by Suhani Adilabadkar
Indian analysts were busy for the past one week focusing just on one state election outcome. Now that they have interpreted the expected course of the 2019 general elections, they are back to their respective drawing boards. The jury is out for the fourth quarter results and has proclaimed them to be ‘MIXED’ - once stars like Strides Shasun and Hatsun Agro for instance, delivered disappointing results.
The word ‘mixed’ indicates hard work for the investors, especially retail investors who need to separate the grain from the chaff in this uncertain economic environment. Choosing from the best of companies which have turned around this quarter after a tough FY17 would be one of the best strategies to circumvent the current global and domestic turbulence, as well as the uncertainty that comes with rising oil prices.
TATA STEEL
Tata Steel is in the news these days, as the first company to acquire a stressed asset, Bhushan Steel under IBC. Tata Steel’s posted a consolidated net profit of Rs. 146300 Mn in March quarter FY18 against a loss of Rs. 11700 mn corresponding quarter previous year. After reporting negative PAT for the last three years, Tata Steel’s consolidated yearly net profit stood at Rs. 177600 Mn for the year ended March FY18. The company is planning capex of about Rs. 80000 Mn for the current fiscal year as the steel sector is witnessing high demand globally and also from the domestic market especially the auto sector. Tata Steel has given sales guidance of around 10 MT from its Europe operations and 12.5 MT from India. No doubt, the scrip has jumped 26% YOY mirroring its accelerated growth momentum.
HEG
HEG, a leading graphite electrode manufacturer turned positive YOY with stupendous jump in net profit reported at Rs. 6340 mn in Q4 FY18, compared to a loss of Rs. 39 mn in the same period kast year. March is the third successive quarter of high growth for the company on all financial parameters. HEG has benefitted from the technological shift in the manufacture of steel from Blast furnace to Electric Arc Furnace which uses electrodes manufactured by the company. HEG stock has multiplied 12 times over the past one year and is still an attractive investment for long term.
WESTLIFE DEVELOPMENT
If you think that burgers are the in-thing these days, you will not wonder why Westlife’s stock has doubled over last one year. Westlife Development, the master franchisee of McDonald’s restaurants in west & south India reporteda 260% jump in net profits at Rs. 66 nn compared to a loss of Rs. 41 mn in the same period previous year. Revenue & EBDITA galloped 35% & 88% YOY.
Cash profit doubled with SSS (Same Store Sales) growth of 25.1%, highest in five years. Westlife through its subsidiary Hardcastle Restaurants, operates around 277 Mcdonald restaurants and aims to add another 25 in FY19.
SHOPPERS STOP
Shoppers Stop exited FY18 with a positive performance, compared to a loss of Rs. 360 mn in the same period last year. 2017 was an eventful year for the company as it exited its non-core business of Hypercity, Timezone and joint venture NGIPL. As a result, Shopper Stop reported higher volume, improved margins, debt reduction by 88% and drove into black YOY by reporting net profits of Rs. 208 cr in March quarter FY18. The company is on course to become debt free by the next financial year.
Amazon has picked up a 5% stake in the company last year which indicates strong growth prospects for the Raheja group-promoted Shoppers Stop with 240 stores across India. The stock has gained 65% over the past one year.
BHARAT FINANCIAL INCLUSION
Bharat Financial Inclusion reported strong performance with PAT & Revenue rising by 190% & 46% respectively YOY with improved GNPAs at 2.4% and Net Interest Income (NII) growth of 83% YOY. Bharat Financial Inclusion had reported successive losses in March and June quarters last year. The company turned positive in second quarter FY18 and has maintained its growth momentum by reporting Net Profit of Rs. 2105 Mn in the current March quarter FY18. The stock has rallied since the announcement of its acquisition by IndusInd Bank and has risen 21% over the past six months.
Suhani Adilabadkar is a Research Analyst registered with SEBI ((INH200003240)) She has done PGDBA (Finance), MS (Finance) and a Fellowship from Insurance Institute of India. She maintains a blog at oasisfundamentals.blogspot.in.
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