Hi, When the government announced the lockdown due to COVID-19, the markets fell as if the world was about to end.
But in no time the market showed a strong recovery and took the investors on a tremendous bull ride.
The excess liquidity and the government relief package took some to an all-time high in October 2021.
Some stocks were multi-baggers even though there was no significant change in fundamentals.
Now we are seeing that the excess liquidity has come down, and now we can see a correction in the market.
Geopolitical and macroeconomic conditions also played an important role in this market fall.
One of the unique things about the markets is that if they can take a stock higher than necessary, they can also take it slower than necessary.
And because of this, opportunities arise in the market for the investors.
So today we will tell you about 5 such high-growth stocks which are trading lower than their pre-pandemic level due to the recent market correction.
We have considered the stocks which have:
Market cap of more than ₹5000 crores, Return on equity more than 15%, 5 years of sales growth CAGR of over 10%, and Debt to equity ratio is less than 1.
For pre-pandemic prices across all stocks, we have considered the February 3, 2020 price levels as reference price levels.
To calculate how high these stocks are from February 3, 2020 levels, we have considered the market closing prices of July 8, 2022.
In the end, we will tell you about the company which has fallen the most from their pre-pandemic level So let's start today's list.
The first company is Sudarshan Chemical Industries Limited.
Sudarshan Chemical is involved in the manufacturing of organic and inorganic pigments.
In addition, the company also manufactures pollution control equipment, size reduction equipment, and grinding equipment for industrial applications.
The company's stock is trading around 6.93% below its pre-pandemic levels.
Sudarshan Chemicals had an investment plan of ₹750 crores from FY 2020 to 2023.
Out of this, the company has already commercialized the Capex of ₹455 crores.
The company has a Capex of around ₹310 crores in the last financial year and plans for another ₹150 crores this year.
The company's Capex intention is basically to add new products to its portfolio and expand its existing manufacturing capacity.
The company's biggest weakness is its dependence on imports for raw materials.
The company imports 30% of its raw materials, and most of that from China.
Their raw material prices have been volatile for some time now due to environmental restrictions and other disruptions in China.
At the same time, the prices of some of their raw materials are fixed in the international markets, due to which there is a lot of volatility in them.
As you can see on your screen, we have shown some key financial and technical ratios of the company.
We have also included the prices of 2 technical indicators so that you can see the stocks from a technical perspective as well.
We have used 2 indicators- 200 days simple moving average i.e. 200 days SMA and RSI (14).
If a company's stock price is trading above the 200 DMA, the stock can be considered bullish.
And if the price is trading below the 200 DMA then the stock can be said to be bearish.
Talking about the RSI, an RSI value below 30 is generally considered oversold, and a trend reversal is likely to lead to an uptrend.
Similarly, an RSI value above 70 is considered overbought, and a trend reversal is likely.
The second company is Metropolis Healthcare Limited.
Metropolis Healthcare India is one of the largest diagnostic chains in South Asia, Africa, and the Middle East.
The company treated 13.4 million patients in FY22 and conducted 25.7 million tests.
In October 2021, the company merged with Hitech Labs, which helps the company to have a good presence in South India.
The company's stock is trading about 12.19% below its pre-pandemic levels.
The company has shown 7% growth in non-COVID revenue despite the disruption of COVID-19.
It showcases the company's aggressive B2C marketing strategy due to which the company has been able to build good trust with the patients.
This is visible in the revenue growth of the company's wellness test.
One challenge for the company is that as the impact of COVID-19 is returning, the number of tests will also start going up.
Also, industry-wide margins remain tight due to the current stiff competition in this segment.
Pharm Easy recently acquired a majority stake in the company's close rival Thyrocare Technologies.
At the same time, given the increasing competition, the company may also have the power to sell some of its stakes to a strategic buyer.
As you can see on your screen, we have shown some key financial and technical ratios of the company.
The third company is SIS Ltd.
SIS Ltd. or Security and Intelligence Services (India) was started by Shri Ravindra Kishore Sinha in 1974.
