Bullet-proof stocks? GST pain, economic woes failed to hurt these 24 companies

June quarter earnings season was marked by repeated disappointments. Yet, 24 companies from the BSE500 pack went against the wind to report 100-1,761 per cent profit growth. Thirty others posted 50-100 per cent surge in bottom lines.

Lower expenses helped Century Textiles & Industries post multi-fold 1,761 per cent profit growth at Rs 120 crore for the quarter ended on June 30. The figure compares with Rs 6.46 crore profit posted for the same period of last financial year. Net sales for the quarter under review swelled 1.20 per cent year-on-year to Rs 2,049 crore.

Looking at the prospects of the cement industry and considering the kind of assets Century Textiles holds, the stock can deliver decent returns in the long run, says Rajesh Agarwal, Head of Research, AUM Capital.

“In a medium term, the stock can hit Rs 1,500 in the next six months and hence we recommend this as a buy,” he told ETNow. That means a 25 per cent potential upside from Monday’s price of Rs 1,205.

Four other companies – Coromandel International, CG Power, TTK Prestige and Torrent Power – reported 907 per cent, 724 per cent, 524 per cent and 338 per cent year-on-year bottom line growth for the quarter.

Edelweiss Securities recently raised the target price of Coromandel International to Rs 511 from Rs 393. “On account of higher returns on asset, we raise our target multiple to 20 times FY19E EPS (from 16 times earlier). DBT implementation entails further rerating potential,” the brokerage said. The stock traded at Rs 440 on August 16.

Multibagger Avanti Feeds posted 204 per cent jump in profit at Rs 148.84 crore for the quarter over Rs 49.03 crore posted for the year-ago period.

Max India, Bharat Electronics and Marksans Pharma clocked 328 per cent, 247 per cent and 208 per cent, profit growth, respectively, for the same period.

Consolidated net profit of country’s biggest lender, State Bank of India, jumped three fold YoY to Rs 3,031crore. However, it saw a major slip in asset quality because of higher bad loan accruals from the books of some of the associate banks that merged into it recently.

Gross non-performing assets (NPA) rose to 9.97 per cent of gross advances as of June 30, 2017, from 7.40 per cent at the end of June, 2016.

Net NPAs or bad loans soared to 5.97 per cent of net advances by June end from 4.36 per cent in the year-ago period.

Centrum Equity Research had a ‘buy’ rating on SBI post June quarter numbers with a target price of Rs 340. The brokerage said Q1FY18 results were weak on both P&L and asset quality fronts but drew comfort from the fact that the merged entity was starting on a strong capital position and watch list portfolio.

“Asset quality remains encouraging and we have factored the same into our estimates. Valuations under such situations remain inexpensive. Subsidiaries continue to remain profitable. Value unlocking therein could trigger further upside to the stock,” the brokerage said.

Among others, Tata Sponge, Gayatri Projects and IFCI reported net profit growth of between 150 and 190 per cent. Dilip Buildcon, Indiabulls Venture, Caplin Point Labs, ITD Cementation, SPARC, Future Retail, MOIL, Infibeam Incorporation, KEC International and Ashoka Buildcon reported over 100 per cent year-on-year profit growth for June quarter.

HDFC Securities is positive on Ashoka Buildcon with a target price of Rs 235, whereas Centrum is bullish on KEC International with a target price of Rs 361. Ashoka Buildcon and KEC International traded at Rs 189 and Rs 298, respectively, on Monday.

June quarter earnings showed continued weakness in banking, IT and pharma sectors, said Kotak Institutional Equities. “Sales disruptions in auto, consumer staples and pharma sectors before GST rollout from July 1, 2017 further affected corporate bottom lines,” the brokerage said.

On an aggregate basis, June quarter profits of the BSE30 companies and Nifty50 index companies slipped 1.5 per cent and 8.4 per cent year on year, respectively, the brokerage said.