Notwithstanding the bleak outlook for June quarter, analysts see medium-term potential in some of these names.
Companies with a year-on-year profit growth (after extraordinary items) in excess of 500 per cent and quarterly profit of at least Rs 100 crore were only considered for this study.
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. Philips Capital said the AMC was marred by erstwhile group-level issues and under-performance in the last two years, but the pace of decline in market share has got arrested and the number of unique investors has increased in the last one year.
“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.
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. The numbers got a boost from a Rs 230 crore tax credit for earlier years, as its subsidiaries adopted the reduced tax rate. Even after accounting for that, the adjusted net profit was up 5.5 times, much higher than estimates, said Sharekhan.
“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. It sees the stock at Rs 1,900. Prabhudas Lilladher (PL) finds it worth Rs 2,140 while Emkay has a target of Rs 2,060. On Thursday, the stock traded at Rs 1,793.
In the case of Kalpataru Power Transmission, profit surged 994 per cent or 11 times to Rs 197 crore from Rs 18 crore a year ago. ICICIdirect believes despite short-term challenges from the pandemic and commodity price rise, Kalpataru’s strong order book, good traction in non-T&D business and improved subsidiary performance would lead to consistent growth in the medium term.
“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.
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.
For Linde India, March was first quarter of the new financial year, which follows calendar year accounting. The company and its shares have been in news of late as it undertook various initiatives to ramp up production of medical oxygen and its distribution in India.
Today, the company produces roughly 3,000 tonnes of liquid medical oxygen a day, approximately 10 times more than what it produced a few months ago. Analysts are positive in the stock.
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 CY21/22,” Antique Stock Broking said.
Jindal Steel & Power’s 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.
Motilal Oswal said after the sale of Jindal Power (JPL), JSPL would become a pureplay Indian steel company, which should also aid in better value discovery as the steel business is still under-valued at 4.1 times FY23 EV/Ebitda.
