Domestic benchmark indices opened in the green on Friday’s trading session. The BSE Sensex advanced 202.46 points or 0.34% to 59,808.26 and NSE Nifty 50 surged 57.25 points or 0.33% to 17,568.50. However, they slipped into the red by the afternoon. In the past five days, the indices have lost approximately 2.60%.
Credit ratings help investors to understand a company’s creditworthiness. Companies with a high credit rating are generally considered to be less risky investments as compared to those companies that do not have a good credit score. A good credit rating indicates that a borrower/company is likely to repay its loans in its entirety without any issues.
Here are three fundamentally strong companies with high credit ratings:
HCL Technologies
HCL Technologies is a leading global IT services company, ranked among the top five Indian IT companies in terms of revenue. The company offers an integrated portfolio of services like software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. It is a large-cap company with a market capitalization of ₹ 2,96,278 crores.
The company has a good return on equity of 22.16% and an ideal debt-to-equity ratio of 0.11. Its shares were trading at a price-to-earnings (P/E) ratio of 20.50, which is lower than the industry P/E of 26.53. The company has a high dividend yield of 4.39%.
ICRA has reaffirmed its long-term rating [ICRA]AAA (Stable) and short-term rating [ICRA]A1+ to the company in respect of its bank limits during the financial year under review. Fitch has assigned a long-term credit rating of A- with a stable outlook to HCL Technologies.
Exide Industries
Exide has been one of the most reliable brands as far as storage batteries and allied products in India. It is one of the largest storage battery companies in India with the widest range of both conventional flooded as well as latest VRLA batteries. It is a small-cap company with a market capitalization of ₹ 14,731 crores.
The company has a return on equity of 7.89%, a dividend yield of 1.15% and an ideal debt-to-equity ratio of 0.05. The company’s shares were trading at a price-to-earnings ratio (P/E) of 3.20, which is significantly lower than the industry P/E of 40.64, indicating that the stock might be undervalued as compared to its peers.
Exide Industries has a credit score of A1+ on its short-term debt instrument (Commercial papers) and AAA on its long-term banking facility (Fund based and Non-fund based facility) from ICRA.
Tata Steel
Tata Steel Ltd is Asia’s first integrated private steel company and it has a presence across the entire value chain of steel manufacturing. It has a market capitalization of ₹ 1,35,955 crores and is a large-cap company.
The Tata group company has an excellent return on equity of 42.56% and an ideal debt-to-equity ratio of 0.81. It has a high dividend yield of ₹ 4.55%. The company’s shares were trading at a price-to-earnings ratio of 4.77, which is significantly lower than the industry P/E of 12.01, indicating that the stock might be undervalued as compared to its peers.
Moody’s has a corporate family rating of Ba1 with a positive outlook, while Standard & Poor’s has a long-term corporate credit rating of BBB- with a positive outlook.
Written by Simran Bafna
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
