A company is said to be ‘fundamentally strong’ when it conducts operations with lower debt levels and has sufficient retained profits to keep the business flowing. Moreover, such companies have the ability to survive during the financial stress faced by their peers in the industry.
Listed below is one of such fundamentally strong companies with competitive financials:
Shilchar Technologies Limited
With a market capitalization of about Rs 817 crores, Shilchar Technologies Limited is involved in the business of manufacturing and selling transformers in India. It provides standard line transformers, power and distribution transformers, etc.
It serves private utilities, EPC contractors, government utilities, and developers & contractors of power plants. Geographically, the group conducts business by having a domestic presence and also includes other countries overseas.
Keeping a purview of 6 months, the stock has been able to deliver multibagger returns of approximately 163 percent. It means that if someone would have invested Rs 1,00,000 in the stock, then it would have converted to Rs 2,63,000 within a period of 6 months.
Having a look at the quarterly numbers reported by the company, the revenues, as well as PAT figures, have increased in the recent period with the former increasing from Rs 68 crores in Q3 v/s Rs 95 crores in Q4 and the latter shifting from Rs 12 crores to Rs 16 crores in the same period.
In addition to the above, the company has healthy profitability ratios with the basic ones such as the return on equity (ROE) improving from 8.66 percent during FY20-21 to 19.22 percent in FY21-22. Moreover, the return on capital employed (ROCE) took a shift from 12.5 percent to 23.58 percent keeping the timeframe the same.
The company has showcased a decent amount of growth as far as the net profit margins are concerned with the most recent movement from 4.69 percent during FY20-21 to 7.79 percent in FY21-22.
The debt-to-equity ratio of the company, though increased from 0.12 in FY20-21 to 0.21 in FY21-22, has stayed within the desired limits followed in the industry.
As per the data available for the quarter ending March 2023, promoters of the company hold a constant 65.85 percent stake and Foreign Institutional Investors (FIIs) hold a 1.89 percent stake in the company.
Written by Amit Madnani
