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Last Updated : Apr 12, 2018 04:20 PM IST | Source: Moneycontrol.com

Top 10 stocks where net profit likely to rise more than 100% in Q4; do you own any?

We have collated a list of 10 stocks from different brokerage firms which are expected to report doubling of net profits on a year-on-year (YoY) basis.

Kshitij Anand @kshanand
 
 
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As we step into FY19, the clamour for an earnings recovery has become louder and March quarter earnings could well lay down the foundation for a double-digit earnings growth in FY19.

Earnings, in particular, remained muted despite high expectations not just in 1 year but for the last three years due to macro disruptions and several policy changes pertaining to asset quality in the banking sector, suggest experts.

“Earnings have already started to bounce from Q3 FY18, which is likely to continue in Q4FY18 too. As a result, the market has a high expectation for the full year of 2019 with 20 percent earnings growth,” Vinod Nair Head of Research at Geojit Financial Services told Moneycontrol.

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“Currently, we are assuming 15 percent, with risk to the ongoing financial mess, credit growth may slow down impacting the outlook in the medium-term. Additionally, cost of funds is rising which does not augur well for earnings growth,” he said.

Most research houses expect FY19 to kick-start earnings recovery for India, although the market is likely to be distracted by several macro factors along the way, such as the ongoing global trade conflict, the US Fed rate increase cycle, domestic equity flows and, last but not the least, the domestic political developments in an election-heavy year, suggest experts.

“As far as the 4QFY18 earnings season is concerned, we expect it to be characterized by the continued dominance of cyclicals in the earnings pool, even as technology makes a smart comeback with double-digit earnings growth,” Motilal Oswal said in a report.

“The consumption recovery story continues to gain ground, with discretionary sectors like Auto and Retail expected to post a solid performance,” it said. But, on the other hand, PSU lenders and corporate private lenders are expected to continue dragging the performance owing to higher provisioning requirements, given the multiplicity of factors at play

We have collated a list of 10 stocks from different brokerage firms which are expected to report doubling of net profits on a year-on-year (YoY) basis:

Bharat Financial Inclusion: Net profit likely to rise by 180% YoY

Edelweiss Securities see 180.5 percent year-on-year (YoY) rise in net profit for Bharat Financial Inclusion to Rs 189.10 crore for the quarter ended March compared to a net loss of Rs 234.90 crore reported in the year-ago period.

The NBFC is likely to report 71 percent YoY rise in net interest income to Rs 419.30 crore compared to Rs 244.7 crore reported in the year-ago period. Edelweiss expects the company to improve on AUM growth.

The net interest margins (NIMs) will likely see some stabilisation but fees might continue to be lower. The asset quality should see improving trajectory, said the report.

Equitas Holdings Ltd: Net profit likely to rise by 280% YoY

Edelweiss Securities sees a 280 percent YoY rise in net profit of Equitas Holdings to Rs 26.20 crore for the quarter ended March compared to Rs6.9 cr reported in the year-ago period. The net interest income or NII should rise by 17.5 percent to Rs 282.90 crore.

Overall, the asset under management (AUM) is expected to see growth momentum improving, with good traction in SME/LAP/home loans along with buildup in MFI portfolio (run-down is done away with).

The operating leverage benefit should start kicking in, and the asset quality should also witness improving trend. Given improving collection efficiency, PaR should be contained, with provisioning at lower levels (upfronting of provisions already happened in Q3FY18).

Havells India Ltd: Net profit likely to rise by 116% YoY

Edelweiss Securities sees a standalone net profit of Havells India to rise by 116 percent on a YoY basis to Rs 205.4 crore compared to Rs 94.7 crore in the year-ago period. Revenues are expected to rise by 19 percent to Rs 2,339 crore for the quarter ended March compared to Rs 1,710 crore reported in the year-ago period.

“We expect Havells' revenue to increase by 11 percent mainly driven by 18-20 percent growth in Electrical Consumer Durables (being the seasonal quarter for fans) & Lighting division (mainly B2B lighting),” said the report. Lloyd's CD segment shall be contributing to the balanced growth in Havell's revenue.

