A company is said to be ‘fundamentally strong’ when it portrays a specific set of characteristics, viz, strong and consistent financial performance, lower leverage ratios, and many more.
Listed below is one such fundamentally strong stock that one could add to their watchlist for a potential upside of more than 45 percent:
Dalmia Bharat Limited
With a market capitalization of Rs 36,852.17 crores, the stocks of Dalmia Bharat Limited, the fourth largest cement manufacturing company in India started their trading session on Thursday at Rs 1,978.35 and currently trade at Rs 1,969.55, a flat movement compared to the previous close of Rs 1,968.60 apiece.
Nomura, one of the well-known Financial Services Groups and Global Investment Banks based in Japan, raised its target price for the stocks of Dalmia Bharat Limited and gave a revised stock price target of Rs 2,900, exhibiting a potential upside of 47.20 percent.
The investment rationale for providing such a recommendation pertains to the best-case scenario if the binding bid by the National Asset Reconstruction Company Limited (NARCL) to acquire “Jaiprakash Associates Limited” (JAL) is in place.
Post the same, Dalmia Bharat Limited will notch up becoming the third-largest cement manufacturing company in India along with JAL’s asset base of Rs 5,600 crores.
Having a glance at the financials, the company’s prime business indicators, viz, its operating revenues as well as after-tax profits, reported a jump in numbers with the former rising from Rs 3,149 crores during Q2FY24 to Rs 3,600 crores during Q3FY24, and the latter, keeping the timeframe the same, rose drastically from Rs 123 crores to Rs 266 crores.
In addition to the above, the company’s ratio analysis portrays decent gross profit margins of around 18 percent. The company has also been able to keep the debt-to-equity ratio at decent levels with the most latest number of FY23 reported at 0.24 times.
The return ratios have also been observed to be present at average levels during FY22-23 with the return on equity (RoE) reported at 6.62 percent and the return on capital employed (RoCE) reported at 5.44 percent.
According to the latest presentations, the company portrays strong prospects with aggressive policies on schemes associated with Rural & Urban Housing and Infrastructure, viz, Roads, Airports & Railways present in the country.
Incorporated in 1939, Dalmia Bharat Limited is engaged in manufacturing as well as selling cement products. The company’s products have numerous applications in construction, oil wells, airport strips, and railway sleepers.
Written by Amit Madnani
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