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.

1. 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 Engineering’s 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 company’s
profit margins its business model turns out to be more robust. Higher profitability in turn reflects on the
companies EPS numbers which boost shareholder’s 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
Interest For
June 2016
PAT for June
2016
Interest/
Profit
Net Profit
Margin
Revenue
In crs
AIAENG 1.19 109.04 1% 21.79% 500
SHREECEM 27.59 507.67 5% 20.35% 2494
NAVNETEDUL 2.25 113.56 2% 20.26% 561
PIIND 1.60 126.86 1% 18.56% 683
DBCORP 3.40 103.96 3% 18.23% 570
ALKEM 9.96 243.30 4% 16.69% 1458
GUJALKALI 2.43 86.26 3% 16.48% 523
RAMCOCEM 29.14 155.93 19% 16.04% 972
PFIZER 0.42 80.04 1% 15.97% 501
BAYERCROP 1.80 131.30 1% 15.35% 856
GSKCONS 0.64 160.61 0% 15.16% 1059
LTI 0.40 235.80 0% 14.80% 1593
APLLTD 1.07 103.63 1% 14.23% 728
SANOFI 0.70 85.30 1% 14.03% 608

2. WABCOINDIA 0.00 73.90 0% 13.77% 537
MPHASIS 5.32 204.34 3% 13.47% 1517
BALRAMCHIN 21.19 110.70 19% 13.39% 827
WELSPUNIND 35.27 208.68 17% 13.10% 1593
INDIGO 116.31 591.77 20% 12.92% 4579
KANSAINER 0.00 126.50 0% 12.08% 1047
ATUL 7.23 80.54 9% 11.93% 675
DCMSHRIRAM 19.70 166.80 12% 11.57% 1442
FINCABLES 1.24 67.18 2% 11.26% 597
SUNDRMFAST 14.26 75.55 19% 10.60% 713
BIRLACORPN 22.47 94.33 24% 10.47% 901
PERSISTENT 0.02 73.29 0% 10.44% 702
GLAXO 0.00 72.27 0% 10.25% 705
NESTLEIND 0.06 230.84 0% 10.16% 2272
ZENSARTECH 1.73 76.46 2% 10.10% 757
KRBL 20.04 80.41 25% 10.05% 800
3MINDIA 0.35 59.72 1% 10.00% 597
KAJARIACER 9.24 64.58 14% 9.68% 667
BERGEPAINT 2.80 116.77 2% 9.37% 1246
AKZOINDIA 0.60 64.26 1% 9.14% 703
KIRLOSENG 0.68 58.75 1% 8.84% 665
EMAMILTD 12.51 56.60 22% 8.78% 644
SKFINDIA 0.00 60.40 0% 8.59% 703
SUPREMEIND 9.72 101.55 10% 8.54% 1189
CYIENT 4.94 69.24 7% 8.34% 831
FSL 13.17 73.36 18% 8.21% 894
CROMPTON 14.68 91.94 16% 8.20% 1121
HITACHIHOM 1.70 69.02 2% 8.08% 854
VGUARD 0.59 42.78 1% 7.47% 573
CARBORUNIV 4.70 38.62 12% 7.26% 532
BLUEDART 7.74 44.08 18% 7.09% 621
HONAUT 0.01 38.19 0% 6.77% 564
GAEL 2.24 48.26 5% 6.17% 782
SUPPETRO 1.48 45.61 3% 6.16% 741
LAXMIMACH 0.02 33.14 0% 5.94% 558
HGS 11.79 51.85 23% 5.70% 909

3. 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
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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