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The 'other' Infosys, Titan, Maruti roar in bull market

A DNA analysis shows that namesake company stocks have given good returns, and in some cases have even beaten well-known brands like Infosys, Titan, and Maruti by up to 70% this year.

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Shares of well-known brands often command premium valuation in the market. But in a bull market, having a similar sounding name also works wonders for the lesser mortal firms.

A DNA analysis shows that namesake company stocks have given good returns, and in some cases have even beaten well-known brands like Infosys, Titan, and Maruti by up to 70% this year.

With continuing liquidity chasing stocks of all shapes and sizes, it seems that namesake stocks or shares of companies that resemble a popular company are in good demand these days. Take the example of Titan Securities, whose stock has jumped 155% in 2017 year to date. The returns of this 'Titan' easily beat the 79% odd gained by shares of Tata Group firm Titan Co that is synonymous with watches and jewellery, according to stock exchange data. You can also look at unrelated 'Titan' Biotech's impressive 46% jump in 2017 year to date.

"Investors should pay a lot of attention to the exact name of the stock they are buying. Using abbreviations or just a part of the name can lead to purchasing a different stock than you had intended. Sometimes after a major development in a well-known company, we see clients sometimes wrongly buying stocks with similar names. Small companies have lower float in the market, so even a small buy or sell order has a major impact on share price. Plus, there are always rumours floating around that attract tips-hungry retail investors," says Satish Shah, a stockbroker.

Such similar sounding names are quite common in the IT stock space. While you have the original IT posterboy Infosys in one corner, there are minions like Shyama Infosys Ltd and Southern Infosys Ltd on the other end of the spectrum. Infosys shares, reeling under management changes triggered by a tussle between founders and previous Board, have fallen by 9.6% this year so far (up to September 30). However, the similar sounding microcap 'Infosys' stocks have not fared that bad. Southern Infosys stock is flat. Penny stock Shyama Infosys is up 30.7% year to date.

"During the dotcom boom and bust phase, adding infotech or infosystems was a fashion for many companies. Gullible investors in those days used to think that the mere mention of 'info' indicated some connection with cutting-edge infotech work. Over the years, such instances have reduced with big brands claiming IP and trademark protection. In case of penny stocks or microcaps, one should be extremely careful. Thorough research should be done before buying," remarks Anil Rego, CEO, Right Horizons.

If you thought car-maker Maruti's 51% gain in stock markets this year is solid, look at another 'Maruti'. The Jay Bharat Maruti (JBM) stock has jumped 118% already this year, more than double that of Maruti Suzuki India shares.

In its defence, however, Jay Bharat Maruti has a Maruti connection. The company, which commenced operations as a manufacturer of LPG cylinders for the Delhi-NCR region of India, in 1986 signed a joint venture with Maruti Suzuki India for the manufacturing of sheet metal components and assemblies. Another similar sounding name is Reliance Chemotex Industries. Shares of this 'Reliance' Chemotex Industries Ltd, incorporated in 1977 by Shanker Lal Shroff as a publicly traded spinning mill in Udaipur, have gone up by 27% in 2017. This is not far from the gains clocked by Mukesh Ambani-controlled Reliance Industries whose stock has gained 45% year to date.

Some common names like Rajesh and Kumar are present throughout similar sounding stocks but stock performance in such cases has been divergent. While Rajesh Exports shares has jumped 77% YTD, Shree Rajeshwaranand Paper have gained over 38% in 2017 so far. J Kumar Infraprojects's shares have stayed flat this year, but Kumar Wire Cloth stock has jumped over 9% while S Kumars Online has tanked 28%. In the same vein, Gitanjali Gems has seen its shares gain 17% YTD, but Geetanjali Credit has seen 39% value erosion.

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