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 that investors should keep under their radar:
Jindal Stainless Limited
Jindal Stainless Limited is an India-based stainless steel manufacturing company offering products such as ferroalloys, hot-rolled & cold-rolled coils, razor blade steel, etc. It has a distribution network through its service centers and warehouses present in both, the Indian as well as overseas markets. The company derives most of its revenue from the sale of steel products.
The company has a market capitalization of Rs 24,768 crores and its stock is currently trading at a price of Rs 300, gaining around 7 percent as compared to the previous closing price of Rs 280.40.
The company, in its regulatory filing with the BSE, announced its results for the fourth quarter as well as the annual period of 2022-23. In addition to the same, the company’s Board recommended a Final dividend of Rs 1.50 along with a special dividend of Rs 1 totaling an aggregate dividend of Rs 2.50 per ordinary share.
Having a quick glance at the latest financials released by the company, the operating revenues generated have increased from Rs 9,063 crores in the December 2022 quarter v/s Rs 9,765 crores in the March 2023 quarter. Moreover, the net profits, during the same period, went up from Rs 513 crores to Rs 716 crores.
Having a yearly comparison of the metrics discussed above, the operating revenues moved from Rs 32,733 crores during FY21-22 to Rs 35,697 crores in FY22-23, and net profits, keeping the timeframe the same, shifted from Rs 3,109 crores to Rs 2,084 crores.
The company’s net profit margins have improved sequentially from 5.66 percent in Q3 v/s 7.34 percent in Q4. Moreover, the debt-to-equity ratio has been consistently reducing with the most recent movement being from 0.35 during Q3 to 0.32 in Q4.
Having a positive outlook for the company, ICICI Securities gave a ‘Buy’ tag to the company with a target price of Rs 385 indicating an upside of 28 percent as compared to the current price levels.
The rationale behind giving such a recommendation is pertaining to the removal of export duties expanding the scope of the company and imposing import duties giving local players to sell their products.
As per the shareholding pattern data release for the quarter ending March, promoters of the company hold a 57.94 percent stake, and Foreign Institutional Investors hold a 21.92 percent stake in the company.
Written by Amit Madnani
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