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Strategic Stock Analysis - Balancing Quantitative and Qualitative Factors in Investment Analysis


Large Cap: Yes Bank

Market cap: Rs.72,495cr
Industry: Banking
  • The bank’s management has changed and is in much better hands of Prashant Kumar, former managing director and CFO of State bank of India. The holding pattern of FIIs has also increased from 12.15% in Sep 2022 to 23.795% in Dec 2023 which mainly consists of Ca Basque investments and Verventa investments whose holding companies are Carlyle Group and Advent International respectively.
  • The bank's Price to book ratio is 1.28x which is lower as compared to industry average of 2.7x which shows the stock is undervalued. Return on capital employed is 4.94% which is very close to the industry average of 6%, despite the fact the bank is still recovering.
  • With SBI holding a majority stake in Yes Bank, there's assurance of government backing to prevent its fall. This is crucial for maintaining trust in the Indian banking system among the investors.
  • FIIs have been actively increasing their shareholding in the bank which shows that it is not a lost cause and can be brought back on track given time under proper guidance.
  • After a drastic fall from all time high of approx. Rs. 393 to Rs. 5.55 within the span of 24 months the stock has been reviving itself from time to time and is now trading at Rs. 25.2.
  • Despite its current value around Rs. 200, many investors have a bullish outlook on Yes Bank, and anticipate long-term growth. They believe in its potential to perform well over time, despite the possibility of a 10-year timeline for significant gains in the long term.

Mid Cap: JM Financial

Market cap: Rs.7,745cr
Industry: Financial services
  • The company maintained a steady net profit margin of around 23%, despite a temporary dip in March 2023. Operating profit margin is now 65%, although there was a COVID related decline in June 2020. Sales revenue has recovered, reaching Rs. 4,346 crore in the latest twelve months, up 32% from 2023.
  • The stock is currently trading at Rs. 81 which has lowered from 115 all time high due to the Securities and Exchange Board of India (Sebi) having barred the company from acting as a lead manager for any new public issue of debt securities.
  • JM Financial is one of India's leading financial service providers who hold a big chunk of the country's investors as their clients.
  • The company is well-positioned to capitalise on evolving market trends and opportunities. Due to an active and stable track record, the company has won over the trust of institutional investors and stakeholders. The company will definitely benefit from the increasing demand for financial services in the country.

Small Cap: Bajaj Hindustan Sugar

Market cap: Rs.4,273cr

#####Industry: Sugar and related products manufacturing.

  • India is one of the largest consumers of sugar globally, with a large and growing population. The increasing urbanisation, and rising disposable incomes are expected to boost the demand for sugar and sugar-based products in the country.
  • The Indian government provides support to the sugar industry through policies such as minimum support prices for sugarcane, subsidies for ethanol production, and incentives for export.
  • Bajaj Hindusthan Sugar has a PE ratio of -65.33 which is low and comparatively undervalued when compared to the PE ratio of the industry.
  • Bajaj Hindusthan Sugar has a D/E ratio of 0.94 which means that the company has a low proportion of debt in its capital.
  • The company is expected to have many export opportunities to countries like Australia, USA, China and many others. This will lead to large scale growth and expansion of the company which is a good sign for investors.
  • Bajaj Hindusthan Sugar Limited has the potential for growth and diversification, due to favourable industry dynamics, and adaptation to evolving market conditions.
  • Sugar companies like Bajaj Hindustan Sugar Limited can profit from the Indian government's ethanol blending mandate, further diversifying streams and attracting revenue.