Maruti to Eicher, here're stocks that meet 'value with quality' criteria

The correction has moderated valuations, with the Nifty’s price-to-earnings (P/E) inching closer to its long-term average. The Nifty now trades at 17.6 times its estimated one-year forward earnings, down from 19.5 per cent at the end of August. The long-term average is slightly below 16 times. Also, the percentage of stocks in the BSE200 universe (excluding financials) with P/E of less than 15 has increased from 26 per cent at the end of August to 31 per cent now. On the other hand, shares trading at P/E multiple of more than 40 have reduced from 20 per cent to 17 per cent, most since March 2018, as per an analysis by Elara Securities. The brokerage has screened stocks that offer “value in quality”. Stocks with high and consistent return on capital employed, stable operating margin, positive free cash flow and low leverage qualify as “quality” stocks. While, stocks whose forward P/E below five-year average and those who have corrected more than 10 per cent meet the “value” criteria.

Maruti Suzuki, Eicher Motors, Sun TV, Endurance Tech, Whirlpool, Wabco, SKF, Mahanagar Gas, Dr Lal Pathlabs and Tata Elxsi are some of the stocks that meet the “value with quality” criteria.