 Saksoft 56
0.0 76 46 9 90 50.9 -1.6 - 33.7 33.9 Triveni Turbine 58
0.0 314 90 30 25 37.2 3.9 10.9 19.5 28.7 ITC 58
0.0 2244 54 52 40 71.0 31.0 28.6 56.7 33.7 Divis Laboratories 60
0.0 104 35 75 39 54.8 35.9 33.5 80.3 60.9 Honeywell Automation 61
0.1 21 39 57 54 132.7 - - 20.4 19.2 Newgen Software Tech 62
0.2 19 50 78 23 113.6 54.0 48.5 40.5 21.2 Garware Technical Fibres 63
0.1 18 22 58 74 69.0 21.2 38.2 16.1 15.2 R Systems International 64
- - 76 72 13 28.9 - - 66.5 56.7 SBI Life Insurance Co 65
0.1 21 86 5 71 33.9 18.9 21.6 44.9 32.7 Hawkins Cookers 66
0.2 30 31 76 55 20.0 20.8 - 23.0 28.2 Alkem Laboratories 66
Returns (% pa) P/E
Rank
profit grew by 8 per cent on the
back of cost control and lower ad
spends. However, Colgate is able to
maintain a very high ROE
through a combination of decent
profit margins (around 15 per
cent) and high financial leverage,
which is maintained at the
expense of its suppliers with
whom the company is able to
negotiate high payable days.
To give impetus to growth, the
company has done several niche-
product launches recently, such as
Vedshakti and Diabetics. Further,
it is pushing its reach in rural
areas.
ICICI Securities
As we saw in the previous section
on profit-growth toppers, ICICI
Securities has been a beneficiary
of several tailwinds. As a result, it
has managed to increase its
earnings at a fast clip.
The company has an asset-light
business model and majority of
its expense goes towards
employee costs.
This means as
the business
grows, it does
not need to go
for heightened
capex.
Additionally, it
earns very high
operating margins of about 40–45
per cent and is able to generate
high financial leverage.
Financial leverage is the ability
of a company to deploy debt to
boost its returns. Being in the
broking industry, giving margin to
its clients is part of ICICI
Securities’ business. When its
clients trade more and for higher
amounts, the company stands to
profit from that.
The company has maintained
dividend payouts of more than 60
per cent during the past decade. A
combination of these factors has
resulted in a high ROE over the
years. However, cyclicity and
increasing competition in the
broking industry could lead to a
reduction in profit margins going
ahead, as a result its ROE may
also normalise.

68 Havells India Capital Goods 62,360 24.8 24.0 2.7 21.4 19.5
68 PFC Finance 29,952 37.3 20.3 2.6 3.1 22.2
70 Sharda Cropchem Chemicals 2,949 22.5 17.7 1.2 84.2 16.5
71 Cholamandalam Investment Finance 43,185 18.9 17.4 1.0 0.7 14.6
72 Ipca Laboratories Healthcare 27,252 40.1 15.8 1.8 71.8 24.5
73 Syngene International Miscellaneous 22,721 17.8 20.3 1.3 -7.0 14.8
73 Rites Capital Goods 5,843 30.3 19.9 2.5 -29.5 16.4
75 HDFC Life Insurance Co Insurance 1,35,603 16.8 25.6 2.2 0.2 17.3
76 Supreme Industries Plastic Products 26,958 15.9 23.0 1.8 29.8 23.0
77 Amara Raja Batteries Automobile Ancillaries 13,170 10.4 19.9 1.1 -7.4 15.2
78 Indraprastha Gas Inds. Gases Fuels 35,816 14.5 19.9 1.3 -10.1 17.2
79 Gujarat Ambuja Exports Agri 3,979 31.6 15.9 2.2 123.1 19.1
65) 'LYHUVLÀHG
81 Persistent Systems IT 17,374 10.4 17.0 1.1 16.4 15.4
82 DFM Foods FMCG 1,677 12.9 24.5 2.8 -25.4 16.0
83 Adani Ports and SEZ Logistics 1,49,875 10.1 19.5 1.2 -14.3 14.7
84 Grindwell Norton Abrasives 13,393 10.7 16.5 1.2 8.1 16.8
85 Coforge IT 20,291 18.0 19.3 2.6 -0.1 20.9
86 Mold-Tek Packaging Plastic Products 1,326 15.7 18.1 1.9 3.0 18.0
87 Elantas Beck Chemicals 2,737 10.4 20.6 2.3 24.6 15.0
88 FDC Healthcare 5,650 15.7 16.0 1.8 40.4 18.0
89 Birlasoft IT 7,103 11.3 16.7 1.6 31.4 14.5
90 Sharda Motor Industries Automobile Ancillaries 1,105 14.2 17.2 2.6 -26.1 14.6
TTM: Trailing 12 months. In ROE calculation, equity as per the latest balance sheet is used.
HDFC Bank
HDFC Bank is
India’s most
valued bank. As
of FY21, its
bank network
stood at 5,608
branches. Despite
operating in a commoditised
business, HDFC bank has
demonstrated superior
performance, as seen through its
industry-leading net interest
margins (4.2 per cent for FY21),
along with a robust asset profile
(gross non-performing assets at
1.3 per cent).
Over the past decade till FY21,
the bank grew its advances by
around 22 per cent to more than
`1.1 trillion. This was achieved on
the back of prudent credit
underwriting and focus on
consistent growth. Even as public
banks, along with some private
banks, recorded high bad assets,
HDFC bank has maintained low
NPA numbers. Consistent
profitability was also achieved
through undertaking more-than-
required provisioning during
good times.
The new management at the
bank intends to focus more on
MSME lending going ahead. The
damage from COVID-induced
economic slowdown also remains
to be seen.
LT Infotech
Started under the aegis of its
parent LT, LT Infotech (LTI)
has come into its own since its
listing in 2016. The company
provides a bouquet of IT services,
such as application
development
and
maintenance,
enterprise
solutions,
testing, etc.,
across various
industries, such as
banking and finance (29.8 per
cent of FY21 revenue), insurance
(15.6 per cent), manufacturing
(16.5 per cent) and others. Like

