Zero Doubt in the Zero Debt Growth

Zero Doubt in the Zero Debt Growth

The 2020 year left everyone in a startlement through various changes. Starting from the rage of the COVID 19 Pandemic to the instant recovery of the financial market, the chronological events happening around with many mysteries and twists the year leaves everyone in astonishment. And the outlook for the issue is simple. The uncertainty can be withstood by the blue-chip companies as they are financially sound and well equipped as a dominant sector. And also, they will be the first to bounce back when the status quo of the company is restored. But it is not certain for most of the time. There are well equipped mid and small-cap companies in steering towards constant profit even during the recess in a studied manner.

For the analysis, the two companies have been filtered and retrieved based on their debt burden in the books with high returns on equity and holding the potential to enhance its boundaries in future commerce.

Filters Used

The last three years have shown their revenue growth by a 20 percent increase.

More than 20% of the Average ROE

No debts in the books

Bhansali Engineering Polymers

The Bhansali Engineering Polymers is a petrochemical company manufacturing Acrylonitrite Butadiene Styrene (ABS) and Styrene Acrylorinite (SAN), raw materials which are used for manufacturing various products associated with home appliances, automobiles, luggage, bus body, telecommunications, etc., This Petrochemical company accelerates an installed capacity of 1.37 Lakh TPA with its two factory plants located in Rajasthan and Madhya Pradesh.

Having a stronghold in the automobile sector, the Bhansali Engineering Polymers through its top-notch lucrative ABS segment is aspiring to enlarge its market share in the stock market. It also gave special attention to strengthening its Research and Development facility. To experience the sales funnels and technical know-how, Bhansali Polymers ventured with Nippon A&L Inc. Japan in 2013.

Being partly met with the support of import, the requirement for the ABS is dangling in a circle along with the market action of automobiles and household appliances. The price and quality negotiation for the materials with the foreign manufacturers is one of the biggest missions in running the company in a steady sea, as there is also the risk of huge losses through the price fluctuations happening in the market value decisions.

The Company board always moves for marking its boundaries through the augmentation expansion as it is a debt-free company with a farsighted mindset. The yearly compounded net sales and income for the last three years are raised and cultivated up to 32 percent and 41 percent exponentially. In the fundamental comparison, its stock valuation at a P/E of 22.9x is compared to the median P/E of 17.6x in the last three years.

Diamines and Chemicals

The privilege of being one of the major players in handling the production of ethyleneamines in the Indian Market is the specialty of this Vadodara Based Company by taking its product in different fields of coating, agrochemicals, pharmaceuticals, etc., It also has the advantage of being power prime business sector accountable for 2% of the total revenue distribution.

The ethylene amines are the major leverage for the Diamines and Chemicals in the market, as it is the major necessity for the industries. The major power player also competes against Chinese manufacturers. It also has a window of opportunity if the Chinese go out of the market. The major deterrent for them is the fluctuation in the raw material prices and the big barrier of the international players.

The yearly compounded net sales and income for the last three years are raised and cultivated up to 21 percent and 72 percent exponentially. The typical net income margin has been at 26 percent, delivering a return on equity of 30 percent, during an equivalent period. Due to the recent run-up in chemical companies, the company's stock has delivered a return of 160 percent within the last three months and trades at a P/E of 19.4x as compared to its three-year median P/E of 10.1x.