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Joel Greenblatt Stocks in India

The 'Magic Formula' was created by hedge fund manager and Columbia University professor Joel Greenblatt.

It involves buying undervalued stocks based on two parameters - high earnings yield and return on capital (RoC).

With the help of this formula, several fund management companies have generated significant return. Here is a list of stocks that rank well on the magic formula's parameters.

Marketcap: Largecap
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CompanyCMP
(Rs)		RoCE
(Latest, %)		P/E
(x)		P/BV
(x)		RoE
(3 yrs, Avg. %)		Sales CAGR
(3 yrs, %)		Profit CAGR
(3 yrs, %)		D/E
(Curr FY, x)		Dividend Yield
(%)
NESTLE2,218.9161.4%66.053.571.6%18.3%22.9%0.01.5%
HYUNDAI MOTOR INDIA LTD.1,829.174.4%NM3.932.5%19.5%47.7%0.10.1%
TCS4,039.369.4%30.714.447.0%13.6%12.3%0.01.8%
COAL INDIA412.256.2%7.42.645.9%19.5%43.3%0.16.2%
TITAN3,217.741.4%88.129.329.6%33.1%53.1%1.40.3%
ASIAN PAINTS2,483.240.3%53.113.226.1%17.8%20.1%0.11.3%
BPCL287.639.4%10.61.620.7%35.6%15.8%0.65.4%
ITC467.436.8%28.17.827.3%12.7%15.7%0.02.9%
ADANI POWER524.134.7%15.93.636.8%24.3%154.1%0.80.0%
BAJAJ AUTO9,546.534.1%33.98.622.7%17.4%16.6%0.10.8%
BHARAT ELECTRONICS278.732.3%45.311.521.5%12.8%24.0%0.00.8%
L&T INFOTECH5,876.631.9%37.48.326.2%42.1%33.2%0.01.1%
HCL TECHNOLOGIES1,820.230.8%29.37.222.6%13.4%12.0%0.02.9%
POLYCAB INDIA6,515.630.3%53.911.419.0%27.1%28.9%0.00.5%
VARUN BEVERAGES630.530.0%79.322.226.3%35.4%80.5%0.70.1%
EICHER MOTOR4,964.729.0%36.47.218.4%23.8%43.8%0.01.0%
PIDILITE INDUSTRIES3,001.128.9%79.117.519.2%19.3%15.8%0.00.5%
IOC133.228.3%11.91.017.1%44.8%25.6%0.78.8%
ABB INDIA6,696.628.2%84.120.918.3%21.5%75.6%0.00.4%
BOSCH34,252.326.8%48.57.915.0%19.9%73.0%0.01.1%
MANKIND PHARMA2,568.026.0%48.49.720.7%18.5%14.5%0.00.0%
DR. REDDYS LAB1,214.025.7%18.73.316.9%13.7%41.9%0.10.1%
TVS MOTORS2,429.323.9%56.214.922.2%26.3%43.1%3.70.3%
ONGC247.921.4%7.60.916.0%29.7%38.8%0.44.9%
L&T3,505.621.3%29.85.415.0%17.6%49.4%1.31.0%

* We show NM where the values are negative

Disclaimer: This is for information purposes only. These are not stock recommendations and should not be treated as such. Learn more about our recommendation services here... Also note that these screeners are based only on numbers. There is no screening for management quality.

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FAQs

Which are the top stocks in India that pass the Joel Greenblatt filter?

As per Equitymaster's Stock Screener, these stocks could potentially meet Joel Greenblatt's investing criteria.


Joel Greenblatt believes that a company with the ability to invest in its business and earn a strong return on investment is usually a "good" company.

Investors are inspired by Greenblatt's ability to pick winning stocks that deliver long-term returns.

Who is Joel Greenblatt?

Joel Greenblatt is an American fund manager and investor.

At present, he is the co-Chief investment officer and the managing principal of Gotham Asset Management, an investment firm he founded in 1985. His fund, a hedge fund, generated a whopping 40% annual return to investors every year for 20 years.

What is the Joel Greenblatt style of investing?

Greenblatt is well-known for his 'magic formula' for scouting investments.

This method of investing combines companies with high earnings yield and those with a high return on invested capital (RoIC).

His basic premise is that companies that can earn a high return on capital over time generally have a special advantage that keeps competition from destroying it. It could be name recognition, a new product that is hard to duplicate or even a unique business model.

Therefore he strongly advocates investing in such companies.

How do you calculate the magic formula?

The 'Magic Formula' gives both earnings yield and return on capital equal weightage while selecting companies. Then it ranks those companies by both ratios.

Earnings yield = EBIT (Earnings before interest and taxes) ÷ Enterprise Value

Return on capital = EBIT (Earnings before interest and taxes) ÷ (Net Fixed Assets + Working Capital)

How do you rank stocks using the magic formula?

Once you calculate both ratios, you must combine both and rank the companies in descending order.

One can then buy two to three positions each month in the top 20 to 30 companies, over the course of a year. Each year, rebalance the portfolio by selling off losers one week before the year term ends and sell off winners one week after the year mark.

Repeat the process each year for a minimum of five to 10 years or more.

Which are the books written by Joel Greenblatt?

Greenblatt has penned down a total of five books that reflect the core values used by him to manage his portfolio.

So far Greenblatt has written -

  1. The Little Book That Beats the Market
  2. The Little Book That Still Beats the Market.
  3. You Can Be a Stock Market Genius
  4. The Big Secret for The Small Investor
  5. Common Sense: The Investor's Guide to Equality, Opportunity, And Growth

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