Large-cap stocks with high NPM
Best large-cap stocks with high NPM: In 1970, Boston Consulting Group (BCG) built a 2×2 matrix that classified businesses into four categories. The four categories were stars, question marks, dogs, and cash cows. For today’s study, we chose the last category. cash cow.
Cash cows are established companies that already have a significant market share. It currently operates in the market at a slower pace than its fast-growing competitors. Nonetheless, the company is able to maintain high net income due to the nature of its operations, coupled with high returns and generally low debt. In this article, we’ll look at the best large-cap stocks with high net profit margins, their operations, and more.
Large-cap stocks with high net profit margins
Today we’ll look at a few stocks that have established businesses and maintain strong net profit margins. Let’s understand what these companies do and what they are doing to foster future growth.
expensive large stocks NPM #1 – Oberoi Real Estate
Oberoi Real Estate It is a real estate developer that builds luxury residential commercial properties and hotels across India. The company has 40 years of experience and currently has 32.8 million square feet of land under development as of FY23.
During the year, Oberoi launched Tower G at Sky City Project Borivali (East) Mumbai. The project is built on 25 25 acres with a carpet area of 4.5 million square feet. The project has already sold out 2,141 units with a sales value of Rs. 5906 Cr out of which Rs. 4369 Cr was recognized in FY23.
The company has so far sold over 4,836 residential units across ultra-affluent residential projects – Esquire, Elysian, Eternia, Enigma, Maxima, Sky City and Three Sixty West for a total price of Rs. 25,255 Cr out of which Rs. 21,474 Cr was recorded as of FY23.
Aiming to become a global icon for Mumbai, Project Three Sixty West has been developed as a mixed-use project in Worli comprising two high-rise towers. The company has sold 177 units so far and earned a profit of 150 million won. The average unit of 8538 Cr is a whopping Rs. 49Cr.
During the year, Oberoi Realty reported impressive results with sales increasing by 56% from Rs. 2752 Cr in FY22 to Rs. 4293 Cr in FY23. The company’s net profit expanded at a much better rate of 82% at Rs. 1047 Cr in FY22 to Rs. 1905C in FY23.
The company reported one of the highest net profit margins at 44.36% while maintaining a return on equity of 16.83%. The company’s debt to equity is a commendable 0.32x and its return on capital employed is 14.4%.
expensive large stocks NPM #2 – Oracle Financial Services
Oracle Financial Services Software Limited is a subsidiary of Oracle, a global leader in providing financial technology solutions across retail banking, corporate banking, risk, financial crime and compliance management. Experienced in resolving issues related to global trade, supply chains, modernization finance and risk management.
The company has an extensive product portfolio consisting of products such as Oracle Flexcube Universal Banking, Oracle Flexcube Islamic Banking, Oracle Banking Platform Orale Trade Finance and several other Oracle Banking APIs that help banks improve the banking experience of their customers.
OFSS earns 52% of its revenue from consulting fees, 33% from maintenance fees, and 15% from licensing fees. The company derives 37% of its consolidated revenue from the Americas, with the European and Middle East markets accounting for 33%. Asia Pacific is the company’s smallest market, accounting for approximately 30% of the company’s revenue.
The company reported revenue of Rs. 5355 Cr in FY22, an increase of 10% to reach Rs. 5890 Cr in FY23. However, net profit decreased by 4.38% from 100 million won. 1888 Cr in FY22 to Rs. 1806Cr in FY23.
The company has seen disappointing revenue growth, but its net profit margin remains high at 42%. Return on equity and return on employed capital are maintained at 30% and 39%, respectively, and the debt ratio is low at 0.01 times.
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#3 Large Cap Stock with High NPM – NHPC
NHPC Mini Ratna is a Category 1 public sector utility company and a leading hydroelectric power company in India. The company, together with its subsidiaries, operates 24 hydropower projects producing 7 gigawatts. During the year, the company generated more than 24.6 billion units of electricity through these projects.
The company also has more than 16 projects under construction, including solar and hydropower. These projects are expected to add 10 GW of capacity to the company’s portfolio. The company earned Rs. 10,857 Cr as capital expenditure for executing these projects.
