These companies posted over 500% jump in Q4 profit; should you buy?

At least 36 companies on the BSE including Happiest Minds Technologies, Linde India and JSW Steel have posted over 500% growth in March quarter profits on a low base. Despite the bleak outlook for the June quarter due to Covid 2.0, market watchers see medium-term potential in some of these names.

Among the top performers in terms of financial results, Tata Steel BSL posted a 32,165% YoY jump in its consolidated net profit to around Rs 1,913 crore for the fourth quarter ended March 31, mainly on account of higher income. The company has posted a profit of Rs 5.93 crore in the same period last year. Nippon Life Asset Management, Elgi Equipments, Sagar Cements, INEOS Styrolution, Sportking India logged 3,000%-4,400% growth in March quarter profits.

Brokerage Narnolia is bullish on Nippon Life Asset Management with a price target of Rs 367. “With flows coming back to debt segment, quarterly average asset under management (QAAUM) growth has started doing well. Going forward, the management expects to improve its equity performance besides also improving its equity market share. The company is unlikely to see any significant increase in the absolute level of fixed expenses,” the brokerage said.

Bottomline of IG Petrochemicals and Dalmia Bharat also increased by over 2,000% during the quarter under review. Commenting on Dalmia Bharat, HDFC Securities said, “The company reported a strong 4QFY21 performance, led by robust volume growth and healthy pricing. We like Dalmia Bharat for its continued strong volume and margin performance.”

Bhansali Engineering, JSW Steel, Sundaram-Clayton, 3I Infotech, Borosil Renewables, Brigade Enterprises, HFCL, DCM Nouvelle and Lakshmi Machine Works also posted over 1,000% growth in net profit in Q4FY21.

Metal major JSW Steel reported a strong set of numbers due to robust domestic demand, enhanced exports and improved steel prices. The company is aiming to use a capex of Rs 25,115 crore over the next 3 years. JSW Steel also intends to set up grinding and washing facilities to improve the quality of ore.

Kotak Institutional Equities has recently downgraded JSW Steel to ‘Reduce’ from ‘Buy’ on account of rich valuation. It sees the fair value of JSW Steel at Rs 640.

Supreme Petrochem, HSIL, Sangam (India), Wheels India, Gulshan Polyols, Blue Star, Green Panel Industries, Vardhman Special Steels, Apcotex Industries, Cheviot Company, Indo Count Industries, Hatsun Agro, Happiest Minds Technologies, Linde India, Nitin Spinners, Pioneer Embroideries, Indian Acrylics and Infobeans Technologies stood among other players which reported 500%-1,000% jump in profit after tax in March quarter.

Japanese brokerage firm Nomura holds a ‘Reduce’ call on Happiest Minds Technologies post Q4 results due to a sharp run-up in the stock prices since February 2021. It has set a price target of Rs 630 for the IT company.