The best company to own is one that requires no capital to grow and yet can earn high returns on invested capital. - Warren Buffett
There's a reason why investors chase stocks with high net profit margins.
These companies generate significant earnings relative to their revenue, indicating strong cost management and pricing power.
High net profit margins not only reflect financial health but also provide a cushion during economic downturns, making such stocks attractive for long-term wealth creation.
Keeping that in mind, let's look at the top 5 high net profit margin companies selected from Equitymaster's screener for High-Profit Margin Stocks.
The screener also features Coal India, but its net profit margin figures are standalone, so we've consider the next stock on the list.
Also, these are not stock recommendations. Investors should do their own research and do due diligence before considering any investment in the stock market. Also, investors should pay close attention to corporate governance while performing their due diligence.
#1 Bajaj Holdings & Investments (BHIL)
First on this list is Bajaj Holdings & Investments.
Bajaj Holdings & Investment operates as an investment company. It's registered as a non-banking financial institution - an investment and credit company - with the Reserve Bank of India (RBI).
BHIL is essentially a holding and investment company and does not have any other operations of its own. The company holds more than 36% stakes in Bajaj Auto Ltd, Bajaj Finserv Ltd and Maharashtra Scooters Ltd.
The company's investments consist of strategic investments in group companies, financial investments in capital markets, and investments in properties.
BHIL earns revenue primarily by way of dividend income from investments held in group companies - Bajaj Auto, Bajaj Finserv, Bajaj Auto Holdings, Maharashtra Scooters, Bajaj Electricals, Mukand Ltd, Hercules Hoists, Mukand Engineers, etc.