In FY23, the company signed an MoU to build a 100 MW floating solar power plant in Uttar Pradesh. The company’s subsidiary has also signed an agreement with the state government to develop a 10 GW ultra-large renewable energy power plant in the state of Rajasthan.
This year, sales increased by 11.64% to 50 billion won. 10,108 Cr in FY22 to Rs. 11,285 Cr. Increased power production led to a 12.79% increase in energy revenues. Plant availability factor increased from 88.19% to 88.75% in FY23.
Net profit for the year increased by 12.2% from Rs. 3774 Cr in FY22 to Rs. 4235 Cr in FY23. The business’s low operating costs allow it to maintain a high net profit margin of 38%. Despite strong net margins, the company has ROE and ROCE of just 12% and 8%, respectively.
#4 Large Cap Stock with High NPM – Kotak Mahindra Bank
Kotak Mahindra Bank It is the fourth largest private sector bank in India by deposits and the third largest bank by market capitalization of Rs. 3.7 billion Chrome Bank has deposits worth 10 million won. 3.62 Lakh Cr and contributed Rs. 3.59 Lakh Cr prepaid.
Kotak provides banking products and financial services in the consumer banking, commercial banking and asset restructuring sectors. The bank also offers card and two-wheeler loans and real estate loans to retail customers.
In addition to its regular deposit-taking operations, the bank also operates a stock broking division and a pension fund division. We are starting to manage alternative assets for fellow HNI investors.
Kotak has grown loans at 10% CAGR and deposits at 13% CAGR over the last five years. The bank has continued to grow CASA at a CAGR of 13% since FY19, maintaining CASA at an industry-leading rate of 52.8% as of FY23. Kotak has also succeeded in maintaining a very low GNPA of only 1.8%.
The company’s net interest income increased by 25% from Rs. 22,187 Cr in FY22 to Rs. 27,740 Cr in FY23. During the same period, net profit increased slightly by 24%. 12,089 Cr in FY19 to Rs. 14,925 Cr in FY23.
#5 Large Cap Stock with High NPM – Hindustan Zinc
Hindustan Zinc It is India’s largest and the world’s second largest integrated zinc producer with a 75% market share in India. It is also the fifth largest silver producer globally. The company is partly owned by the Government of India with 29.5% stake in the company and 64.9% by its parent company Vedanta Ltd.
Hindustan Zinc has access to iron ore mines in five districts in Rajasthan and one district in Uttarakhand. The company enjoys a long mine life of over 25 years and reserves of over 460.05 MT. In addition to the mines, smelters and refineries were established in strategic locations. The annual production capacity of this smelter is 1.12MT.
The company mainly produces refined zinc, lead and silver, with production capacities of 821KT, 211KT and 714MT respectively. These metals and minerals account for 74%, 12%, and 13.5% of the company’s revenue, respectively.
Hindustan Zinc earned a profit of Rs. 35,477Cr in FY23, up 15.73% from Rs. 30,656 Cr in FY22. The company’s net profit slowed to around 9.16%, increasing from Rs. 9629 Cr in FY22 to Rs. 10,511 Cr in FY23.
Due to the well-established nature of its business and its ability to generate consistent cash without incurring higher costs, Hindustan Zinc maintains strong operating margins of 55.23% and 29.63%. These returns, combined with high ROE and ROCE of 44.53% and 48.5%, make investing in the company a strong proposition.
List of best large-cap stocks with high NPM
The list below is a compilation of the top 10 large-cap stocks with high net profit margins.
conclusion
We have now finished our article explaining all the companies on the list. Before concluding the article, I would like to say that net profit margin alone is not a strong indicator of a company’s performance. A company may report higher income due to asset sales (one-time gains), the income from which will never be repeated.
To avoid being swayed by high NPM, it is always important to know how much of your total income generated in a particular year is exposed to other income. Additionally, along with looking for high margins, it is always best to look for companies that are growing 10-15% per year while maintaining those margins.
That’s our side of the story. Let us know what your favorite stocks are from our list. Do you think we’ve missed out on companies with high NPM? Let us know in the comments below.
Written by Nasir Hussein
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