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Beaten Down MNC Stock To Buy: Strong Brand Equity, Excellent Fundamentals

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A lot of stocks this week have plunged to 52-week lows. There are several quality names that have also fallen in the process. A few of them are exceedingly good for their fundamentals and dividends. Here is a stock that has a great brand equity and is good on fundamentals:

 

Castrol India

Castrol India

This stock plunged to a 52-week low this week. The stock hit a low of Rs 112 and is currently trading at Rs 120. We like the stock for a number of reasons. The first is that the company has a very strong brand equity in the automotive and industrial lubricants segment. The second is that it is a virtually debt free company and we see the prospects of sharp growth coming back to the company, once the covid worries fade. The stock is also good on fundamentals aspects, which we will discuss later.

Decent financial performance
 

Decent financial performance

For the first nine months of the calendar year 2021, the company had a very good performance. Revenues at the company were up to Rs 3137.5 crores, as against Rs 2108 crores in the corresponding period of the previous year. Net profits for the first 9 months of calendar year 2021 was placed at Rs 569.5 crores as against Rs 395 crores in the corresponding 9 months period.

The company is virtually debt free, so in a rising interest rate scenario, nothing much would change.

We believe that going forward the fundamentals of the company can only improve as lockdowns and curfews are gradually lifted. The company has a strong brand equity in the replacement market we well.

Fundamentals and view on why you should buy the stock of Castrol India

Fundamentals and view on why you should buy the stock of Castrol India

If you see the first nine months the company did an EPS of Rs 5.86, despite the lockdowns and curfew. In a normal calendar year, there is no reason why the company cannot do an EPS of Rs 10 for the full 12-months. This means the stock is available at a price to earnings of around 12 times, which is cheap for an MNC stock.

In fact, the dividend yields on the stock based on the current market price of Rs 120, works to around 4.63%. We seldom hear of such high dividend yields for MNC stocks. The shares are a good bet for long term investors.

Disclaimer

Disclaimer

Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and is family do not hold shares in any of the companies mentioned above.

 

Story first published: Wednesday, January 26, 2022, 13:23 [IST]
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