A company with a “fundamentally strong” nature portrays a specific set of characteristics including lower leverage ratios, strong financial numbers, consistent margins & ratios, etc.
Listed below is one such fundamentally strong stock which is trading at a discount of more than 35 percent from its 52-week high:
Fine Organic Industries Limited
With a market capitalization of Rs 14,100 crores, the stocks of Fine Organic Industries Limited, an agrochemical company, closed at Rs 4,603.85 on Friday gaining around 0.50 percent as compared to the previous close of Rs 4,583.60 apiece.
The company’s scrip hit its 52-week/all-time high mark at a price of Rs 7,326.45 on the 14th of September 2022. Comparing the current price with the high levels, the company’s stock is currently trading at a discount of around 37 percent.
Having a quick walkthrough of the consolidated financials of the company, it has performed exceptionally well with consistent increase in the operating revenues as well as after-tax profits during the past couple of financial years.
The operating revenues witnessed a shift from Rs 1,876 crores during FY21-22 to Rs 3,023 crores during FY22-23, and, the net profits rose from Rs 260 crores to Rs 619 crores during the same time horizon.
Additionally, the company’s net profit margin improved from 13.89 percent during FY21-22 to 20.50 percent during FY22-23. The profitability metrics also showed decent growth with the return on equity (RoE) moving from 27.06 percent during FY1-22 to 40.10 percent during FY22-23, and, the return on capital employed (RoCE) taking a shift from 36.30 percent to 54.94 percent.
The leverage ratio such as the debt-to-equity ratio has consistently remained low with the most recent movement being a reduction from 0.06 times during FY21-22 to 0.02 times during FY22-23.
As per the shareholding pattern data for the June 2023 quarter, the company’s Promoters consistently hold a 75 percent stake, and the Foreign Institutional Investors (FIIs) hold a 3.78 percent stake in the company.
Founded in 1970, Fine Organic Industries Limited is involved in the business of manufacturing, processing, supplying, distributing, and importing oleochemical-based additives within and outside India. The company offers food additives that include antifungal additives, beverage clouding agents, bread improvers, etc.
Written by Amit Madnani
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