Fundamentally strong stocks are those stocks that have a solid financial foundation, such as strong earnings growth, low leverage ratio, high return on equity, and a stable cash flow. These stocks will perform well even when the market is rough, and other stocks are underperforming.
Listed below are such fundamentally strong stocks in different sectors that are trading at a discount of up to 25 percent from their respective 52-week high:
MTAR Technologies Ltd
With a market capitalisation of Rs. 7,092 crores, the shares of MTAR Technologies Ltd, engaged in manufacturing various machine equipment started Wednesday’s trading session on a flatter note at Rs. 2,314 compared to its previous close at Rs. 2,306. The share hit a high of Rs. 2,324, gaining around 1 percent and currently trading at Rs. 2,306.55 apiece.
The company hit its 52-week or all-time high in September 2023 at Rs. 2,920.35 and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 21 percent.
The revenue increased by around 10 percent from Rs. 152 crores in the June quarter to Rs. 167 crores during the September quarter. In addition, the net profit increased from Rs. 20 crores to Rs. 21 crores during the same timeframe.
Due to consistent operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 12.22 percent during FY21-22 to 18.15 percent in FY22-23, and, the return on capital employed (RoCE) zoomed from 16.02 percent to 22.45 percent during the same timeframe.
On a contrasting note, the net profit margin decreased marginally from 18.90 percent during FY21-22 to 18.03 percent during FY22-23.
The company is working on enhancing its product portfolio and expanding its customer base. The company received a defence license, for which they are working on various products under the license for future growth.
Solar Industries India Ltd
With a market capitalisation of Rs. 53,723 crores, the shares of Solar Industries India Ltd, engaged in manufacturing explosives and explosive accessories started Wednesday’s trading session positively at Rs. 5,999 compared to its previous close at Rs.5,937.65. The share hit a high of Rs. 6,080, gaining around 3 percent and currently trading at Rs. 6,065 apiece.
The company hit its 52-week or all-time high in November 2023 at Rs. 7,832.90 and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 23 percent.
The revenue decreased by around 20 percent from Rs. 1,682 crores in the June quarter to Rs. 1,347 crores during the September quarter. On a contrasting note, the net profit increased by 4 percent from Rs. 202 crores to Rs. 209 crores during the same timeframe.
Due to consistent operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 26.07 percent during FY21-22 to 35.86 percent in FY22-23, and, the return on capital employed (RoCE) zoomed from 25.56 percent to 36.34 percent during the same timeframe. Furthermore, the net profit margin increased marginally from 11.43 percent during FY21-22 to 11.72 percent during FY22-23.
The company is expecting the EBITDA margin to increase further from the earlier guided range of 20 percent to 22 percent. The Capex for the year is expected to be around Rs. 650 crores to Rs. 700 crores.
GMM Pfaudler Ltd:
With a market capitalisation of Rs. 6,731 crores, the shares of GMM Pfaudler Ltd, engaged in manufacturing corrosion-resistant glass-lined equipment started Wednesday’s trading session on a flatter note at Rs. 1,497.05 compared to its previous close at Rs. 1,497.55. The share hit a high of Rs. 1,500.95, gaining around 1 percent and currently trading at Rs. 1,499 apiece.
The company hit its 52-week or all-time high in December 2022 at Rs. 1,999 and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 25 percent.
Having a look at the financial statements of the company, the operating revenues as well as net profits, consistently increasing during the past couple of financial years.
The revenue increased marginally by around 3 percent from Rs. 912 crores in the June quarter to Rs. 937 crores during the September quarter. In addition, the net profit zoomed by 30 percent from Rs. 54 crores to Rs. 70 crores during the same timeframe.
Due to consistent operating revenue and profits, the profitability metrics of the company improved with the return on equity (RoE) increasing from 16.16 percent during FY21-22 to 32.17 percent in FY22-23, and, the return on capital employed (RoCE) zoomed from 16.37 percent to 25.96 percent during the same timeframe. Furthermore, the net profit margin rose from 2.95 percent during FY21-22 to 6.7 percent during FY22-23.
The company is focusing on increasing its market share and executing projects in the international business and targeting to be a top-five global player.
Written By Vaibhav Patil
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