The strong earnings reflected a mix of cost optimisation measures, sharper-than-expected demand recovery and healthy operational delivery. Dalal Street investors have been quick to reward these stocks, with shares of 18 of 25 such firms beating the Sensex’s 9 per cent return for the year to date.
For this study, only those corporates were considered, which have a minimum market capitalisation of Rs 10,000 crore and quarterly profits in excess of Rs 100 crore.
The chart topper is Adani Transmission. The Adani group firm logged a profit after tax (PAT) of Rs 440 crore for December quarter, which was 157 per cent more the year-ago period’s Rs 173.44 crore, data compiled from corporate database Ace Equity showed. The stock has rallied 74 per cent so far this calendar.
Prospects for the transmission and distribution segments look promising, with Rs 40,000 crore worth of transmission tenders coming up and a potential uptick in the privatisation of discoms.
“A strong balance sheet provides room for Rs 5,000 crore capex in transmission and Rs 1,500-2,000 crore in distribution businesses annually over the next three to five years,” Edelweiss, which recently hosted the company management, said.
Shares of Bank of India have climbed 45 per cent year to date after the PSU lender logged a 370 per cent surge in profit at Rs 544.20 crore on improvement in asset quality and lower provisions, which stood at Rs 1,980 crore in December quarter against Rs 4,015 crore a year ago.
Shares of Minda Industries, SKF India, Grasim Industries, Dalmia Bharat and Apollo Tyres have risen 32-43 per cent year to date. Among them, Dalmia Bharat reported a 604 per cent year-on-year rise in profit at Rs 183 crore, led by robust volume growth, production ramp-up in the east, healthy south-led pricing and continued cost controls.
“Despite major ongoing expansions, the company’s balance sheet remains well under control,” said HDFC Securities, which has a buy rating on Dalmia Bharat.
On Minda, Cholamandalam Securities said the auto ancillary company has historically managed to deliver growth above the industry average on the back of regular new product launches and an increase in kit value per vehicle. It expects recovery in rural demand, increasing need for personal transportation arrangement due to social distancing and cost-cutting measures to drive growth in the coming quarters.
Edelweiss has upgraded SKF India to ‘buy’ as it anticipates a change in fortunes for the company, driven by a pickup at OEMs that account for two–thirds of its business and also on strong uptick in the industrial cycle.
In the case of Grasim, other than a two-fold jump in profit, the company’s announcement of Rs 5000 crore foray into the paints segment has also supported the stock.
For Apollo Tyres, the ongoing cost containment measures, capex conservation, strong recovery from the replacement market in India and a focus on premium products in Europe are making analysts turn positive on the stock.
Motherson Sumi Systems, AU Small Finance Bank, The Ramco Cements Ultratech Cement, Supreme Industries, Shree Cement and MRF are some other companies that reported a 100 per cent surge in December quarter profits. These stocks have rallied double of the Sensex’s 9 per cent gain this calendar.