Investing in Manufacturing Stocks: Opportunities & Top Picks in India

The manufacturing sector is one of the key sectors for creation of job in any economy.

Prime Minister of India, Mr. Narendra Modi, had launched the “Make in India” program to place India on the world map as a manufacturing hub and thereby give global recognition to the Indian economy.

Under the ‘Make in India’ initiative, the Modi government aims to increase the share of the manufacturing sector to the gross domestic product (GDP) to 25% by 2022, from 16%, and to create 100 million new jobs in India by 2022.

Now that Modi government is elected for a 2nd term with a greater mandate, industrial growth is likely to propel manufacturing sector stocks in the next few years.

India is expected to become the 5th largest manufacturing country in the world by the end of the year 2022.

For investors who want to get benefit from this positive growth in manufacturing sector can look up to these ten 10 stocks for 2019.

10 Best Stocks in the Manufacturing Sector (2019)

1. Marico Ltd.

Incorporated in the year 1988, Marico Ltd. is a bluechip company and a pioneer name in the Indian FMCG sector.

The company is providing consumer products and services in the areas of personal health and beauty care.

Marico Ltd. holds a number of brands including Parachute, Kaya Limited, Saffola, Hair and Care, Nihar, Mediker, Revive, Manjal, Livon, Set Wet, Zatak, Hercules, Fiancee, HairCode, Eclipse, and Black Chic.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 366.45 366.50 1 Year Profit / Loss (%) 16.41 16.45 3 Year Profit / Loss (%) 42.42 42.46 5 Year Profit / Loss (%) 208.77 208.83 Beta (1 year) 0.82 0.82 Avg. Daily Volatility (% on year basis) 1.54 1.58

Key Market Indicators

Market Cap (₹ Cr) 46,342 Book Value (₹) 23.23 P/E 56.90 Industry P/E 36.66 P/B 15.45 Dividend Yield (%) 1.18 Return on Equity (%) 37.27

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 1,609.00 8.71 EBITDA (₹ Cr) 311.00 – 16.06 Net Income (₹ Cr) 401.00 62.18 EPS (₹) 3.11 61.98

Note: All the above values as on 27/05/2019

The company has reported a sales revenue of Rs. 1,609.00 Crore, in Q4 FY 2018-19 (which is an increase of 8.71% on a yearly basis).

Also, the company has reported a net profit of Rs. 401.00 crore in the latest quarter.

2. Graphite India Ltd.

Incorporated in the year 1967, Graphite India Ltd. (GIL) is the manufacturer of graphite electrodes, as well as carbon and graphite specialty products in India.

It has 6 manufacturing units which are spread across India and also has a 100% owned subsidiary at Nuremberg, Germany, by the name Graphite COVA GmbH.

It came into existence with the collaboration with erstwhile Great Lakes Carbon Corporation (GLCC) of USA, GIL has been continually improving its product quality and services.

This company is scaling to newer heights of excellence and customer recognition in recent times.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 413.75 413.45 1 Year Profit / Loss (%) – 46.79 – 46.71 3 Year Profit / Loss (%) 406.83 406.85 5 Year Profit / Loss (%) 368.53 368.52 Beta (1 year) 1.64 1.35 Avg. Daily Volatility (% on year basis) 3.70 3.15

Key Market Indicators

Market Cap (₹ Cr) 7,620 Book Value (₹) 271.23 P/E 7.38 Industry P/E 23.90 P/B 1.44 Dividend Yield (%) 4.36 Return on Equity (%) 63.46

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 1,693.00 27.97 EBITDA (₹ Cr) 934.00 23.54 Net Income (₹ Cr) 562.00 4.07 EPS (₹) 28.74 3.79

Note: All the above values as on 27/05/2019

The company has reported a sales revenue of Rs.1,693.00 crore, in Q4 FY 2018-19 (which is an increase of 27.97% on a yearly basis).

Also, the company has reported a net profit of Rs. 562.00 crore in the latest quarter.

3. Honeywell Automation India Ltd.

Incorporated in the year 1984, Honeywell Automation India Ltd. is a large-cap company operating in the engineering sector.

Honeywell Automation India Ltd. is in a leadership position in providing integrated automation and software solutions, including process and building solutions.

