Satyakam Mishra
reachsatyakam@gmail.com
http://equityconnect.blogspot.
We looked at the RoE trend of ET 500 companies over the last five years to identify those that have consistently improved shareholder value. We found that two out of every five companies in the current listing have improved their RoE in FY11 from the previous year's levels.
In addition, there were 10 companies which have improved their RoEs consistently over the last four years. These 10 companies are from various sectors and no one sector dominates the list. Lubricants company Castrol India, plastic products and printing ink maker Uflex, and engineering design consultant Engineers India feature in the first three spots in the list of 10 based on their latest RoEs. The three are also among the companies to record the highest gain in RoEs in the last five years.
Each of the 10 companies, which have demonstrated a consistent improvement in their RoE, reported an impressive double-digit return on shareholders' capital in FY11. Castrol's shareholders earned a whopping return of 93% on equity in FY11. It means the company was able to earn a net profit that was nearly equal to its total equity.
The ET 500 list also includes two companies — Nestle and Colgate Palmolive — which reported more than 100% RoE in FY11. Both companies are from the FMCG sector, and recorded net profits in excess of their respective total equity. Companies such as these with well-established businesses and relatively lower requirement of capital expenditure tend to report a higher RoE.
There are 11 companies in the ET 500 rankings which reported a more than 50% RoE in FY11 and 20 more had RoEs in the range of 30-50%. The presence of five multinational companies (MNCs) in the list of top 30 companies with high RoEs reflects the effectiveness of the business model of these players. Of these, three companies including Nestle, HUL, and Colgate belong to the FMCG sector. Castrol and consumer durables player Whirlpool are the other two MNCs.
What is surprising is the fact that only two IT players — TCS and MphasiS — were able to make it to the top 30 list despite the high profitability of the sector. This could be because of higher amount of reserves and surplus on the books of IT companies due to the high cash generating nature of the business.
Coal India and Muthoot Finance, which listed recently, made it to the top 30 list during their debut year itself. Muthoot reported a RoE of 51.5% whereas Coal India's RoE was 36.7% in FY11
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Blog Writer : For Definition of RoE , please click :-
http://www.investopedia.com/terms/r/returnonequity.asp#axzz1hx3oKEON
reachsatyakam@gmail.com
http://equityconnect.blogspot.
We looked at the RoE trend of ET 500 companies over the last five years to identify those that have consistently improved shareholder value. We found that two out of every five companies in the current listing have improved their RoE in FY11 from the previous year's levels.
In addition, there were 10 companies which have improved their RoEs consistently over the last four years. These 10 companies are from various sectors and no one sector dominates the list. Lubricants company Castrol India, plastic products and printing ink maker Uflex, and engineering design consultant Engineers India feature in the first three spots in the list of 10 based on their latest RoEs. The three are also among the companies to record the highest gain in RoEs in the last five years.
Each of the 10 companies, which have demonstrated a consistent improvement in their RoE, reported an impressive double-digit return on shareholders' capital in FY11. Castrol's shareholders earned a whopping return of 93% on equity in FY11. It means the company was able to earn a net profit that was nearly equal to its total equity.
The ET 500 list also includes two companies — Nestle and Colgate Palmolive — which reported more than 100% RoE in FY11. Both companies are from the FMCG sector, and recorded net profits in excess of their respective total equity. Companies such as these with well-established businesses and relatively lower requirement of capital expenditure tend to report a higher RoE.
There are 11 companies in the ET 500 rankings which reported a more than 50% RoE in FY11 and 20 more had RoEs in the range of 30-50%. The presence of five multinational companies (MNCs) in the list of top 30 companies with high RoEs reflects the effectiveness of the business model of these players. Of these, three companies including Nestle, HUL, and Colgate belong to the FMCG sector. Castrol and consumer durables player Whirlpool are the other two MNCs.
What is surprising is the fact that only two IT players — TCS and MphasiS — were able to make it to the top 30 list despite the high profitability of the sector. This could be because of higher amount of reserves and surplus on the books of IT companies due to the high cash generating nature of the business.
Coal India and Muthoot Finance, which listed recently, made it to the top 30 list during their debut year itself. Muthoot reported a RoE of 51.5% whereas Coal India's RoE was 36.7% in FY11
=========================================================================
Blog Writer : For Definition of RoE , please click :-
http://www.investopedia.com/terms/r/returnonequity.asp#axzz1hx3oKEON
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