We always try to invest in the large cap companies. But mostly we find them overvalued as a lot of investors are already invested in these companies. But today we find 3 large cap companies which have good fundamentals.
Selection Process
We only consider which companies have a market cap of more than 20,000 crores along with a net profit margin more than 15%. This company should also have more than 15 percent of Return of Equity. They also need to have 5 year sales growth of minimum 10 percent along with debt to equity ratio less than 1.
So let’s start the list.
1.Supreme Industries
Basics:
This company is among the leading companies which manufactured plastics in our country. As we know in modern days, plastic is essential in our daily days. Despite having a negative impact on the environment we are bound to use plastics. These will grow every year. So you can understand the big potential in these companies.
Fundamental Analysis:
The PE ratio of this company is 24.34 whereas the industry PE ratio is 3.59. It is indicative that this is still an undervalued company. This company is almost debt free which is also a good sign.
This company is giving good profit on Return on Equity of 35.91 % with net profit margin 15.34 %. In the last 5 years, this company had given 16.52 % compounded annual sales growth. The share price of this company is trading at 2050 rupees which give 15 percent return to the investors of the company.
2.NMDC limited
Basics
This company is one of the leading companies of Iron Ore exploration and production in our country. As Iron is an integral part of the modern society and the demand is increasing day by day, it can be said that the future is bright for this industry.
Fundamental Analysis
This company has PE ratio of 4.90 whereas the industry PE ratio is 13.07. This lower PE indicates that the company is still in an undervalued zone. This company is also debt free which is also a good sign
If we talk about profitability, this company is giving 21.81% of return on equity with a huge net profit margin of 40.74%. This company is giving 18.94% compounded annual growth in the last 5 years.
3.Oil India Limited
Basics
This government entity is involved in crude oil, natural gas and LPG production. We all know that these are the engines of our economy. It will only boom in the upcoming years.
Fundamental Analysis
The PE ratio of this company is 5.69 whereas the industry PE ratio is 21.97%. But this company has 0.61 % of debt to equity ratio which is considered ok in this industry.
If we talk about profitability of the company, Return on Equity is 16.27% of this company with net profit margin of 25.43%. This company gave 95.92% returns last year.