NMDC: Net profit likely to rise by 122% YoY

Edelweiss Securities sees a net profit of NMDC to rise 122 percent for the quarter ended March 2018 to Rs 1,140 crore compared to Rs511.90 crore reported in the year-ago period. The revenues are likely to rise by 21 percent to Rs 3,479 crore for the quarter ended March compared to Rs 2,871 crore reported in the year-ago period.

Edelweiss expects EBITDA to grow 2x on the back of price hike taken in December and January. Also, brokerage firm expects volume uptick post-restoration of the railway line. The pellet plant has

commenced operations but is expected to have an only marginal impact on earnings.

Ipca Laboratories Ltd: Net profit likely to rise by 209% YoY

Edelweiss Securities sees a net profit of Ipca Laboratories to rise by 209 percent to Rs 83.80 crore compared to Rs 27.1 crore reported in the year-ago period. The revenues are also likely to rise by 19 percent to Rs 795 crore for the quarter ended March.

Edelweiss expects domestic formulations to grow by 18 percent on a YoY basis. Export formulations is likely to grow 14 percent YoY from rebound in Europe business and 11 percent appreciation in EUR.

The brokerage firm expects EBITDA margin to decline slightly, during the seasonally weak quarter, to 17.8 percent compared to 18.8 percent and 10.2 percent in Q3FY18 and Q4FY17, respectively.

Jubilant FoodWorks Ltd: Net profit likely to rise by 313% YoY

Motilal Oswal sees a net profit of Jubilant FoosWorks to rise by 313 percent on a YoY basis for the quarter ended March 31 to Rs 61.7 crore. The domestic brokerage firm expects sales to increase 22.8 percent on a YoY basis, with same-store sales (SSS) up 20 percent YoY.

With SSS growth well above cost increases, the margins are expected to expand sharply by 740bp YoY, resulting in more than doubling of EBITDA and quadrupling of PAT from that in the year-ago period, when PAT had declined 46.3 percent YoY.

Zensar Technologies Ltd: Net profit likely to rise by 562% YoY

Motilal Oswal sees a net profit of Zensar Technologies to rise by 562 percent on a YoY basis to a Rs 68.8 crore. The stock trades at 14.3x FY19E and 10.9x FY20E earnings.

The domestic brokerage firm expects EBITDA margin to expand by 20bp QoQ to 13.5 percent. This would mark the return of Zensar’s profitability to levels seen before the margin shocker in 4QFY17, where EBITDA margin had touched a low of 7.9 percent.

Delta Corp Ltd: Net profit likely to rise by 286% YoY

Motilal Oswal sees a net profit of Delta Corp to rise by 286 percent on a YoY basis to Rs 44 crore. The domestic brokerage firm expects the revenue to grow 42 percent on a YoY basis to Rs 153.5 crore, driven by traction in Goa casinos and ramp-up of online business.

The EBITDA margin is likely to expand 1,390 bps to 45.7 percent, and EBITDA is expected to grow 104 percent YoY to Rs 70.2 crore on a low base.

Info Edge Ltd: Net profit likely to rise by 105% YoY

Motilal Oswal sees 105 percent YoY rise in net profit of Info Edge to Rs 35.6 crore for the quarter ended March. The domestic brokerage firm expects the revenues to grow by 42 percent on a YoY basis to Rs 153.5 crore, driven by traction in Goa casinos and ramp-up of online business.

The EBITDA margin is likely to expand 1,390 bps to 45.7 percent, and EBITDA is expected to grow 104% YoY to RS 70.2 cr on a low base.

Navneet Education Ltd: Net profit likely to rise by 131% YoY

Motilal Oswal sees 131 percent YoY rise in net profit for Navneet Education for the quarter ended March 31 to RS 39 crore. The domestic brokerage firm expects revenues to grow by 47 percent on a YoY basis to RS 307.4 cr in 4QFY18.

The EBIDTA margin is likely to expand 460 bps on a YoY basis to 17.9 percent and EBIDTA is likely to grow by 97 percent YoY to RS 55 crore.

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First Published on Apr 12, 2018 09:48 am
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