Tata Chemicals: This chemicals company posted stellar Q3FY22 results as its net profit rose 69% YoY to Rs 340 crore due a rise in product prices and lower taxes. Revenues grew 21% YoY to Rs 3,141.6 crore led by growth across all geographies driven by both volumes and realisation growth due to revival in demand and re-opening of businesses across all sectors. The demand momentum looks set to continue. However, the input supply-side environment, especially energy costs remain high compared to historical levels. Supply chain challenges continue to be seen in the market. Globally, demand for soda ash (basic chemical segment) picked up significantly which helped in the revenue growth during the quarter. Basic chemicals contribute 75% to the company’s revenue, and special chemicals the rest. The basic chemical segment grew 23.2% YoY to Rs 2,447.80 crore, whereas the revenue from special chemical segment grew 9.7% YoY to Rs 678.55 crore. The rise in demand for soda ash resulted in a tight demand-supply situation, leading to higher spot prices which helped Tata Chemicals’ quarterly performance. Analysts at Nirmal Bang maintain a ‘Buy’ rating on Tata Chemicals, having a positive outlook for the company. According to Nirmal Bang’s industry scenario analysis, soda ash will enjoy a cyclical upswing in margins for at least 2 years leading to higher pricing. On the other hand,  Motilal Oswal maintains a ‘hold’ rating as even though the company did well in Q3FY22, the brokerage believes that rising input costs are likely to negatively affect the margins.

Metropolis Healthcare: This diagnostics company’s stock slumped 17.4% till Thursday after the company posted weak Q3FY22 results, missing the Trendlyne Forecaster’s net profit  and revenue estimates. Profit fell 29.7% YoY to Rs 41.2 crore despite a 6.2% increase in revenue to Rs 295.6 crore. EBITDA margin dipped 550 bps YoY to 26.5% mainly because of a fall in margin across its testing both Covid and non-Covid segments. While the company’s peers registered robust non-Covid revenue growth in the range of 20-25% YoY, Metropolis Healthcare’s non-Covid revenue rose marginally by 7% to Rs 243.7 crore. This is because of a sharp drop in volumes from its government contract. Lower EBITDA margins of testing services of Hitech Diagnostics labs, which Metropolis Healthcare acquired last year, pulled down the overall profit margins. The revenues can come under additional pressure with large healthcare service providers expanding aggressively into Integrated digitized healthcare services. Edelweiss continues to remain positive on the company despite its lacklustre performance. The brokerage expects the non-Covid revenue to increase supported by the government contracts and the EBITDA margins to get back to pre-covid levels with the consolidation of Hitech labs.

Mahindra & Mahindra: Amid a weak quarter for the auto sector, this car and farm equipment maker saw its Q3 net profits jump 57% YoY to Rs 1,987 crore. Part of the rise in profit was because the company accounted for an exceptional income of Rs 205.1 crore on selling stake in its logistics joint venture Porter. So, what was brewing in its core segments? Although M&M’s auto and farm divisions’ Q3 revenue grew 10% YoY to Rs 16,928 crore, operating profit fell 29% YoY to Rs 1,287 crore. Higher commodity price inflation and semiconductor shortage affected M&M as well. The core topline growth was driven by the auto segment which saw revenues rise 16% to Rs 9,958 crore led by strong demand for XUVs, Thar and Bolero. However, the farm segment witnessed dismal sales growth as its tractor volumes fell 9% YoY to 91,769 units. Another trend highlighted in M&M’s earnings call was the spike in farm input costs by 25% while final output prices witnessed a rise of only 10% YoY. This led to lower purchasing power amongst the farmers as they were hardly left with any money in their hands. M&M has subsequently reduced its FY22 growth guidance for the farm equipment segment. While chip shortages are easing out in Q4, it will be interesting to see if this helps the auto segment give a boost to the company’s overall profitability.

Berger Paints: This paint maker’s stock is on an upswing over the past week, despite the larger paint industry being marred by fears of a rise in input costs due to the increase in crude oil prices. While Berger Paints’ Q3FY22 revenues rose 20.4% YoY to Rs 2,550 crore, its net profit fell 8% YoY to Rs 250 crore due to raw material price inflation of 28-29%. However, the decorative segment saw relatively lower raw material price inflation.. The decorative segment led the growth in revenue with a growth of 12% YoY, and as the company was able to pass on price hikes to its customers. Metros and tier-1 cities were key growth drivers, with increasing demand in this segment. Industrials continue to suffer due to falling demand and high input costs, especially in auto. This is probably why Chola Wealth Direct has a positive outlook on the company, despite its cost troubles in Q3FY22. To meet this growing demand, the company is setting up a new plant in Lucknow. The capex for the plant is Rs 800 crore and is expected to be operational by mid-2022, well before the official deadline of January 2023.

Oil And Natural Gas Company: This oil and gas explorer’s stock rallied 5% on Monday as oil prices hit a seven-year high. The stock also hit a 52-week high of Rs 176.35 as crude was on the boil due to geopolitical tensions between Russia and Ukraine. The company’s Q3FY22 performance also helped. Its net profit zoomed 7X YoY to Rs 8,763 crore in Q3FY22 and revenues surged 1.6X YoY to Rs 28,742.9 crore. The rise in revenue comes in because of the realisation of crude oil at USD 75.4 per barrel and gas sales at 4.3 billion cubic metres. The thing to note here is that revenues and profit rose despite a fall in production. In this context, the management is infusing capex of Rs 30,000 crore to increase production of crude oil and gas to 60 metric million tonnes for FY 23-24. Total oil production is at 5.5 million metric tons down 3.2% YoY, while total gas production at 5.5 billion cubic metres, down by 4.2% YoY in Q3FY22. Motilal Oswal’s report suggests that ONGC’s gas production is likely to clock 7% CAGR growth over FY22-24. Meanwhile, HDFC Securities is positive on the company’s overall performance and believes that the capex guidance of the company will ramp up production. Both these brokerages have a ‘Buy’ rating on the stock. However, ICICI Securities remains concerned over lower production levels. Right now, the brokerage believes that if high crude oil prices sustain, the company may have higher earnings, but the sustainability of high crude prices is suspect. For now, the brokerage has downgraded its rating to ‘Hold’ from ‘Buy’.