Top 5 most expensive stocks in India

Try and answer this no-brainer. Do you know which is the most expensive stock in the world? Most of you might have guessed it right. It’s the Warren Buffet-owned Berkshire Hathaway. But are you aware of the most expensive stock in India? Well, we’re here to help you out with it. Today we will look into the nuances of why certain stocks are highly-priced, and also discuss a few of the most expensive stocks that are traded in our country.

But firstly, why are some stocks so pricey?

Why are some stocks so expensive?

Most shares have a face value of Rs 5 or Rs 10, but the price at which they are traded in the market can shoot up to some thousand rupees. Isn’t it fascinating?

The market price of a stock is determined by the forces of demand and supply. Of course, demand and supply are influenced by a wide variety of factors. So every time, the number of buyers exceeds the number of sellers for a particular stock, the market price of that stock rises, and vice versa.

But the increasing price of a stock would limit the number of potential shareholders. To combat that, most companies carry out what is known as a Stock Split. The process of stock split increases the number of shares which eventually decreases the market price per share. So the next time you see a stock priced very high, just know that the company can take it down by splitting its shares.

How to identify expensive stocks?

You can use a good screener like Ticker to filter out the most expensive shares. All you have to do is go on to the screener and type “Price” and give in your desired figure.

Today, we’ve used the query to filter out the 5 most expensive stocks in the country. Let’s have an overview of these companies.

Most Expensive Stocks in India

• MRF Ltd

The company that was established as a toy balloon manufacturer in the late 1940s is now the largest tyre manufacturer in the country and the sixth-largest in the world. The products of the Madras Rubber Factory include conveyor belts, paints, treads, and tubes. MRF has never split its stock or issued bonus shares. Also, It is the first tyre company to cross the 10 billion market cap. Astounding, right!

MRF has a debt-equity ratio of 0.09 and an interest coverage ratio of 7.28. The company is in a comfortable position to pay off its debts. If there is something that may concern the investors is the Sales and Profit growth. The company has shown negative growth in both profits and sales.

• Honeywell Automation India Ltd

Incorporated in 1984, Honeywell Automation is engaged in the business of providing software solutions and integrated automation. The company was initially promoted by the Tata Group, then converted into a JV, and is now majorly owned by Honeywell Asia pacific Inc. The company is a proud market leader in the Electronics Instrumentation and Process Control equipment industry.

Though the profit growth over the last year isn’t attractive, the share price has seen a CAGR of approximately 22.59% in the past 3 years which is quite impressive. The sales have also grown at 4.19% over the last 3 years which is quite concerning for the investors. Honeywell is a debt-free company with an interest coverage ratio of 68.18 which will give its investors a sense of security in the company.

• Page Industries Ltd

Page Industries, established in the year 1994, is an Indian brand that is licensed to manufacture and sell products of Jockey in India, Nepal, Sri Lanka, Bangladesh, Oman, UAE, and Qatar. Not only that, but the company also has an exclusive license to manufacture, market, and distribute Speedo International Ltd.'s products.

ROCE of ~40%  indicates that the capital employed in the company is utilized efficiently. The debt component of the company is almost negligible. However, sales and profit have definitely decreased. When compared to similar companies in the textile industry, the market cap of Page is the largest. The company is trading at a P/E of 108.01 which is quite high!

• Shree Cement Ltd

Shree cement, incorporated in the year 1978, is the leading cement manufacturing company in north India. The cement manufacturer also produces and sells power under the name Shree Power and Shree Mega Power. The company follows a multi-brand strategy and sells cement under the highly recognized brands of Shree Ultra, Bangur, and Rock strong.

The sales growth over the last year is quite satisfactory. The company has shown tremendous growth in profit growth over the past 1 year. The debt ratio of the company is 0.14 which reflects that the company is not heavily dependent on borrowings, and the interest coverage ratio of 13.24 indicates a comfortable repayment position. ROCE and ROE levels of the company are also satisfactory.

• 3M India Ltd

3M is a company operating in diversified industries like transportation, safety, design and construction, electronics, health care, and many more. A few of their popular products include Scotch Magic Tape, Scotch Glue Stick, etc. The company strives to provide innovative products and solutions worldwide without ignoring the aspects of global sustainable development through social responsibility, economic growth, etc. 

Though 3M is one of the most expensive stocks in the country, the fundamentals do not reflect a healthy position. The company is debt-free which is a good sign. However, the dividend yield stands at 0% and the growth of sales and profit is in the negative. The average of CFO/PAT over the last 5 years is at 0.96 which is average.

Final words

While choosing a stock to invest in, some prefer fundamental analysis, while others, technical analysis. Veterans like Warren Buffet strongly believe that the former is way more reliable and authentic than the latter. This is in a way true.

Only because a stock is highly-priced does not guarantee stability and long-term returns. Like we established, the most expensive stocks may not necessarily be great bets. Don’t let biases impact your investment decisions. Invest only and only after thorough research.

Invest wisely!