A company is said to be ‘Fundamentally Strong’ when it bags the luxury of having decent financials and margins. Moreover, such companies, in comparison to others in the industry, have lower debt levels thereby improving their short-term liquidity management.
Listed below is one such Fundamentally Strong stock with a high Net Profit margin that investors should keep under their radar:
Glenmark Life Sciences Limited
Glenmark Life Sciences Limited is a company based in India that is involved in the business of developing, manufacturing, and marketing active pharmaceutical ingredients (API). Products offered by the company comprise various therapeutic segments including central nervous system disorders, cardiovascular disease, diabetes, etc.
The company has a market capitalization of Rs 6,580 crores and its stock closed at a price of Rs 537.10, down around 2 percent as compared to the previous closing price of Rs 547.85. Year-to-date, the scrip has gained around 28 percent ranging from Rs 417.80 to the current price levels.
Having a quick glance at the latest financials released by the company, the operating revenues generated have increased from Rs 540 crores in the December 2022 quarter to Rs 621 crores in the March 2023 quarter. Moreover, the net profits, during the same period, went up from Rs 104 crores to Rs 146 crores indicating an increase of approximately 40 percent.
Having a yearly comparison of the metrics discussed above, the operating revenues moved from Rs 2,123 crores during FY21-22 to Rs 2,161 crores in FY22-23, and net profits, keeping the timeframe the same, shifted from Rs 418 crores to Rs 466 crores.
After the negative margins faced during FY17-18, the company has been successful in maintaining positive and healthy percentages with the net profit margins having a recent movement from 19.72 percent during FY21-22 to 21.60 percent in FY22-23.
Moreover, the profitability metrics have shown slight improvements with the return on equity (ROE) increasing from 20.38 percent during FY21-22 to 21.83 percent in FY2-23 and the return on capital employed (ROCE), during the same time horizon, moved from 28.40 percent to 28.62 percent.
As per the shareholding pattern data release for the quarter ending March, Promoters of the company hold a 82.85 percent stake, and Foreign Institutional Investors hold a 3.28 percent stake in the company.
Written by Amit Madnani
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