These BSE 500 firms posted up to 35,281% YoY rise in Q4 net profit; should you buy? 

At least 49 companies in the BSE 500 index have managed to post more than 100 per cent year-on-year (YoY) growth in the bottom line in the March quarter so far despite the ongoing inflationary environment. On the top Adani Power posted a 35,281 per cent rise in net profit at Rs 4,645.47 crore in Q4FY22, mainly on the back of higher revenues. Net sales of the company increased 66 per cent YoY to Rs 10,597.78 crore. Shares of the company scaled their fresh all-time high of 343.80 on May 24, 2022, despite the ongoing volatility in the domestic equity market.

Adani Power is the largest thermal power producer in the country. The company targets to 10x its current renewable capacity of 2.5GW to 25GW by 2025.

GlaxoSmithKline Pharmaceuticals is next on the list. The company posted an 8,407 per cent growth in net profit during the quarter under review. It was followed by Tata Chemicals (up 3,623 per cent), Bandhan Bank (up 1746 per cent), Mahindra CIE Automotive (up 1,499 per cent), Exide Industries (up 1,130 per cent), Mangalore Refinery and Petrochemicals (up 1,020 per cent) and Container Corporation of India (up 900 per cent).

Commenting on Glaxosmithkline Pharmaceuticals, brokerage Motilal Oswal Financial Services said, “We value Glaxosmithkline Pharma at 37 times 12-months forward earnings to arrive at our target price of Rs 1,570. Considering the limited upside from current levels, we maintain our Neutral stance on the stock.”

From the above stocks, Sharekhan maintained ‘Buy’ on Exide Industries with a target price of Rs 183. “We maintain our Buy rating on the stock, led by positive business outlook, foray into lithium-ion cell manufacturing, and attractive valuations,” Sharekhan said.

Other players include Bank of India, JSW Energy, Tata Investment Corporation, Gujarat Alkalies and Chemicals, Minda Corporation, IDFC, UCO Bank, Emami, Tata Consumer Products, The Great Eastern Shipping Company, Shilpa Medicare, Cholamandalam Financial Holdings, SBI Cards and Payment Services, HCL Technologies, Procter & Gamble Health, Lakshmi Machine Works and CSB Bank posted somewhere between 200 per cent and 750 per cent rise in net profit in Q4FY22.

KR Choksey Share and Securities is bullish on Tata Consumer Products with a target price of Rs 964. “The company reported a strong set of numbers on the back of benefits arising from the synergies of the merged group. Tata Consumer improved its market share in its core segments during the quarter. The company has seen a shift in demand from unorganised players to more branded products in pulses segments. Tata Consumer is well placed to capture the industry opportunity arising from the shift and further expansion of market share through its Tata Sampann brand. We believe the company will see a healthy double-digit sales growth in India business by expanding its distribution network and its geographical reach,” KR Choksey Share and Securities said in a report.

Data further highlighted that companies like ICICI Prudential Life Insurance Company, Mahindra & Mahindra Financial Services, Firstsource Solutions, Cholamandalam Investment, Zomato, LIC Housing Finance, BASF India, Bharti Airtel, IDFC First Bank, Bayer CropScience, ABB India, Angel One, AU Small Finance Bank, NCC, Anupam Rasayan, RBL Bank, GHCL and Aster DM Healthcare stood among other firms that posted over 100 per cent growth in net profit for the quarter ended March 31.

Commenting on the March quarter results, Shrikant Chouhan, head of equity research (Retail), Kotak Securities said, "Nifty50 companies reported decent earnings in Q4FY22 with aggregate net profits broadly in line with our estimates. Now, we expect Nifty50 earnings to grow by 19.4 per cent in FY23E (EPS of Rs 852) and by 11.1 per cent in FY24E (EPS of Rs 956)."

"Banks, diversified financials, oil, gas, consumable fuels and telecom contribute 75 per cent of incremental profits of Nifty50 in FY23 and have low downside risks to earnings. Our advice to investors who are sitting on the side lines is to buy selectively," Chouhan added.

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