Just Dial, United Breweries, United Spirits in India's top 10 most expensive stocks list

Written by Devangi Gandhi | Mumbai | Updated: Sep 4 2014, 02:41am hrs
StocksAmong the top ten most expensive stocks--put together by FE with the help of Bloomberg's earnings estimates---are five FMCG firms. (Reuters)
With the Sensex scaling new peaks---it closed Wednesday's session at a record 27,139.94---analysts are going back to their spreadsheets to pick stocks that don't look so expensive. The fact, is however, that most blue-chips now command very stretched valuations, especially consumption stocks whether local players or multi nationals (MNCs). Among the top ten most expensive stocks--put together by FE with the help of Bloomberg's earnings estimates---are five FMCG firms. These include, not surprisngly, alcohol beverage makers United Breweries and United Spirits, which trade at a jaw-dropping 59 and 49 times one-year forward expected earnings.

With a forward PE of 69, Just Dial, voice and online information provider, that listed in June 2013, was the most expensive stock. That's despite analysts questioning the firm's pace of transition from voice- based to internet based services. The stock recently found a place in the NSE mid-cap index.

Indeed, the compilation--which took into account companies with market value of more than Rs 10,000 crore and which boast a one-year forward price to earnings ratio (P/E) of more than 25---threw up as many as 38 companies and lots of surprises.

Logistics player Blue Dart, a subsidiary of DHL is the second most expensive stock with a P/E multiple of 65 times. While speculation that the MNC parent may de-list the Indian arm keeps the stock going, DHL's decision to foray into e-commerce has also boosted valuations.

Tata Communications is a surprising candidate but the Street seems to be acknowledging the turn-around in the company which reported a net profit of Rs 102.8 crore in FY14, breaking a four-year long loss- making streak. The recovery has lead to a jump in the buy ratings on the stock from 53% to 71% of the total recommendations.

The United Spirits stock has been a winner ever since the UK based Diageo PLC made an open offer back in November 2012; after all who doesn't want to own an MNC with big brands and strong margins While the stock has made an exit from the NSE's flagship indices, including 50-share Nifty since it postponed the publication of its FY14 earnings, it nevertheless has a fan following.

Always fair and lovely, Hindustan Unilever was a top performer 2011 and 2012 when the broader market was dull; with its parent Unilever adding to its stake in the company by 14.8% to 67.3% through an open offer last year, the stock has acquired even more charm. HUL currently trades at a forward P/E multiple of 37, an astounding 30% premium to its historical valuations. Smaller players like Nestle and P & G also command P/E multiples of 43 and 45.5 while capital goods players ABB and Siemens are also richly valued with P/E multiples of 50 and 45.5, respectively.