We are just two weeks away from the end of financial year and it will be wise to say was bad year looking at the index returns. The Nifty 50 have given a return of -13.90% this financial years.

We don’t invest looking at the index, rather we prefer to buy quality stocks at right price and stay invested with them until fundamentally things change or when market is happy to buy at crazy valuations from us.

For us, it is important that management is adding value to the business every year, as we believe that, price of underlying assets follows the intrinsic values in the long term. Below is the list of five businesses that have added intrinsic values to the business and their past one year performance so far.

  Intrinsic Value added – 2016 Market Returns
Nifty 50   -13.90%
Amar Raja Batteries 22.75% 3.92%
Hero Motocorp 49.97% 6.86%
Atul Ltd 35.64% 25.88%
Bajaj Finance 56.81% 62.67%
Eicher Motors 153.25% 14.84%
Godrej Consumer Products 36.56% 16.92%

 

Looking at the above table, you will notice that the market returns are not correlated with intrinsic values in the short term, but they are definitely in the long term. Secondly, don’t forget that you have to buy these quality assets when they are trading cheap to its estimate intrinsic values. When you do that, you will notice your returns are almost correlated to its intrinsic value returns.

Finally, it will be not advisable to consider these stocks are trading at discount today. We do own Amar Raja and Eicher Motors in our portfolio, is our small disclaimer.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise you to take professional advice before going ahead with our views.