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A company is said to be ‘fundamentally strong’ when it possesses a low debt-to-equity ratio which resembles a superior position in times of financial distress as compared to its peers in the industry. Moreover, other financial parameters of the company are strong which indicates operational efficiency. 

Contrary to the strong financial performance and numbers, listed below are 2 Fundamentally Strong stocks that are currently trading at a discount of more than 20 percent from their 52-week high levels. 

DMART:

With a market capitalization of Rs 230,674 crores, the company’s shares traded flat and closed at a price of Rs 3,547. The current prices exhibit a discount of 23 percent from its 52-week high price of Rs 4,609. 

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Having a glance at the latest financials released by the company, the operating revenues increased by taking a shift from Rs 30,976 crores during FY21-22 to Rs 42,839 crores in FY22-23. Moreover, the company’s net profits, keeping the time horizon the same, went up from Rs 1,492 crores to Rs 2,378 crores. 

Coming onto the profitability ratios of the company, the basic parameters such as the return on equity (ROE) as well as the return on capital employed (ROCE) saw decent growth with the former increasing from 10.91 percent during FY21-22 to 14.79 percent in FY22-23 and the latter, keeping the timeframe the same, moving up from 14.85 percent to 18.79 percent. 

Moreover, the net profit margin slightly improved from 4.81 percent during FY21-22 to 5.55 percent in FY22-23. The interest coverage ratio improved from 48.63 times in FY21-22 to 55.87 times during FY22-23 portraying short-term liquidity management. 

Hindustan Zinc Limited:

With a market capitalization of Rs 128,534 crores, the company’s shares closed at a price of Rs 304, down around 0.40 percent as compared to the previous closing levels of Rs 305.45. The current prices exhibit a discount of 21 percent from its 52-week high price of Rs 383. 

Having a glance at the latest financials released by the company, the operating revenues increased by taking a shift from Rs 29,440 crores during FY21-22 to Rs 34,098 crores in FY22-23. Moreover, the company’s net profits, keeping the time horizon the same, went up from Rs 9,629 crores to Rs 10,511 crores. 

Coming onto the profitability ratios of the company, the basic parameters such as the return on equity (ROE) as well as the return on capital employed (ROCE) witnessed a drastic change with the former increasing from 28.08 percent during FY21-22 to 81.27 percent in

FY22-23 and the latter, keeping the timeframe the same, moving up from 37.65 percent to 86.71 percent. 

The net profit margins of the company, due to increased input costs, have slightly reduced from 32.70 percent during FY21-22 to 30.82 percent in FY22-23. The debt-to-equity ratio, though increased, remains within the desired limits taking a shift from 0.08 times during FY21-22 and going up to 0.92 times in FY22-23. 

Written by Amit Madnani

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