The product portfolio of this company includes environmental and combustion controls, sensing control and also provides engineering services in the field of automation and control to global clients.

With the emphasis of the current government on smart cities, this company is poised to grow manifold in the coming years.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 26225.85 26266.75 1 Year Profit / Loss (%) 28.60 3.85 3 Year Profit / Loss (%) 157.76 150.82 5 Year Profit / Loss (%) 644.24 644.35 Beta (1 year) 0.63 0.58 Avg. Daily Volatility (% on year basis) 1.41 1.37

Key Market Indicators

Market Cap (₹ Cr) 21,254 Book Value (₹) 1875.53 P/E 85.09 Industry P/E 10.99 P/B 12.82 Dividend Yield (%) 0.13 Return on Equity (%) 20.53

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 810.27 26.65 EBITDA (₹ Cr) 139.47 50.42 Net Income (₹ Cr) 84.12 44.12 EPS (₹) 95.14 44.11

Note: All the above values as on 27/05/2019

The company has reported a sales revenue of Rs. 810.27 Crore, in Q4 FY 2018-19 (which is an increase of 26.65% on a yearly basis).

Also, the company has reported a net profit of Rs. 84.12 crore in the latest quarter.

4. Zydus Wellness Ltd.

Incorporated in the year 1994, Zydus Wellness Ltd. is a mid-cap company, that has a market cap of ₹7,306.05 Crore.

Zydus Wellness Ltd. is an emerging and strong player in the Indian FMCG sector with a specialty in the health and wellness space in India.

Some of their notable brands include:

• Nutralite – is table margarine;
• Sugar-Free – is a low-calorie sweetener and
• EverYuth – is a skincare product line.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 1303.95 1307.30 1 Year Profit / Loss (%) 3.83 3.85 3 Year Profit / Loss (%) 65.10 65.14 5 Year Profit / Loss (%) 150.76 150.82 Beta (1 year) 0.73 0.75 Avg. Daily Volatility (% on year basis) 1.88 1.92

Key Market Indicators

Market Cap (₹ Cr) 7,540 Book Value (₹) 578.50 P/E 38.16 Industry P/E 36.66 P/B 2.26 Dividend Yield (%) 0.61 Return on Equity (%) 19.37

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 145.41 9.83 EBITDA (₹ Cr) 48.14 14.54 Net Income (₹ Cr) 39.69 9.79 EPS (₹) 10.16 9.72

Note: All the above values as on 27/05/2019

The company has reported a sales revenue of Rs. 145.41 Crore, in Q4 FY 2018-19 (which is an increase of 9.83% on a yearly basis).

Also, the company has reported a net profit of Rs. 39.69 crore in the latest quarter.

5. DCM Shriram Ltd.

Incorporated in the year 1989, DCM Shriram Ltd. is a leading business conglomerate in India, providing farm solutions, bio seeds, sugar, chloro-vinyl, and fertilizers.

The company has delivered consistent profit growth of 22% over the past 5 years. The chlorine alkali business is becoming stronger with economies of scale and substantial improvement in power efficiencies.

It maintains a flawless balance sheet with a proven track record and pays a dividend on a regular basis. It expects to generate more revenue from the current fiscal year.

The business portfolio includes:

• Agri-Rural Business: It includes the production of urea and SSP fertilizers, sugar, farm inputs marketing such as DAP, crop care chemicals, hybrid seeds
• Chlor-Vinyl Business: It includes the production of caustic soda, chlorine, calcium carbide, PVC resins, PVC compounds, power, and cement.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 613.75 612.15 1 Year Profit / Loss (%) 128.93 128.97 3 Year Profit / Loss (%) 248.45 248.49 5 Year Profit / Loss (%) 352.70 352.74 Beta (1 year) 1.55 1.58 Avg. Daily Volatility (% on year basis) 3.38 3.37

Key Market Indicators

Market Cap (₹ Cr) 7,267 Book Value (₹) 226.08 P/E 11.30 Industry P/E 23.64 P/B 2.06 Dividend Yield (%) 1.76 Return on Equity (%) 25.68

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 1,880.17 21.21 EBITDA (₹ Cr) 438.90 360.06 Net Income (₹ Cr) 292.81 477.42 EPS (₹) 18.67 498.40

Note: All the above values as on 27/05/2019

The company has reported a sales revenue of Rs. 1,880.17 Crore, in Q4 FY 2018-19 (which is an increase of 9.83% on a yearly basis).

