South Indian Bank, ONGC, HPCL, Oil India, Coal India, Karur Vysya Bank, CESC, PNB Housing, SBI, GAIL, NMDC, City Union Bank, Hindalco, Gulf Oil, Axis Bank, Sun TV and NTPC are the stocks that ICICI Securities are shares. Ranked in ascending order from ‘deep value’ to ‘value’.
“Stocks related to the above sectors are generally capital-intensive, cyclical and value stocks. Our back-testing suggests that as long as the investment, commodity and credit cycles remain strong, value stocks will have the necessary catalyst to keep outperforming,” the local brokerage firm said in a report.
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The proportion of ‘investable value stocks’ (RoE > 14% and earnings yield > bond yield) in the top-1,000 universe has declined from 15% to 7.6% over the past year, mostly in micro-caps, small-caps and mid-caps. -caps in descending order (cycled low at 6% in Dec’17), the report added.
ICICI Securities’ value strategy is defined as identifying stocks about which the market is pessimistic, with respect to the company’s long-term growth potential, while they view the fundamentals of such companies as strong amid improving near-term growth. Probabilities
The framework used to identify value stocks includes a combination of parameters that reflect unwarranted market pessimism about ‘long-term prospects’ as measured by their proprietary ‘Market-Implied Long-Term Growth Value’ (MILTGV) framework, scenarios where earnings yield is Attractive P/B ratio above bond yields and compared to stock’s RoE profile.
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