Investing in mid-capitalization stocks with consistently rising net profit margins provides the potential for growth and a balanced risk-return profile, while also offering opportunities to discover undervalued companies and diversification benefits.
Mid-caps with robust financials and high profitability are more resilient and potentially more rewarding than their broader mid-cap peers.
Here are a few Mid-cap stocks with high Net Profit Margins and strong financials:
Indian Energy Exchange Limited (IEX)
Indian Energy Exchange Limited offers an automated trading platform for physically delivering electricity, renewable energy, and certificates. It provides various trading markets, including electricity, green energy, and certificates.
With a market capitalization of Rs.18,360 crore, the company’s share price opened at Rs.207.7 per share on Thursday, up 0.5 percent from its previous close.
In Q1 FY25, IEX reported a 19.23 percent year-on-year increase in revenue, reaching Rs.124 crore compared to Rs.104 crore in Q1 FY24. Profit after tax increased by 25.67 percent to Rs.93 crore, up from Rs.74 crore in the same period.
IEX Ltd. has an annual net profit margin of 72.06 percent, a return on capital employed (ROCE) of 50 percent, and a return on equity (ROE) of 37.7 percent. The company also features a low debt-to-equity ratio of 0.01 and a current ratio of 0.43.
Central Depository Services Limited (CDSL)
Central Depository Services Limited (CDSL), a leading securities depository in India, facilitates the holding and transfer of securities electronically.
With a market capitalization of Rs.29,708 crore, the company’s share price closed at Rs.1,430 per share on Thursday, up 0.7 percent from its previous close.
In Q1 FY25, CDSL Ltd reported a 71.33 percent year-on-year increase in revenue, reaching Rs.257 crore, up from Rs.150 crore in Q1 FY24. Profit after tax rose by 81.08 percent to Rs.134 crore, compared to Rs.74 crore in the same period.
The company has an annual net profit margin of 51.6 percent, with a return on capital employed (ROCE) of 40.2 percent and a return on equity (ROE) of 31.3 percent. It also maintains a low debt-to-equity ratio of 0.0 and a current ratio of 1.01.
Nippon Life India Asset Management Limited
Nippon Life India Asset Management Limited (NAM India) is an asset management company that acts as an investment manager to Nippon India Mutual Fund.
With a market capitalization of Rs.43,732 crore, the company’s share price opened at Rs.695 per share on Thursday, up 1 percent from its previous close.
In Q1 FY25, the company reported a 71.33 percent year-on-year increase in revenue, reaching Rs.505 crore compared to Rs.354 crore in Q1 FY24. Profit after tax increased by 81.08 percent to Rs.332 crore, up from Rs.236 crore in the same period.
Nippon Life India Asset Management Ltd. has an annual net profit margin of 54.4 percent, a return on capital employed (ROCE) of 36.2 percent, and a return on equity (ROE) of 29.5 percent. The company also features a low debt-to-equity ratio of 0.0 and a current ratio of 1.74.
Written by – Siddesh S Raskar
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