Should you consider purchasing shares from these 8 Nifty firms that saw a net profit increase of over 50% in the June quarter? – Top

The June quarter results season has entered its final leg with 46 Nifty companies having announced their results so far. Data shows that eight blue chips have reported over 50 per cent growth in their net profit during the quarter. In fact, home-grown steel major JSW Steel, the country’s largest lender State Bank of India (SBI), and the country’s largest carmaker Maruti Suzuki have reported over 100 per cent growth in their respective bottom lines in Q1FY24.

Shares of JSW Steel and Maruti Suzuki have gained 8.34 per cent and 11.83 per cent on a year-to-date (YTD) basis till August 10, respectively. On the other hand, SBI declined 6.47 per cent during the same period.

In light of this showing, market watchers are bullish on a couple of large-caps that have announced results.

KRChoksey Shares and Securities is bullish on SBI with a target price of Rs 750, indicating an upside of over 30 per cent against the current market price. “SBI reported a slightly disappointing performance in terms of growth momentum during the quarter. The balance sheet remains resilient with 10.3 per cent YoY and 0.5 per cent QoQ growth to Rs 55,43,100 crore. The sequential performance of the bank was muted, led by the underperformance of the asset profile especially the credit growth,” the brokerage said.

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Going forward, the management expects to deliver credit growth in the range of 14-15 per cent in FY24, led by multiple triggers like a strong revival of the rural segment led by the decent rainfall and a boost in infrastructure capex in the corporate segment. According to the bank’s management, the current quarter was a seasonally weak quarter, and thus, they expect the growth to pick up in the coming quarters

“We have factored a CAGR of 16.4 per cent in profits growth while advances are expected to grow 13 per cent CAGR over FY23-25. The bank’s return on assets (ROA) to improve to 1.1 per cent by FY25 from 0.7 per cent in FY22 and ROE to 17.2 per cent by FY25 from 11.9 per cent in FY22,” KRChoksey said in a report.

On the other hand, JM Financial has a ‘Buy’ call on Maruti Suzuki with a target price of Rs 11,500. Shares of the auto major traded at Rs 9,937 on August 10.

Maruti Suzuki board recently approved the termination of the contract manufacturing agreement with Suzuki Motor Gujarat (SMG) and consolidates the entire manufacturing under one roof by acquiring SMG from Suzuki Motor Corporation (SMC), Japan. The company plans to make this acquisition via the issuance of shares to SMC and will seek approval from its minority shareholders.

“MSIL’s shareholders benefitted from favourable terms of the agreement and conserved cash outflow on capacity expansion. Acquiring SMG at net book value is expected to result in around 4 per cent dilution in EPS. We believe the timing for this announcement couldn’t have been better given the strong product cycle and expansion of volumes and margins,” JM Financial said.

Among the other major players, Adani Ports and Special Economic Zone reported an 82.57 per cent year-on-year rise in net profit at Rs 2,114.72 crore in Q1FY24. Mahindra & Mahindra, Asian Paints, Kotak Mahindra Bank and Eicher Motors also reported an over 50 per cent rise in net profit during the quarter.

Sharing his views on Adani Ports, Om Mehra, Equity Research Analyst, Choice Broking said, “Adani Ports reported healthy financial figures, showcasing remarkable growth in revenue and profits. Investors are recognising the stock’s resilience in navigating market challenges and its ability to capitalise on global trade opportunities. The company’s proactive approach to infrastructure development and its commitment to innovation have contributed to its strong financial position.”

Shares of the company have recovered smartly after the Hindenburg report, now trading just 1.83 per cent down on a year-to-date basis. Nuvama Research has a ‘Buy’ rating on Adani Ports with a 12-month target price of Rs 958. Shares of the company were at Rs 802.90 on August 10. “Adani Ports reported a strong quarter, ahead of our estimates. Inorganic acquisition on the port side along with multi-fold capacity creation in the logistic business should provide multi-year growth prospects for APSEZ,” Nuvama said in a report. The brokerage is also positive on Asian Paints with a target price of Rs 4,000, showing an upside of over 20 per cent against the market price of Rs 3,234.25 on August 10.

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