0.2 23 33 42 88 118.2 25.4 31.2 73.1 53.9 Havells India 68
- - 15 62 86 47.5 10.9 4.9 3.3 4.4 PFC 68
0.0 116 42 81 41 143.9 4.2 - 13.1 17.4 Sharda Cropchem 70
- - 56 82 28 261.1 25.3 34.1 29.5 21.6 Cholamandalam Investment 71
0.1 120 13 90 66 37.6 37.4 22.5 25.8 30.7 Ipca Laboratories 72
0.3 15 61 63 51 72.6 24.7 - 57.8 38.1 Syngene International 73
0.0 86 25 67 83 15.0 - - 13.8 12.6 Rites 73
- - 65 34 78 36.4 - - 99.1 84.9 HDFC Life Insurance Co 75
0.0 64 66 49 65 147.9 22.2 32.4 29.4 33.9 Supreme Industries 76
0.0 74 81 65 36 39.2 -2.6 24.8 22.5 27.2 Amara Raja Batteries 77
0.0 116 71 66 49 12.5 35.9 23.6 33.0 27.2 Indraprastha Gas 78
0.1 61 23 89 80 201.2 46.0 29.0 14.6 10.8 Gujarat Ambuja Exports 79
65)
0.0 101 85 85 32 359.6 28.4 30.1 39.5 16.4 Persistent Systems 81
0.4 4 74 40 89 66.1 0.2 30.8 64.3 63.0 DFM Foods 82
1.2 4 89 68 48 147.8 33.5 19.1 31.7 19.5 Adani Ports and SEZ 83
0.0 70 79 87 46 159.5 33.0 28.8 57.0 36.5 Grindwell Norton 84
0.0 36 59 70 87 147.0 49.6 35.3 45.7 21.0 Coforge 85
0.5 6 68 79 70 167.5 24.8 36.4 35.0 24.5 Mold-Tek Packaging 86
0.0 368 80 61 81 69.5 20.0 13.3 42.8 30.3 Elantas Beck 87
0.0 117 69 88 68 39.8 13.6 13.5 18.3 19.5 FDC 88
0.0 33 88 86 61 290.2 12.2 14.0 25.4 10.8 Birlasoft 89
0.0 63 72 83 85 207.2 18.0 - 23.7 14.3 Sharda Motor Industries 90
Returns (% pa) P/E
Rank
The median P/Es are for five years. If five-year data are not available, they are for three years or one year. Profit data as of December 2020. Price data as on May 14, 2021.
other Indian IT services
companies, LTI drives around 68
per cent of its revenue from
North America.
During the past 10 years till
FY21, LTI has managed to deliver
consistent profit growth of
around 20 per cent YoY. This has
been achieved on the back of
various measures, such as
consistent client additions
(increased from 264 in FY17 to
over 400 in FY21), focus on digital
services (33 per cent in FY18 to
45.6 per cent in FY21),
diversification across various
industries, alliances with
technology specialists, such as
Amazon, IBM, Oracle and others,
and through various acquisitions.
The company won two large
deals in Q4 for a total value of $66
million. Going forward, COVID is
expected to accelerate digital-
services uptake, which will
benefit LTI.
HDFC AMC
With an AUM of `3.95 trillion as
of FY21, HDFC AMC is one of the
largest and most profitable fund
houses in the country. It offers a
diversified product mix across
equity and debt segments through
its 227 branches and a network of
more than 65,000 distributors.
Mutual funds are a sunrise
sector and have seen AUM (assets
under management) growth of
around 14 per cent per annum
over the last 10 years till FY20.
This trend has been accelerated
due to demonetisation, low
interest on traditional savings
avenues, better
marketing,
amongst
others.
Recent
regulatory
changes, which
have capped
expense ratios, have
taken some sheen off AMCs.
However, long-term growth
prospects of the industry remain
intact.

Prominent names
dropped from the
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Company name
Reasons for exclusion
Pidilite Industries
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than 18% YoY.
Eicher Motors
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YoY.
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fell short of 8% due to a 33% YoY
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fell short of 8% due to a 27% YoY
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Jubilant Foodworks
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YoY.
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YoY.
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INSIGHTS
Data as on May 14, 2021

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Companies with the highest pledged
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Asian Paints

Granules India
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