Further, the investor confidence level in these stocks is exceptionally high as a result of the pay-out policies adopted by most of these companies. Most of these companies have been very liberal in rewarding shareholders by way of bonus issues and high dividends. Multinationals have been consistent in capitalising their reserves to reward shareholders as they are confident of reporting sufficient growth in earnings to match the equity dilution.

Besides, MNCsnormally operate in sectors that are unlikely to witness a slowdown. This makes valuation of MNC stocks all the more attractive. Companies in the fast moving consumer goods (FMCG), pharmaceutical, speciality chemicals, agrochemicals and consumer durables sectors, have reported a robust growth in earnings despite the general slowdown. The trend is likely to continue and the earnings are expected to improve in the current year, thus making the discounting even more attractive.

In a few cases, the results for the period ended September have shown a substantial improvement in earnings. For instance, Knoll Pharmaceuticals, on an expanded equity of Rs 16.2 crore (after 1:1 bonus) has reported a net profit of Rs 10.5 crore for the quarter ended September 1998 against the full year net profit of around Rs 25 crore. Knoll's annualised earning per share works out to around Rs 26 and at the current market price of Rs 417, the scrip trades at a price earning ratio of around 16.

At current valuations, a number ofmultinational stocks are going cheap with attractive price earning ratios. BASF Limited at Rs 157 is trading at a price earning of only 15.3. After going ex-bonus, the scrip has dropped to Rs 157 and is an attractive bet. Digital Equipment is available at a price earning ratio of 19.68 while Cummins Limited (16.18), Atlas Copco (9.09), Hind Lever Chemicals (13.13), Philips (16.72) and Esab India (14.28) are also trading at attractive PEs.

A study of performance of multinationals in the past 11 trading sessions shows that out of the 36 group A multinational stocks, only four MNC stocks have lost more than the BSE sensex's 11.41 per cent.

On the other hand, six MNC scrips have moved against the wave and registed huge gains. E Merck, Novartis, ABB, Ingersol Rand, Pfizer and Parke Davis have been clear outperformers and registered gains in the range of 1 per cent to 14 per cent.

Wartsila NSD, BASF Limited, Cummins India and Carrier Aircon have lost more than 11.4 per cent in the past 11 trading sessions.Wartsila has been among the worst sufferers and has lost more than 14 per cent. BASF, after going ex-bonus in the past few sessions, has lost more than 16 per ecnt from the ex-bonus price of Rs 190 to the current level of Rs 157.

BASF India's performance for the first quarter of 1998-99 has been steady. While the company reported a 17 per cent growth in sales to Rs 81.08 crore, the post-tax earnings rose 19 per cent growth to Rs 3.86 crore. Given the seasonal nature of agrochemicals, the first quarter performance may not be the right yardstick to judge the full year's earnings. With a normal monsoon, the company is expected to improve its earnings in the following quarters.

Carrier Aircon, the 51 per cent subsidiary of Carrier of US is the undisputed leader in airconditioning and is trading at Rs 226 which gives an attractive price earning of just over 20. The company has witnessed robust growth in the past few years and has the necessary competence to maintain its growth rates.

Knoll Pharmaceuticals isanother attractive investment option. The company is a prominent player in the pharmaceutical industry, and given its impressive past financial performance, the hike in stake by the parent company's subsidiary - Lupharma GmbH - to 51 per cent and with a host of popular brands, Knoll Pharmaceuticals is certainly a good bet at the current levels. Knoll Pharma has been engaged primarily in two segments of pharmaceuticals industry -over-the-counter (OTC) drugs and formulations. However, it plans to withdraw from the OTC market so that it can concentrate on its core business of formulations. It is revamping its product portfolio to concentrate on the ethical prescription business.