Thread by @finologyticker

Few high-profit margin stocks 🤑

• Bajaj Finserve Ltd.
• Coal India Ltd.
• NMDC ltd.
• Aditiya Birla capital Ltd.
• L&T Finance Holding Ltd.

Should you Invest in Companies with a High Margin?

Let’s find out ⤵

High margins generally refer to companies with a low cost of goods sold and a high selling price.

This allows them to realise a higher amount of revenue.

#StockMarket

Such companies are highly profitable and enjoy a competitive advantage in their industry such as:

👉High Entry Barriers
👉Better Research and Development
👉Patents and Trademarks

#StocksToBuy #finance

But,

Companies operating with high margins, may or may not provide the best results for an investor.

How? ⤵

A company may be earning Rs 5 lac on selling 1 car, and it is able to sell 10 cars in a year, bringing the net profits of Rs 50 Lac.

Another company, with the same capital structure, makes a profit of Rs 1 Lac/car (lower margin), but is able to sell 100 cars in one year, bringing the net profit to Rs 1 Cr.

Which company would you prefer to invest in? A company with higher margins? Or the company with higher turnover? Do the math.

If a company’s margins are high but ROCE is low, it means that despite high-profit margins, you, as an investor, could still be earning low!

There is a lot more to this concept, Find out on

blog.finology.in/investing/shou…