Companies That Pay Less Interest to Magnify

Their Profits
It has been observed that Indian companies listed in the NSE who
pay comparatively lesser amount of interest cost have reported
attractive profit margin for quarter ended June 2016 as compared
to companies that bear higher interest cost burden. It is not
surprising thus that these companies have reported revenues
above Rs. 500 crores and an interest outflow that is lower than
25% of their Net Profits. This statistical data covers all the 1700
companies that are listed at the National stock exchange.
For Example AIA Engineerings net interest outgo stood at Rs. 1.19
crores against Net Profitability of Rs. 109.04 crores for quarter
ended June 2016. This proves that due to significantly lower outflow of interest from the companys
profit margins its business model turns out to be more robust. Higher profitability in turn reflects on the
companies EPS numbers which boost shareholders wealth. The company has reported quarterly
revenue of Rs. 500 crores and its stock prices rose 85% in last six months from Rs. 701 to Rs. 1330.
Hence it can be concluded that companies that have a lower interest burden have higher probability of
offering returns to its investors.

NSE Code
AIAENG
SHREECEM
NAVNETEDUL
PIIND
DBCORP
ALKEM
GUJALKALI
RAMCOCEM
PFIZER
BAYERCROP
GSKCONS
LTI
APLLTD
SANOFI

Interest For
June 2016
1.19
27.59
2.25
1.60
3.40
9.96
2.43
29.14
0.42
1.80
0.64
0.40
1.07
0.70

PAT for June

2016
109.04
507.67
113.56
126.86
103.96
243.30
86.26
155.93
80.04
131.30
160.61
235.80
103.63
85.30

Interest/
Profit
1%
5%
2%
1%
3%
4%
3%
19%
1%
1%
0%
0%
1%
1%

Net Profit
Margin
21.79%
20.35%
20.26%
18.56%
18.23%
16.69%
16.48%
16.04%
15.97%
15.35%
15.16%
14.80%
14.23%
14.03%

Revenue
In crs
500
2494
561
683
570
1458
523
972
501
856
1059
1593
728
608

WABCOINDIA
MPHASIS
BALRAMCHIN
WELSPUNIND
INDIGO
KANSAINER
ATUL
DCMSHRIRAM
FINCABLES
SUNDRMFAST
BIRLACORPN
PERSISTENT
GLAXO
NESTLEIND
ZENSARTECH
KRBL
3MINDIA
KAJARIACER
BERGEPAINT
AKZOINDIA
KIRLOSENG
EMAMILTD
SKFINDIA
SUPREMEIND
CYIENT
FSL
CROMPTON
HITACHIHOM
VGUARD
CARBORUNIV
BLUEDART
HONAUT
GAEL
SUPPETRO
LAXMIMACH
HGS

0.00
5.32
21.19
35.27
116.31
0.00
7.23
19.70
1.24
14.26
22.47
0.02
0.00
0.06
1.73
20.04
0.35
9.24
2.80
0.60
0.68
12.51
0.00
9.72
4.94
13.17
14.68
1.70
0.59
4.70
7.74
0.01
2.24
1.48
0.02
11.79

73.90
204.34
110.70
208.68
591.77
126.50
80.54
166.80
67.18
75.55
94.33
73.29
72.27
230.84
76.46
80.41
59.72
64.58
116.77
64.26
58.75
56.60
60.40
101.55
69.24
73.36
91.94
69.02
42.78
38.62
44.08
38.19
48.26
45.61
33.14
51.85

0%
3%
19%
17%
20%
0%
9%
12%
2%
19%
24%
0%
0%
0%
2%
25%
1%
14%
2%
1%
1%
22%
0%
10%
7%
18%
16%
2%
1%
12%
18%
0%
5%
3%
0%
23%

13.77%
13.47%
13.39%
13.10%
12.92%
12.08%
11.93%
11.57%
11.26%
10.60%
10.47%
10.44%
10.25%
10.16%
10.10%
10.05%
10.00%
9.68%
9.37%
9.14%
8.84%
8.78%
8.59%
8.54%
8.34%
8.21%
8.20%
8.08%
7.47%
7.26%
7.09%
6.77%
6.17%
6.16%
5.94%
5.70%

537
1517
827
1593
4579
1047
675
1442
597
713
901
702
705
2272
757
800
597
667
1246
703
665
644
703
1189
831
894
1121
854
573
532
621
564
782
741
558
909

Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal
views of the research team. Users are advised to use the data for the purpose of information and rely on their own
judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment
Advisory Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of
MCX & NCDEX. We declare that our activities were neither suspended nor we have defaulted with any stock exchange
authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and
based on their observations have issued advise letters or levied minor penalty on for certain operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/
Research Analyst/ his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or
other benefits from the subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by
Vikash Kandoi