Whenever investors browse stocks to add to their portfolios, they need
crystal-clear quantitative parameters to filter out stocks that support their
thesis. For example, EPS growth is one of my favorites when it comes to
filtering out stocks that show consistent earnings growth within the company.EPS is simply a company's net income divided by the
shares outstanding to give the earnings number for each share. Earnings per
share growth is generally one of the most important metrics shareholders look
to to measure the company's financial performance as it is the net figure to
which shareholders are entitled after all expenses and accounting adjustments.
Listed below are 3 companies from the leading Nifty 50 index that have posted
the highest EPS growth over the past 5 years.
SBI- First on the list is State Bank of India which has a
market capitalization of INR 5,17,314 crores making it the largest public bank
in the country. Following the Covid-19 pandemic, the bank has shown an
exceptional recovery in the share price, which has risen from a May 2020 low of
INR 149.45 to an all-time high of INR 586.2 a few days ago. The massive rebound in share price was driven by strong financials as
they posted their highest ever turnover of INR 4,06,973 in FY22, consequently
resulting in a 57.88% yoy increase in net profit to 35,373 crores. This equates
to EPS of INR 39.64, which was just INR 0.31 in FY 2017. This is a massive
5-year CAGR of 164%. No other company in the index even comes close.
HINDALCO- Hindalco Industries Ltd is the second fastest growing company in the
Nifty 50 list in terms of the above parameter. This miner has a market cap of
INR 92,343 crores and is trading at a P/E of just 6.73 compared to the industry
average of 13.34.The company posted a record profit of INR 13,730 crores
in FY22, which is a staggering 294% higher than last year's profit of INR 3,483
crores, and EPS, which was INR 8.89 in FY2017, rose in FY22 61.74 INR
representing a 5 year CAGR of 47.36%. FIIs hold a significant 24.76% stake in
the company, while mutual funds also own 13.15%. As I always mention, investors
need to be particularly vigilant in commodity-based companies due to their
cyclical nature.
JSW STEEL - JSW Steel Ltd (NS:JSTL) is engaged
in the production and distribution of iron and steel products and has a market
capitalization of INR 1,63,281 crores. The company also saw a massive profit
jump of 161.22% to INR20,665 on higher commodity prices in FY22. In the last 5
years, the market share has also increased from 15.41% to 19.85%.The increased profit pushed EPS up to INR68.51 in FY22, down from just
INR11.7 in FY2017, a 5-year CAGR of 42.4%. The icing on the cake is that the
company also trades with a dividend yield of just over 3.21%.
These 3
companies mentioned above are the only ones in the Nifty 50 index that have
clocked a 5-year CAGR in EPS of over 40% and all 3 of them posted the
highest-ever earnings in FY22.
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