Also, the company has reported a net profit of Rs. 292.81 crore in the latest quarter.

6. Crompton Greaves Consumer Electricals Ltd.

Crompton Greaves Consumer Electricals Ltd. is an Indian manufacturer and distributor of consumer products ranging from fans, light sources, pumps, and household appliances, like geysers, mixer grinders, toasters, and irons.

It has maintained its leadership position in the market for products like fans, domestic pumps, and street lighting for over 20 years.

It has 4 manufacturing locations (Goa, Vadodara, Ahmednagar, and Baddi) and products are available in nearly 150,000 retail points across the country.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 232.75 232.90 1 Year Profit / Loss (%) – 1.54 – 1.52 3 Year Profit / Loss (%) 75.99 76.04 5 Year Profit / Loss (%) NA NA Beta (1 year) 0.78 0.79 Avg. Daily Volatility (% on year basis) 1.92 1.85

Key Market Indicators

Market Cap (₹ Cr) 13,828 Book Value (₹) 14.90 P/E 44.31 Industry P/E 28.23 P/B 15.36 Dividend Yield (%) 0.77 Return on Equity (%) 41.01

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 1,206.88 7.15 EBITDA (₹ Cr) 184.03 4.93 Net Income (₹ Cr) 140.54 36.16 EPS (₹) 2.23 35.98

Note: All the above values as on 27/05/2019

The company has reported a sales revenue of Rs. 1,206.88 Crore, in Q4 FY 2018-19 (which is an increase of 7.15% on a yearly basis).

Also, the company has reported a net profit of Rs. 140.54 crore in the latest quarter.

7. Asian Paints Ltd.

Asian Paints Ltd. is an Indian multinational paint company incorporated in the year 1945 and headquartered in Mumbai, Maharashtra.

The company’s product portfolio comprises of paints, coating, products related to home decor, bath fittings and related services.

It is India’s largest (having more than 50% market share) and Asia’s 3rd largest paints corporation.

In the last 5 months, Asian Paints Ltd. outpaced the market by surging 25%, as compared to a 13% rise in the BSE Sensex.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 1365.70 1366.85 1 Year Profit / Loss (%) 5.85 5.92 3 Year Profit / Loss (%) 36.84 36.88 5 Year Profit / Loss (%) 161.53 161.57 Beta (1 year) 0.94 0.96 Avg. Daily Volatility (% on year basis) 1.46 1.44

Key Market Indicators

Market Cap (₹ Cr) 1,40,172 Book Value (₹) 97.92 P/E 68.75 Industry P/E 33.66 P/B 14.92 Dividend Yield (%) 0.60 Return on Equity (%) 24.25

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 5,018.21 11.92 EBITDA (₹ Cr) 879.83 0.08 Net Income (₹ Cr) 473.11 – 1.64 EPS (₹) 4.93 – 1.60

Note: All the above values as on 27/05/2019

The company has reported a standalone sales revenue of Rs. 5,018.21 Crore, in Q3 2018 (which is an increase of 11.92% on a yearly basis).

Also, the company has reported a net profit of Rs. 473.11 crore in the latest quarter.

8. Mahindra & Mahindra Ltd.

Established in the year 1945, Mahindra & Mahindra Ltd. is an Indian multinational vehicle manufacturing corporation headquartered in Mumbai, Maharashtra.

It was established as Mohammad & Mahindra initially and later renamed as Mahindra and Mahindra.

It is the largest manufacturer of tractors in the world and one of the largest vehicle manufacturers by production in India.

The company began manufacturing tractors for the Indian market during the early ’60s. Currently, it is the top tractor company in the world (in terms of volume) with annual sales totaling more than 200,000 tractors.