The company mainly operates in 3 business segments security features, cash logistics, and facility management.
Security and training, paramedic and emergency response services, with these 3 segments;
the company executes asset protection and mobile patrol, and pest control management services;
Cash logistics services provide services like ATM cash replenishment activities and secure transportation of valuables like gold.
In addition, the company also provides trading and installation services of electronic security devices such as alarm monitoring and response services.
The company's stock is trading around 12.52% below its pre-pandemic levels.
SIS is a leading player in Security Services and Facility Management in India.
The company is also playing a major role in Australia as per the credit report of India Ratings.
The company had a market share of 14% in Australia last year. The company is operating in India for more than 40 years.
Due to such long-term operations, the company has been able to create brand value in India.
Despite operating on such a large scale, the company has grown its revenue at a CAGR of 15% in the last 10 years.
SIS generates approximately 48% of its revenue from foreign trade.
As a result, the company's exposure to currency fluctuations remains high.
The company's operating cost in local currency reduces the company's risk significantly, but the company currently has a new hedging policy for foreign currency risk.
Currency hedging means that the company's investments are less affected by foreign exchange fluctuations.
Now you can see on screen some of the key financial and technical ratios of the company.
The fourth company is Mahanagar Gas Limited.
Mahanagar Gas Limited was incorporated in 1995 as a joint venture between GAIL (India) and BG Asia Pacific Holdings Private Limited.
The company made its debut in the stock market in 2016, after which the two parent companies reduced their stake to 32.5% each.
BG Asia Pacific Holdings sold its entire stake in 2019 and now GAIL is the sole promoter of the company.
The company is primarily involved in City Gas Distribution (CGD).
The company's stock is trading around 26.10% below its pre-pandemic levels.
The company's key strength is its dominant position in key Geographical Areas (GAs).
The company currently supplies natural gas to the city of Mumbai and adjoining areas such as the Raigad district.
The company currently enjoys infrastructure exclusivity in Raigad till 2040 under the Petroleum and Natural Gas Regulatory Board (PNGRB) Act.
Due to exclusivity, until 2040, no one else can compete with the company in that particular area.
This is a strong advantage in terms of pricing power to the company from which it will be able to increase its profitability maintenance.
The progress of expansion in Raigad had slowed down considerably due to the pandemic.
In January 2022, the company achieved the target of domestic connection setup and pipeline work.
But the delay in execution caused by the pandemic could result in fines for the company, which negatively impact its profitability and business operations.
Let us now take a look at the financial and technical ratios of the company.
The last company is Indraprastha Gas Limited.
Indraprastha Gas is also involved in the business of City Gas Distribution (CGD).
It supplies gas to various cities like New Delhi as well as nearby cities like Noida, Greater Noida, Ghaziabad, Gurugram, Meerut, Kanpur, etc.
It is involved in expanding various segments like Compressed Natural Gas (CNG), and Piped Natural Gas (PNG) to commercial and residential consumers and supplying to other CGD companies.
The company's stock is trading about 26.27% below its pre-pandemic levels.
The company has a first-mover advantage in and around Delhi.
Since it is a CAPEX-heavy business, this sector has strong entry barriers.
The company has infrastructure exclusivity in many geographical areas where it enjoys a monopoly position.
Due to this exclusivity, the company has developed infrastructure rapidly over the years.
Because of these reasons, Indraprastha Gas has strong pricing power and operating leverage that keeps them away from the competition.
The biggest threat before the company is the change in the policy & regulations of the government.
For example, the government is exploring proposals to end the exclusivity given to players in this business segment.
This will end the near monopolistic status of the company in the times to come.
In the long run, the company's margins may get compressed due to increased competition.
Now you can see the key financial and technical ratios of the company on the screen.
So these were the 5 high-growth companies that are trading at a discount from their pre-covid level.
We remind you that this video is for educational purposes only, and is not a buy or sell recommendation of any kind.
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