When deciding whether to invest or not in a company, many investors look for businesses that will last a long time and not those businesses that are doing well currently. They intend to remain invested in stocks for more than ten years and let their money compound.
Fundamentally strong companies help investors to make fortunes, especially when investors remain invested for a long period of time. One such company is SRF Limited.
SRF Limited is a chemical-based multi-business entity that manufactures industrial and specialty intermediates. Its product portfolio includes fluorochemicals, specialty chemicals, packaging films, technical textiles and coated and laminated fabrics.
The company’s shares have given multibagger returns of 15091% in the past fourteen years as its share price increased from ₹ 13.87 to ₹ 2107.00. Therefore, if an investor would have invested ₹ 1,00,000 in the company’s shares fourteen years ago, the value of their holdings would have been ₹1,51,91,000 today!
SRF is a large-cap company with a market capitalization of ₹ 63,359 crores. It has an ideal return on equity of 24.50 per cent and an ideal debt-to-equity ratio of 0.42. Its shares were trading at a price-to-earnings ratio (P/E) of 28.79, which is significantly higher than the industry P/E of 13.90, therefore the stock might be overvalued. This could also mean that investors are willing to pay a higher price for the company’s future earnings.
The company has promoter holdings of 50.53 per cent. Further, 18.31 per cent of its shares are held by Foreign Institutional Investors (FIIs), 17.33 per cent is held by retail investors, Domestic Institutional Investors (DIIs) hold 4.57 per cent and mutual funds have a 9.26 per cent stake in it.
Written by Simran Bafna
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