A company of a ‘fundamentally strong’ nature exhibits a specific set of characteristics including strong as well as consistent financial numbers, lower leverage ratios, etc.
Listed below are two such fundamentally strong stocks in different sectors that are at a discount of up to 25 percent from their respective 52-week high level:
Sumitomo Chemical India Limited
With a market capitalization of Rs 21,113.86 crores, the stocks of Sumitomo Chemical India Limited started their trading session on Tuesday at Rs 426 and currently trade at Rs 423, slipping around 0.50 percent as compared to the previous closing levels of Rs 425.05 apiece.
The company hit its 52-week/all-time high in October 2022 at a price of Rs 540.65, and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 22 percent.
Having a look at the annual consolidated financials of the company, the prime indicators of business, viz, the operating revenues as well as net profits, went up consistently during the past couple of financial years.
The most recent movements in numbers show the operating revenues shifting up from Rs 3,061.22 crores during FY21-22 to Rs 3,510.97 crores during FY22-23, and, the net profits, keeping the timeframe the same, increased from Rs 423.55 crores to Rs 502.21 crores.
Due to increased cost pressure, the profitability metrics of the company took a slight hit with the return on equity (RoE) reducing from 24.42 percent during FY21-22 to 23.31 percent during FY22-23, and, the return on capital employed (RoCE) decreasing from 33.66 percent to 30.65 percent during the same time period. The net profit margins, on a contrasting note, rose from 13.84 percent during FY21-22 to 14.3 percent during FY22-23.
The shareholding pattern data, as per the June 2023 quarter, shows the company’s Promoters holding a 75 percent stake, thus, having a ‘skin in the game’, and, the Foreign Institutional Investors (FIIs) holding a 2.51 percent stake.
Sumitomo Chemical India Limited is involved in the business of manufacturing as well as selling agricultural pesticides, household insecticides, feed additives, and other animal health nutrition products.
Redington Limited
With a market capitalization of Rs 12,237.29 crores, the stocks of Redington Limited started their trading session on Tuesday at Rs 158.80 and currently trade at Rs 156.55, slipping around 1.40 percent as compared to the previous closing levels of Rs 158.75 apiece.
The company hit its 52-week high in December 2022 at a price of Rs 202.2, and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 23 percent.
Having a glance at the annual consolidated financials of the company, the prime indicators of business, viz, the operating revenues as well as net profits, went up consistently during the past couple of financial years.
The most recent movements in numbers show the operating revenues shifting up from Rs 62,644.01 crores during FY21-22 to Rs 79,376.78 crores during FY22-23, and, the net profits, keeping the timeframe the same, increased from Rs 1,314.87 crores to Rs 1,439.39 crores.
Due to increased cost pressure, the profitability metrics of the company took a hit with the return on equity (RoE) reducing from 24.61 percent during FY21-22 to 22.66 percent during FY22-23, and, the return on capital employed (RoCE) decreasing from 30.25 percent to 26.58 percent during the same time period.
Redington Limited is engaged in the business of providing supply chain management as well as information technology (IT) services. The company also sells IT distribution products consisting of computers, software, security solutions, network equipment, and many more.
Written by Amit Madnani
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