Q4 Results: 6 Stocks Emerge Compelling Buys With up to 4,000% Profit Growth
Six BSE500 companies including Nippon Life, Dalmia Bharat and Kalpataru Power have logged 600-3,900 per cent surge in March quarter profits on an extremely weak base.
Companies with a year-on-year profit growth in excess of 500 per cent and quarterly profit of at least Rs 100 crore were only considered for this study.
1. Nippon Life India -
Nippon Life India reported Rs 166.51 crore profit for the March quarter, 3,931 per cent, or 40 times, higher than Rs 4.13 crore reported for the year-ago period.
“Nippon’s AUM has recovered strongly post rebranding, and we expect operating leverage to provide significant scope for RoE improvement as AUM stabilises,” it said and valued the stock at Rs 400. Nirmal Bang has a target of 412 on the stock, Haitong International Research Rs 387 and CLSA Rs 375. On Thursday, the stock traded at Rs 351.
2. Dalmia Bharat
Dalmia Bharat’s consolidated profit rose 26 times, or 2,567 per cent, for the quarter to Rs 640 crore from Rs 24 crore in the year-ago quarter.
“Barring the near-term impact on Covid second wave, the cement industry is poised for a healthy demand environment going forward with government-led infrastructure investment and a gradual pickup in private capital expenditure. Dalmia is expected to benefit from the strong demand and pricing environment in eastern and southern India going ahead," Sharekhan said in a recent note. On Thursday, the stock traded at Rs 1,793.
3. Kalpataru Power Transmission -
Profit surged 994 per cent or 11 times to Rs 197 crore from Rs 18 crore a year ago.
“The strategy to monetise non-core assets and utilise proceeds towards debt reduction and acquisitions to grow international business would further strengthen its balance sheet,” it said and suggested a price target of Rs 470 for the stock. HDFC Institutional Equities sees the stock at Rs 560 while Prabhudas Lilladher at Rs 448. The stock traded at Rs 390 in a depressed market on Thursday.
4. Adani Enterprises’ -
Profit soared 984 per cent to Rs 209.13 crore from Rs 19.28 crore year on year. Angel Broking said the numbers were led by strong operating performance and were largely in line with its estimates. Not many analysts track this stock.
5. Linde India -
Linde India undertook various initiatives to ramp up production of medical oxygen and its distribution in India and has been in the news for the same.
Today, the company produces roughly 3,000 tonnes of liquid medical oxygen a day. The company reported a 675 per cent, or 7.7 times, jump in profit at Rs 302.60 crore against Rs 39 crore reported for the year-ago period.
“After business integration with Praxair India, Linde India is well poised to register exponential earnings growth over the next 3-5 years on the back of expected acceleration in demand for industrial gases in India and improvement in profitability. We see meaningful upside to earnings in CY 21 /22,” Antique Stock Broking said.
6. Jindal Steel & Power -
March quarter profit came in at Rs 2,139.29 crore, 7 times (or 600 per cent) the year-ago quarter's Rs 305.62 crore.
"Strong internal accruals, contained capex and divestments have helped JSPL strengthen its balance sheet with net debt/Ebitda down to 1.5 times in FY2021. With leverage concerns behind, JSPL has announced a capex plan of Rs180 bn to increase its steel capacity by 85% over the next 3-4 years. The brownfield expansion has low capital intensity and attractive returns," Kotak Securities said.