There are few shares in Indian
Stock market whose always command premium valuation irrespective of the market
conditions. e.g. Colgate, Dabur,
Hindustan Unilever, Bosch, Abbott India, Nestle, Asian Paints etc. There are various reasons behind such high
valuation.
1. Long
Term Earning Visibility: Companies with long term earning visibility always
command premium valuations. FMCG companies are the most suitable example of this.
2. Return
on Equity : Companies with
high Return on Equity always command premium valuations. Nestle,colgate are the
companies whose ROE is more that 100%
3.Corporate
Governance : Companies with high corporate governance always enjoy a premium in
valuation over their peers.
4. Multinational
Companies : Multinational companies with strong parent and having strong
presence in India enjoy premium valuation. This premium is because of their
technological edge , good corporate governance, high dividend payout ratio,
High ROE and hope for open offer and delisting.
Bayer Crop Science, Abbott India, HUL, Bosch, GSK are prominent examples.
Disclaimer : I have shares of Abbott India and Bayer Crop sciences.
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