A company is said to be “fundamentally strong” when it portrays a certain set of characteristics such as strong financial numbers, lower leverage ratios, etc. Listed below is one such fundamentally strong stock engaged in the “Automobile” sector with a potential upside of more than 30 percent:
Mahindra & Mahindra Limited
The shares of Mahindra & Mahindra Limited opened their trading hour on Monday at Rs 1,489 and currently trade at Rs 1,517, a gain of around 4 percent as compared to the previous closing levels of 1,464.65 apiece. Being one of the top gainers for the street, the company has a market capitalization of approximately Rs 1.89 Lakh crores.
Having a quick walkthrough of the financials, the company reported an increase in basic operational indicators such as revenues and net profits. The former increased from Rs 90,170 crores during FY21-22 to Rs 121,268 crores during FY22-23, and, the latter took a shift from Rs 5,397 crores to Rs 9,869 crores.
Moreover, the profitability metrics of the company showed an improvement with the return on equity (RoE) increasing from 13.95 percent during FY21-22 to 18.24 percent during FY2-23, and, the return on capital employed (RoCE) moving up from 10.27 percent to 12.66 percent keeping the timeframe the same.
The debt-to-equity ratio of the company also witnessed a marginal reduction in number from 1.58 times during FY21-22 to 1.57 times during FY22-23.
Having a positive outlook for the company, Nomura, one of the well-known Investment Banks globally, gave a ‘Buy’ recommendation for the company with a target price of Rs 1,978 indicating a potential upside of 30.40 percent as compared to the current stock prices prevailing in the market.
The rationale behind providing such a recommendation is pertaining to the strong financial performance during the recent quarters, the company’s growth in the SUV segment, etc.
As per the shareholding data available for the June 2023 quarter, the Promoters hold a 19.37 percent stake, and the Foreign Institutional Investors (FIIs) hold a considerable stake of 40.14 percent in the company.
Mahindra & Mahindra Limited is one of the leading automobile companies based in India. The company generates a majority of its revenues from the “Automotive” segment including automobiles, mobility solutions, construction equipment, and other spare parts related to the same.
Written by Amit Madnani
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
