The balance sheet is an important financial statement that provides an overview of a company’s assets, liabilities, and shareholders’ equity at a specific point in time. One important component of the balance sheet is cash and cash equivalents, which represents the company’s liquid assets readily available for use.
Cash and cash equivalents include cash on hand, demand deposits in banks, and highly liquid investments with short-term maturities. These assets are easily convertible into cash and are crucial for a company’s day-to-day operations, including meeting short-term obligations.
Market capitalization, on the other hand, is a measure of a company’s total value, calculated by multiplying the current share price of the company by the number of outstanding shares.
In some cases, a company may have a situation where the amount of cash and cash equivalents reported on the balance sheet exceeds its market capitalization and, in this article, we are going to cover those companies along with the share price trading under Rs 50.
| Company Name | CMP Rs. | Cash Rs.Cr. | Mar Cap Rs.Cr. |
| GMR Power & Urban | 17.8 | 1,103.9 | 1,072.6 |
| GVK Power Infrastructure | 2.7 | 509.6 | 429.5 |
| Unitech | 1.5 | 446.1 | 387.2 |
| IL&FS Engineering & Construction | 11.2 | 330.9 | 146.4 |
| IL&FS Transportation Network | 3.3 | 299.8 | 106.9 |
| Hindustan National Glass & Industries | 12.8 | 224.9 | 114.3 |
| Hindustan Organics Chemical | 27.5 | 198.1 | 184.7 |
| Madhucon Projects | 5.7 | 82.4 | 41.7 |
| Addi Industries | 32.8 | 62.3 | 35.4 |
| ARSS Infra | 19.8 | 53.1 | 45.0 |
| Punjab Communications | 30.8 | 43.9 | 37.0 |
| Transchem | 22.0 | 34.5 | 26.9 |
| Hindustan Fluoro Carbon | 9.7 | 30.8 | 19.0 |
| Viceroy Hotels | 2.7 | 23.5 | 11.5 |
| Mahaan Foods | 32.5 | 17.8 | 11.4 |
| Premier | 2.9 | 16.6 | 8.7 |
| Samyak International | 18.8 | 13.3 | 11.8 |
| Metalyst Forgings | 2.8 | 12.9 | 12.0 |
| United Interactive | 46.0 | 12.1 | 8.4 |
| Hindustan Appliances | 6.9 | 8.8 | 6.9 |
| Yogi Infra Project | 3.6 | 8.2 | 6.0 |
| Purple Entertainment | 3.8 | 7.7 | 3.3 |
| NCC Blue Water Projects | 4.9 | 6.9 | 3.8 |
| KMF Builders & Developers | 4.4 | 6.6 | 5.4 |
| Taparia Tools | 11.6 | 6.6 | 3.5 |
| SAB Events & Governance Now Media | 4.1 | 6.1 | 4.3 |
| Chemo Pharma Laboratory | 36.0 | 6.1 | 5.4 |
| IMP Powers | 3.7 | 5.8 | 3.2 |
| Lakshi Precision Screw | 4.6 | 5.2 | 5.0 |
| Galada Power & Telecommunications | 2.0 | 4.5 | 1.5 |
It can be an interesting situation when the amount of cash and cash equivalents recorded on a company’s balance sheet surpasses its market capitalisation. Although it is good to have cash in the balance sheet it can be interpreted from another perspective that the market is undervaluing the company due to poor investor sentiment, industry-specific challenges, or a lack of awareness about the company’s potential.
A robust cash position provides financial stability, enabling the company to stand strong during economic downturns, invest in research and development or grab any opportunities. It also offers to meet unforeseen expenses, continue operations during the downturn, or make any strategic acquisitions.
The market may eventually recognize the company’s true value, leading to an increase in market capitalisation. If the company can effectively communicate its growth prospectus and deploy its excess cash in a manner that generates returns, it may attract investors and drive market sentiments. Investors must keep these stocks on their radar.
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