Top Ten Low Beta Stocks

Investors would recollect that last week we had recommended high beta stocks for our Slide Show. This time, therefore, we have chosen the top ten low beta stocks which are usually slow and steady in nature. To reiterate, beta is a number which describes the movement or volatility of that stock in comparison to the broader indices. For example, if a stock has a beta of 1 then its movement is almost similar to that of the Sensex, while in case it is greater than 1 (for instance, 2) then it gives around two times’ the return than the broader indices. Similarly if the stock’s beta is less than 1 (say, 0.5) then it will inch higher by approximately 50 per cent less than that of the broader indices. Here one should note that stocks having beta greater than zero usually move in the direction of the broader market i.e. if the market inches higher, the stock also goes up and vice-versa.

Low beta stocks usually include defensive bets like consumer goods, consumer durables and pharma stocks. This is because this stock does not see a sharp movement or wealth erosion even if the market becomes volatile. The following table lists the top ten low beta stocks with their value and their current market price (CMP):

1. Kansai Nerolac Paints Ltd.

Goodlass Nerolac Paints Ltd.(GNPL), the Indian subsidiary of Japan-based Kansai Paint Co Ltd, is the second-largest paint company in India with a presence in decorative paints as well as industrial and marine paints, enamels, varnishes, coatings, resins, etc. It is also the second-largest coating company in India. The company markets its products under the brand names Nerolac, Glossolite, Goody, Allscapes and Excel in decoratives. On an YTD basis the stock has given a return of around 8 per cent and it ranks first on our low beta list with a beta standing of 0.01.

2. Gujarat Gas Company

Gujarat Gas Company is the largest private sector player in the natural gas transmission and distribution business. The company is the main distributor of natural gas in the industrial, commercial, domestic and automobile segments. The company mainly operates in the districts of Gujarat and is continually expanding due to the growing demand and usage of natural gas. The share price of GGCL has declined by 10.92 per cent since the beginning of the fiscal year. The beta of this stock is 0.02.

3. Strides Arcolab

Pharma stocks generally tend to have a lower beta as the stocks are not very volatile. Being a recession-proof business, pharma stocks usually do not cause major wealth erosion. Strides Arcolab is a pharma company with its focus on the injectable segment. The company derives most of its income from exports and has a decent pipeline of products to be launched in the future. The company has recently acquired a manufacturing facility in order to boost its production. Its beta is 0.03.

Godfrey Philips India (GPIL), promoted in 1936 by Godfrey Philips of London, has a business presence in the manufacture and marketing of cigarettes and branded tea. The company has very famous brands like FS1, Four Square and Marlboro. The company exports cigarettes as well as tobacco to various countries like the Middle East, West Africa, Southeast Africa, Asia, East Europe, Australia, etc. It has three major manufacturing facilities, two at Mumbai and one at Ghaziabad. On an YTD basis the stock price has appreciated by 37 per cent and the beta of the stocks stands at 0.03.

5. Kemrock Industries & Exports Ltd.

Kemrock Industries & Exports Ltd was incorporated in the year 1991 and the company is the world’s most integrated fibre-reinforced composites’ manufacturer, providing an extensive range of standard products that are ideal replacements for traditional materials. The company delivers standard as well as customized solutions that are ideal replacements for conventional materials. Their product range comprises carbon fiber, windmill blades & nacelle covers, railway interiors/exteriors, telecom towers, pipes and many more FRP/GRP composite products. On a YTD basis the stock is down by 9 per cent and the beta of the stocks stands at 0.05.

6. Marico Ltd.

Marico is one of India’s leading consumer products and services companies in the global beauty and wellness space. Today, one out of three Indians uses a Marico product. Marico is present in more than 25 countries across Asia and the African continent. Its vast portfolio of enduring brands comprises Parachute Advansed, Saffola, Hair & Care, Nihar, Mediker, Revive and Manjal, which are leading household names today. On an YTD basis the scrip has moved higher by 25 per cent and the beta of the stocks stands at 0.06. Marico is DSIJ’s one of the favourite FMCG bets.

7. Gulf Oil Corporation Limited

Gulf Oil Corporation Limited, an arm of the Hinduja Group, is a company that was formed with the merger of Gulf Oil India and IDL Industries Limited. With revenues of more than Rs 1,000 crore, the company’s operations are spread across lubricants, industrial explosives, mining, and infrastructure & property development with lubricants being the largest contributor to its revenue in which the company enjoys a No 2 position across India. The firm’s beta is 0.06 and has YTD returns of 67.95 per cent.

8. HEG Ltd.

HEG is a leading manufacturer and exporter of graphite electrodes in India. It has the world’s largest single site plant of graphite electrodes with a production capacity of 80,000 MTPA. The demand of graphite electrodes is correlated to steel production. The industry is expected to see 15 to 20 per cent growth in both, volumes and pricing in FY 2012-13. The beta of the stock is 0.08 and the prices have yielded a return of 42.67 per cent since the beginning of the fiscal.

9. Cadila Healthcare

Cadila Healthcare is one of the well known pharma companies in India. The company has a presence of over 60 years in the pharma field. It has a subsidiary known as Zydus Wellness which has products like Sugar Free, EverYuth, etc. The company also has an animal health business. It is ambitious of nearly tripling its business in the next 3-4 years which will see good price appreciation over the same period. Its current beta is 0.09.

Page Industries is a known name in the innerwear segment. The company markets its products under the brand ‘Jockey’. In fact it is the only company in India that endorses this licensed brand and provides exclusivity to its products. The company is also in the process of getting a few other licensed global brands in India. It is also expanding its capacities in order to meet the high demand for its products. The beta of this stock is 0.1.

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