A company is said to be ‘fundamentally strong’ in nature when it portrays some characteristics which include a low debt-to-equity ratio, strong and consistently improving financials, Promoters having ‘skin in the game’, etc.
Herein this article, we will analyse one such fundamentally strong stock which has a high Promoter holding:
Permanent Magnets Limited
Having a market capitalization of Rs 1,400 crores, the shares of Permanent Magnets Limited are currently trading at Rs 1,648. The stock witnessed an intra-day high of Rs 1,689, exhibiting a gain of around 7 percent compared to the previous closing price of Rs 1,544.95. The intra-day high price is also recorded to be the stock’s fresh 52-week high price.
Keeping a purview of one year, the scrip has delivered multibagger returns of around 393 percent. It means that if someone would have invested Rs 1 Lakh into the stock, it would have converted to Rs 4.93 Lakhs within a period of one year.
A glance at the company’s standalone financials leads us to observe that the basic operational indicators, such as the operating revenues as well as the net profits generated, have increased in the past couple of financial years.
The operating revenues have taken a movement from Rs 129 crores during FY21-22 to Rs 182 crores in FY22-23. In addition to the above, the net profits saw a movement from Rs 19 crores to Rs 29 crores during the same period.
Coming onto the profitability metrics, the return on equity (RoE) moved up from 23.16 percent during FY21-22 to 26.81 percent in FY22-23, and, the return on capital employed (RoCE), keeping the timeframe the same, moved from 30.67 percent to 35.65 percent.
According to the data available for the quarter ending March 2023, the Promoters of the company hold a 58.01 percent stake and, over the past quarters, have stayed within the same range.
Permanent Magnets Limited, with its headquarters in India, produces cast magnets as well as parts for electricity meters. Brass terminals, magnetic assemblies, electromagnets, and other items are included in the company’s product line.
Written by Amit Madnani
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