The markets this year displayed their volatile nature. After showing a good time to investors early on, the final months were not so good. The general elections, foreign investors moving billions out of Indian stocks, stock prices crashing, and so on—2024 was a roller coaster.
But amid all this, some stocks did shine and left a mark. These are stocks that scored a 5 out of 5. Returns over the year, year-on-year (y-o-y) quarterly profit growth, return on capital employed (RoCE), return on equity (RoE) and debt reduction, all categories checked and with strong numbers.
The top three stocks with the highest current RoCE have been considered for this article from a list of stocks screened for the above-mentioned parameters on screener.in.
Network People Services Technologies Ltd
First up is Network People Services Technologies (NPST), a company that is in the business of providing software and digital payment solutions to the banking and fintech segment, primarily focusing on transaction processing, payment platforms, RegTech, and digital engagement solutions.
With a market capitalization of ₹5,614 crore, the company is almost debt-free. Listed in August 2021, it has shown exceptional efficiency in using its capital and shareholders’ money, generating returns that are significantly higher than those of most peers.
An RoCE of 83.5% means for every ₹100 invested in the business (capital), the company generates ₹83.5 in operating profit.
An RoE of 63.7% means shareholders earn ₹63.7 for every ₹100 they’ve invested.
It saw a half-yearly profit growth of over 232% y-o-y, growing from ₹10 crore to ₹33 crore.
Over the last three years, the company’s sales have also grown at a compounded rate of 103%, from ₹25 crore in 2020-21 to ₹128 crore in 2023-24.
Its Ebitda (earnings before interest, taxes, depreciation and amortization) grew from ₹3 crore in 2020-21 to ₹42 crore in 2023-24, which is a compound annual growth rate (CAGR) of 141%.
Its share price also has shown a sharp growth from its early listing price of around ₹22 in August 2021 to the current price of ₹2,896. A CAGR of 420%.
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The stock delivered nearly three-fold returns of 297% over the past year.
It is currently trading at a price-to-earnings (PE) ratio of 112x, while the industry median is 42.6x. The three-year median PE for the stock is, however, 80x, compared to the industry median of 31x.
The only not-so-good point is that despite repeated profits, the company is still not paying any dividends. However, in February 2024, NPST allotted 12.9 million equity shares as bonus shares in the ratio of 2:1.
According to the company’s investor presentation from October 2024, the payments landscape in India is expected to reach $100 trillion in transaction volume and $50 billion in revenue by 2030. The company plans to ride this big wave with all its experience running a high-profit, capital-efficient business.
Shilchar Technologies Ltd
Shilchar Technologies is in the business of manufacturing and distribution of electronics, telecom, and power transformers. It recently began manufacturing of Ferrite transformers.
The company has a market cap of ₹6,359 crore and, like NPST, is almost debt-free.
With an RoCE of almost 75% and an RoE of 55%, Shilchar is very efficient in using its capital and investors’ money to generate solid returns.
The y-o-y quarterly profit growth was 35%, as the net profit was ₹24 crore in September 2023 and ₹33 crore in September 2024.
The company’s sales grew at a CAGR of 27% over the last five years between 2018-19 and 2023-24, from ₹118 crore to ₹397 crore.
Its Ebitda grew at a CAGR of 52% between 2018-19 and 2023-24 from ₹14 crore to ₹113 crore.
The share prices have grown at a CAGR of 159% over the last five years from ₹72 to ₹8,338 as of 11 December 2024.
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The stock delivered returns of over 250% over the past year.
It is currently trading at a PE of 59x, while the industry median is 65x. The 10-year median PE for the stock is, however, 15x, compared to the industry median of 29x.
The company has been concentrating on catering to the needs of the renewable energy sector, including solar and wind energy in the local market. It is looking forward to new business from the local private sector and its export business.
According to Shilchar’s investor presentation from October 2024, the company has some solid order inquiries from domestic and foreign clients. For 2024-25, they have an order pipeline of ₹550 crore, and the company says it would not shy away from putting in more capex if the industry scenario remains buoyant.
India Tourism Development Corporation Ltd
India Tourism Development Corporation LTD (ITDC) is a Government of India undertaking that runs hotels and restaurants; provides transport facilities; produces, distributes and sells tourist publicity literature; and offers entertainment and duty-free shopping facilities to tourists.
With a market cap of ₹5,681 crore, it is also almost debt-free.
When it comes to utilizing capital and investors’ money, ITDC, too, has not left any stone unturned.
The company has delivered an RoCE of 31.5% and an RoE of about 20%.
The y-o-y quarterly profit growth was around 25%, as the net profit stood at ₹19 crore in September 2023 and ₹24 crore in September 2024.
If we look at the sales of the company, it has grown at a CAGR of 8% in the last five years and 44% in the last three years.
The Ebitda grew from ₹19 crore in 2018-19 to ₹101 crore in 2023-24, which is a CAGR of 40%.
The share prices grew at a CAGR of 14% in the last five years, from ₹338 in December 2019 to the current rate of ₹664 as of 11 December 2024.
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The stock delivered nearly 48% returns over the past year and is currently trading at a PE of 80x, while the industry median is 37x. The 10-year median PE for the stock is 114x compared to the industry median of 39x.
ITDC is maintaining a healthy dividend payout ratio of 22%.
According to the India Brand Equity Foundation (IBEF), India’s tourism and hospitality sector is expected to yield revenue exceeding $59 billion by 2028. Moreover, foreign tourist arrivals (FTAs) are forecasted to hit 30.5 million by the same year.
In 2024, Prime Minister Narendra Modi inaugurated 52 tourism sector projects valued at over ₹1,400 crore under the Swadesh Darshan and PRASHAD schemes.
With the projected bump in numbers and the government initiatives, ITDC could very well make the most of the opportunity for itself and its stakeholders.
Will it be a “happy” new year after all?
Strong financials, robust order pipelines, superior capital efficiency and solid profits… These stocks have a feather for each on its hat.
These stocks have till now escaped the sharp eyes of the Warren Buffets of India or even domestic institutions for that matter.
For more such analysis, read Profit Pulse.
While these three stocks we have dived into today have almost everything going their way for the year 2024, it will be interesting to watch how things play out for them in 2025. So, adding them to your watchlist would not be such a bad idea.
Note: We have relied on data from www.screener.in, www.trendlyne.com and www.tijorifinance.com throughout this article. Only in cases where the data was not available have we used an alternative but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the market for over a decade. During this period, he was an integral part of a leading equity research organisation based in Mumbai as the head of sales and marketing. Presently, he is spending most of his time dissecting the investments and strategies of the super investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
