Select stocks hit new highs in recent rally

Vidya Bala

BL Research Bureau The Sensex may be 27 per cent below its high of 20,873 in January 2008, but did you know that select blue-chips have already surpassed their earlier highs? Thirty-six of the BSE 500 stocks and four Sensex stocks have raced ahead of their respective prices on January 8, 2008. “Defensives” from the pharma and FMCG space make up most of the list.

GlaxoSmithkline Consumer Healthcare, Hero Honda Motors, LIC Housing Finance and Rural Electrification Corporation, in fact, made new life-time highs in June 2009, even as the broader market traded well below its January 2008 levels. At least 12 stocks from the BSE 500 universe recorded their new life-time highs in the last two months, even as 36 raced ahead of their respective prices on January 8, 2008.

Companies such as Godrej Consumer Products, EID Parry India and Shree Renuka Sugars in the FMCG space and Lupin and Cipla in the pharmaceutical segment are all currently trading a good 20 per cent above their respective prices on January 8, 2008. While the stocks that recently hit their all-time high are from a mixed bag of sectors, the ones trading above their January 2008 levels mostly come from pharma and consumer goods.

In the Sensex basket, Maruti Suzuki, Hindustan Unilever and Infosys Technologies have managed to sustain their prices at levels higher than the January 2008 peak. Sun Pharma was, however, the only stock to make a new life high in the recent rally.

Aided by performance

Stocks that soared were actually cases of valuations being ‘re-rated’. Stocks in the BSE 500 universe that were carried to their new highs managed to deliver healthy profit growth in a year that witnessed a good number of firms recording decline/marked slowdown in their profit growth.

Companies such as Hero Honda Motors, Coromandel Fertilisers and Rural Electrification Corporation demonstrated profit growth in the range of 30-90 per cent in FY-09, thus demanding a re-rating. Others such as Sesa Goa, boosted by a series of positive moves including a recent acquisition, are probably just a short spike away from hitting a new high.