A company is said to be “Fundamentally Strong” when the company portrays a certain set of attributes including strong and consistent numbers, high profitability metrics, low leverage ratios, and many more.
Listed below is one such fundamentally strong stock under the ‘Large-cap’ category with a potential upside of more than 25 percent to add to your watchlist:
Britannia Industries Limited
Founded in 1892, Britannia Industries Limited is a packaged-food company based in Bengaluru, India with main product categories including biscuits, dairy, bread, cakes, and rusks. The company exports its products to approximately 70 countries globally.
With a market capitalization of around Rs 1.08 Lakh crores, the stocks of Britannia Industries Limited started their trading session on Friday at Rs 4,540 and currently trade at Rs 4,502, of dip of around 0.80 percent as compared to the previous closing levels of Rs 4,540.45 apiece.
The company recently reported financial results for the quarter ending June 2023 wherein the basic parameters such as the operating revenues and net profits took a hit due to increased cost pressures and tough competition from other players in the same segment.
The operating revenues reduced from Rs 4,023 crores during Q4FY2-23 to Rs 4,010 crores during Q1FY23-24, and, net profits, during the same time horizon, went down from Rs 557 crores to Rs 455 crores.
On a contrasting note, the above-mentioned metrics, on a YoY basis, showed positive movements with the operating revenues going up from Rs 3,700 crores during June 2022 to Rs 4,010 crores during June 2023, and, the net profit figures taking a shift from Rs 335 crores to Rs 455 crores.
In addition, the company reported a high return on equity (RoE) of 65.69 percent during FY22-23, and, also reduced its debt-to-equity ratio from 0.96 times during FY21-22 to 0.84 times during FY22-23.
Having a positive outlook for the company, BOB Capital Markets gave a “Buy” recommendation for the stock with a target price of Rs 5,844 exhibiting a potential upside of around 30 percent as compared to the current stock prices prevailing in the markets.
Despite muted results reported by the company, the Brokerage provided such a recommendation supported by factors such as distribution-led growth strategies, augmenting its manufacturing capabilities, and many more.
As per the shareholding data available for the June 2023 quarter, the Promoters hold a 50.55 percent stake, and the Foreign Institutional Investors (FIIs) hold a considerable stake of 21.29 percent in the company.
Written by Amit Madnani
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.
