Wednesday, February 4, 2009

Next BlueStar or CRISIL?

As discussed in my previous post here, I went through the list of high dividend paying companies. The criterion was to have a minimum yield of 5%. There were 336 companies matching the criteria. To find the next BlueStar or CRISIL, I eliminated companies with following critiera:
1. The company is very small. If it has revenue less than INR 100 Crore and/or profits less than INR 10 Crore. This removed 19 companies.
2. The company has a lot of debt, i.e. more than half its networth. This removed 161 companies.
3. The company is not paying dividend consistently. This include companies which paid special dividend to make yield more than 5%.
4. Companies whose business model can't be trusted to remain sustainable, i.e. Aftek, Gulf Oil Corp etc. This eliminated 8 companies.
5. The companies whose earnings will be negative this year. This eliminated 16 companies.
6. The company is a bank. This eliminated 10 companies.

I was left with a list of 71 companies to keep an eye on. Some of them include Royal Orchid Hotels, Mangalam Cement, Ador Welding, VST Industries, HCL Infosystems, Lakshmi Machine Works, GNFC, Plastiblends, etc. The companies in these list are from sectors ranging from Hotels to Cement, from Engineering to Tobacco, from IT to Fertilizers. Take your pick.
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