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20 firms that never saw loss for 10 years, grew wealth up to 17,000%

86 per cent of these companies managed to give positive returns to their investors.

Feb 21, 2018, 10.43 AM IST
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Centrum believes steady margin expansion would continue on the back of stable raw material prices and healthy operating leverage.
Generating more money than their annual spend year after year has helped more than 600 listed companies on BSE to deliver solid returns, running up to 17,000 per cent, to shareholders over the past 10 years.

Now, that’s the real India Growth story.

Data available with a corporate database Capitaline shows that 735 companies have reported positive growth in bottom line figures all through from FY08 to FY17. What’s more, 86 per cent of these companies managed to give positive returns to their investors.

With a 17,148 per cent rally, shares of Tasty Bites Eatables stood out as top performer on the list. The scrip has risen to Rs 8,106 as of February 15, 2018 from Rs 47 on the same day in 2008. Over these years, the company’s net profit has growth from Rs 1.17 crore in 2007-08 to Rs 22.78 crore in 2016-17.

Relaxo Footwear and Ajanta Pharma are two other stocks, which have rallied 12,567 per cent and 12,374 per cent, respectively, during this period. These companies have reported profit growth at the rate of 25 per cent CAGR in last 10 years.

Equirus Securities has a price target of Rs 1,658 for the Ajanta Pharma stock by June 30, 2019. The scrip traded at Rs 1,394 on February 16.

Sharekhan is bullish on Relaxo Footwear with a price target of Rs 735. “We have broadly maintained our earnings estimates for FY2018, FY2019 and FY2020. GST implementation is turning out to be the silver lining for the company, as a large shift of business is happening from the unorganised sector. We expect revenue and earnings to growth at around 17 per cent and 25 per cent (CAGR) over FY2017-FY2020, while operating profit margin is likely to remain stable at 14-15 per cent,” Sharekhan said in a report.

Relaxo shares traded at Rs 597.75 on February 16, 2018.

Among others, shares of La Opala RG, DFM Foods, Mayur Uniquoters, Bharat Rasayan, Somany Ceramics and Arman Financial have rallied 9,703 per cent, 9,059 per cent, 8,206 per cent, 7,198 per cent, 5,838 per cent and 5,020 per cent, respectively, in these 10 years.

Among these, La Opala RG, DFM Foods and Somany Ceramics have reported 48.80 per cent, 37 per cent and 38 per cent CAGR expansion in profit during this period. Other companies registered 25-32 per cent CAGR increase in net profit in these years.

Brokerage Centrum recently upgraded La Opala RG to ‘buy’ with a target price of Rs 730. “Despite increasing competition, we expect the company to post over 20 per cent volume growth as witnessed in the third quarter of FY18 on the back of increasing penetration, higher sales of new products and pass through of GST benefits to customers by lowering prices,” the brokerage said.

Centrum believes steady margin expansion would continue on the back of stable raw material prices and healthy operating leverage.

Somany Ceramics reported disappointing revenue growth and a sharp drop in Q3 FY18 Ebitda margin to 7.5 per cent from around 10 per cent YoY, due to the impact of higher gas cost and weaker GVT prices. A higher tax rate on gas at its Haryana plant further squeezed margins.

Due to near-term margin pressures and rising fuel costs, Edelweiss Securities has trimmed FY18, FY19 and FY20 EPS of Somany Ceramics by 23 per cent, 11 per cent and 9 per cent, respectively, and revised its price target for the stock downward to Rs 1,100 from Rs 1,214 earlier. However, the brokerage has maintained a ‘buy’ rating on the stock.

Stocks like Cera Sanitaryware, Page Industries, TTK Prestige, Stylam Industries, Kajaria Ceramics, Hatsun Agro, Wim Plast, KRBL, Apcotex Industries, Vakrangee and Oriental Carbon have climbed between 4,450 per cent and 5,000 per cent during these 10 years.

Emkay Global Financial Services recently revised its rating on Apcotex to ‘accumulate’ from ‘buy’ with a target price of Rs 547. The company produces synthetic emulsion polymers.

Domestic equity benchmark Sensex has risen 89 per cent to 34,297 as of February 15, 2018 from 18,115 on February 15, 2008.
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