Since its inception, the company has sold over 2.1 million tractors worldwide and has over 1,000 dealers servicing approximately 1.45 million customer base.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 676.26 679.35 1 Year Profit / Loss (%) – 19.89 – 19.82 3 Year Profit / Loss (%) 2.43 2.51 5 Year Profit / Loss (%) 14.65 14.71 Beta (1 year) 1.23 1.24 Avg. Daily Volatility (% on year basis) 1.70 1.72

Key Market Indicators

Market Cap (₹ Cr) 79,067 Book Value (₹) 294.60 P/E 9.20 Industry P/E 8.72 P/B 2.16 Dividend Yield (%) 1.18 Return on Equity (%) 20.42

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 13,070.36 12.89 EBITDA (₹ Cr) 1,858.15 16.72 Net Income (₹ Cr) 1,076.81 – 11.44 EPS (₹) 9.01 – 11.49

Note: All the above values as on 27/05/2019

The company has reported a standalone sales revenue of Rs. 13,070.36 Crore, in FY 2018-19 (which is an increase of 12.89% on a yearly basis).

Also, the company has reported a net profit of Rs. 1,076.81 crore in the latest quarter.

9. Cipla Ltd.

Incorporated in the year 1935, Cipla Ltd. is an Indian multinational pharmaceutical and biotechnology company, headquartered in Mumbai, India.

It primarily develops medicines to treat respiratory, cardiovascular disease, arthritis, diabetes, weight control, depression, and other medical conditions.

It has 34 manufacturing units in 8 locations across India and has its presence in 100 countries around the globe.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 578.35 578.70 1 Year Profit / Loss (%) 8.47 8.49 3 Year Profit / Loss (%) 22.23 22.29 5 Year Profit / Loss (%) 53.10 53.18 Beta (1 year) 0.73 0.74 Avg. Daily Volatility (% on year basis) 1.51 1.56

Key Market Indicators

Market Cap (₹ Cr) 45,031 Book Value (₹) 186.98 P/E 31.90 Industry P/E 22.34 P/B 2.99 Dividend Yield (%) 0.54 Return on Equity (%) 10.17

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 4,271.00 22.17 EBITDA (₹ Cr) 1,056.41 76.99 Net Income (₹ Cr) 367.20 105.59 EPS (₹) 4.55 104.95

Note: All the above values as on 27/05/2019

The company has reported a standalone sales revenue of Rs. 4,271.00 Crore, in FY 2018-19 (which is an increase of 22.17% on a yearly basis).

Also, the company has reported a net profit of Rs. 367.20 crore in the latest quarter.

10. GHCL Ltd.

Incorporated in the year 1983, GHCL Ltd. is a small cap company and engaged in the business of manufacturing and trading of inorganic chemicals, home textiles and wind power generation.

The company’s specialty is in soda ash, home textiles (bed sheets, duvet sets, comforter sets), yarn, edible salt (IFLO and SAPAN), and Industrial grade salt.

Performance of the Stock

Parameters BSE NSE Current Price (₹) 269.90 270.45 1 Year Profit / Loss (%) 20.91 20.95 3 Year Profit / Loss (%) 210.14 210.23 5 Year Profit / Loss (%) 1,091.59 1,091.65 Beta (1 year) 1.12 1.13 Avg. Daily Volatility (% on year basis) 2.11 2.15

Key Market Indicators

Market Cap (₹ Cr) 2,390 Book Value (₹) 196.42 P/E 6.82 Industry P/E 24.92 P/B 1.24 Dividend Yield (%) 2.05 Return on Equity (%) 17.49

Latest Quarterly Results

Q4 FY 2018-19 Results % Chg (Yearly) Sales (₹ Cr) 911.27 25.05 EBITDA (₹ Cr) 241.45 30.56 Net Income (₹ Cr) 118.55 44.31 EPS (₹) 12.00 43.54

Note: All the above values as on 27/05/2019

The company has reported a strong sales revenue of Rs. 911.27 Crore, in Q4 FY 2018-19, which is an increase of 25.05% on a yearly basis along with an increase of 43.54% in net profit.

Its tremendous performance in last few quarters is largely driven by its fast and strategic capacity expansion and realization improvement in all of its business verticles at the same time.

The Bottom Line

India is an attractive hub for foreign investments in the manufacturing sector and it has the potential to reach USD 1 trillion by 2025.

The implementation of the Goods and Services Tax (GST) and with impetus on developing industrial corridors and smart cities, the government of India aims to further assist in integrating, monitoring and developing a conducive environment for industrial development and will promote advance practices in the manufacturing sector.

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those of Groww