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Value Investing Gems: 3 Companies Beat Graham's Test
30 May
Summary
- Benjamin Graham's value investing principles are applied.
- Three companies, GNFC, KRBL, and PNC Infratech, passed the test.
- The screen focuses on margin of safety and reasonable valuations.
Benjamin Graham, the father of value investing, established a strict defensive investor test focused on margin of safety and avoiding risky businesses. This test, designed for discipline over speculation, has been adapted for the Indian market, excluding financial entities due to their unique structures.
After applying specific filters on Screener and conducting manual checks, GNFC, KRBL, and PNC Infratech emerged as companies meeting Graham's criteria. GNFC showed a chemical segment rebound offsetting flat sales, with a PE of 9.4 and PB of 0.8. KRBL, a leading basmati producer, saw steady domestic growth despite export volatility, with a PE of 12.6 and PB of 1.4.
PNC Infratech, an infrastructure developer, reported lower revenue but stable profit, supported by a significant order book. Its valuation includes a PE of 11.9 and PB of 0.8. While these companies passed the stringent screen, their long-term success hinges on navigating industry-specific risks like commodity cycles, export fluctuations, and execution challenges.
