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33 firms saw sales, profit & stock price rise in double digits since April; worth a look?

Firms involved in the capital markets business were among the top grossers during H1FY19.

Updated: Nov 26, 2018, 04.43 PM IST
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Companies involved in the capital markets business were among the top grossers during H1FY19.
India Inc as well as Dalal Street investors had a highly volatile period in last two quarters in terms of raw material costs, currency fluctuations and selloff in the broader equity market.

Yet, as many as 33 companies on National Stock Exchange (NSE) managed to register double-digit bottom line and top line growth and record up to 80 per cent rise in share prices since the beginning of this financial year. The BSE Sensex advanced 7.5 per cent during this period.

Companies involved in the capital markets business, including Indiabulls Ventures and Goldcrest Corporation, were among the top grossers during the first half of this financial year.

Indiabulls Ventures reported a 155 per cent YoY rise in net sales and 117 per cent jump in profit during April-October 2018. The company’s share price rallied 80 per cent to Rs 447.10 as of November 19 from Rs 248.40 on April 2.

The Annual Wealth Creation Study of Motilal Oswal Financial Services listed the company as fastest wealth creator, with a 2013-18 stock price multiplier of 30 times (97% CAGR).

Goldcrest Corporation posted 60 per cent YoY rise in net profit on a 102 per cent YoY rise in sales during the first half of FY19. The stock has rallied 16 per cent this financial year till November 19.

Among Nifty companies, RIL, TCS and Tech Mahindra posted over double-digit growth in bottom line and top line during the first half even as their shares rose 28 per cent, 31 per cent and 14 per cent, respectively, since the beginning of April.

RIL is the largest private player in refining, petrochemicals and E&P in India. The company is expanding its presence in consumer retailing and telecom.

Edelweiss Investment Research is positive on Reliance Industries with a target price of Rs 1,240. “RIL is currently in a capex phase, investing in world-scale projects such as petcoke gasification, off-gas crackers and telecoms, which are expected to drive future growth. Earnings are expected to double over the next 5 years and RoCE to surge after assuming 5 years of cumulative losses in the telecom business, as the value-accretive petcoke and off-gas cracker projects kick in,” it said.

Post Q2, brokerage Prabhudas Lilladher in October came out with a 'buy' recommendation on Tech Mahindra with a price target of Rs 885.

Cigniti Technologies, Intellect Design Arena, L&T Infotech, NIIT Technologies and Zensar Technologies were among other IT players, which also reported double-digit growth in profit and sales during the first half of 2018-19 (H1FY19). Shares of these companies rallied between 17 per cent and 65 per cent between April 2 and November 19.

Nirmal Bang Securities says midcaps may witness faster growth pick-up on a low base in FY19, but investors should to focus on sustainability and not overpay for riskier businesses. “The current valuation of midcap stocks factor in strong growth over a two to three- year time frame-which we believe is unlikely.”

Adani Transmission and Torrent Power also managed to get places on the list from the power generation and distribution segment. Household names, including Dabur and VIP Industries, posted up to 28 per cent and 49 per cent rise in net sales and net profit, respectively, for the half year. Shares of these firms have rallied up to 50 per cent so far.

Aarti Drugs, Almondz Global Securities, Arman Financial Services, Astral Poly Technik, Berger Paints, Britannia Industries, Goldiam International, JSW Steel, Pearl Global, Polyplex Corporation, Praj Industries, PVR, Teamlease Services, Triveni Turbine and Wendt (India) were among the other players whose net profit and net sales grew over 10 per cent each during the April-September period. Shares of these companies have rallied between 10 per cent and 50 per cent so far this financial year.

Nirmal Bang has an ‘accumulate’ rating on Dabur with a target price of Rs 420, and a ‘buy’ rating on PVR with a target price of Rs 1785.

Centrum Equity Research is bullish on Aarti Drugs with a price target of Rs 870. “The company is likely to benefit from vertical integration which is likely to drive future growth. We expect margins to improve post the launch of new products and additional capacities of Ketoconazole and Metformin APIs going on stream in Q4FY19. Key risks to our assumptions include a slowdown in the domestic pharma market and regulatory risks for its manufacturing facilities,” it said.

Gautam Chhaochharia, UBS Securities India, says from a one-year framework, one-and-a-half-year framework or six-month framework, the risk-reward is clearly unattractive.

“You should get better opportunities to buy in dips. Given the election uncertainty, no one knows what will happen there. Markets are broadly hoping and pricing that Mr Modi will come back in one way or the other but it is always a difficult one to predict and valuations have come off,” he said in an interaction with ETNow.

But even if you look at more realistic estimates, they are still trading much higher than last three-year, five-year averages. “You do not have enough comfort to jump in and have a lot of buffer, but given the inherent growth market in India, if you are taking a three-year perspective, you still should be okay in terms of delivering good returns from here on,” he said.

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