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April-June period was another mixed quarter for India Inc, with companies listed on the National Stock Exchange (NSE) posting a tad above 7 per cent year-on-year growth in net profit on a 14 per cent YoY jump in top line.
For Nifty, earnings growth stood at 13.7 per cent YoY, but that was largely on account of SBI and telecom firms, excluding which, the earnings growth was 24 per cent YoY.
As many as 15 companies in the listed universe of NSE reported their first loss in at least 10 quarters.
They included Tata Motors, ICICI Bank and Piramal Enterprises from the largecap space and Electrosteel Castings, SpiceJet, Hindustan Construction Company, Strides Pharma Science, Madhucon Projects, Narayana Hrudalaya, Olectra Greentech, Healthcare Global, Tokyo Plast International, Adroit Infotech, Dai-Ichi Karkaria and Orient Press from among second-rung stocks.
One-time expenditure, an increase in raw material prices, slowdown in business and higher provisioning were some of the factors that impacted bottom lines on a case-to-case basis.
Various brokerages are still bullish on select companies from this list.
For instance, Tata Motors posted a consolidated net loss of Rs 1,862.57 crore for the first quarter ended June 30, impacted by multiple challenges that its British arm JLR faced in major markets, including China, UK, Europe and the US.
It had reported Rs 3,199.93 crore profit for the April-June period of 2017-18.
The auto major also reported a five per cent dip in global sales, including that of Jaguar Land Rover (JLR), to 92,639 units in July.
Brokerage firm Motilal Oswal has a ‘buy’ rating on Tata Motors with a target price of Rs 360.
UBS recently maintained a ‘neutral’ rating on Tata Motors and reduced its target price to Rs 280.
“A deterioration in Jaguar Land Rover's (JLR) performance is likely to result in rapid releveraging of Tata Motors' balance sheet, potentially overwhelming the domestic business's improvement, in our view.
However, we think its improving India business continues to offer some downside support and now accounts for 46 per cent of our price target,” it said in a report.
Shares of Tata Motors are down 39 per cent on year-to-date basis till September 12.
The stock closed at Rs xxx on Wednesday.
Private sector lender ICICI Bank posted its maiden quarterly loss in more than a decade.
It registered a net loss of Rs 119.5 crore for the three months to June due to higher provisioning for bad loans.
Motilal Oswal has a ‘buy’ rating on the lender Bank with a target price of Rs 355.
The stock is up 10 per cent year to date and closed at Rs xxx on Wednesday.
Piramal Enterprises posted a consolidated net loss of Rs 69.81 crore for June quarter on one-time non-cash accounting charge towards its imaging business.
Shares of Piramal Enterprises scaled their fresh 52-week high of Rs 3,148.90 on August 28.
The stock closed at Rs xxx on Wednesday.
The domestic airline industry has been under ‘great stress’ as it struggles with high fuel prices and a fall in the rupee.
This forced SpiceJet to post its first loss of Rs 38.10 crore in 13 quarters.
High crude oil prices hurt the airline industry during the quarter as aviation turbine fuel (ATF) alone accounts for over 40 per cent of their operational costs.
Brokerage Elara Securities is bullish on SpiceJet with a target price of Rs 194, indicating an upside of more than 100 per cent from its current price.
The stock closed at Rs xxxx on September 27.
The brokerage further added that SpiceJet is the only airline that reported a yield growth of 4-8 per cent YoY in last two quarters while its peers reported a decline.
SpiceJet’s PAX RASK (passenger revenue per ASKM) premium over IndiGo in Q1FY19 expanded to Rs 0.47, highest in seven quarters.
Healthcare Global Enterprises (HCG) reported a net loss of Rs 3.40 crore for June quarter.
Edelweiss Securities says HCG is planning to open four more centres during the year, which will likely accentuate pressure on Ebitda margin.
“We cut our target multiple to 18 times from 20 times and revise our target price to Rs 280 (from Rs 320 earlier) with ‘hold’ rating,” the brokerage said.
Hindustan Construction Company posted a higher-than-expected Q1FY19 loss of Rs 19.7 crore owing to lower claims recognition.
“The company has arbitration awards worth Rs 4920 crore in its favour, out of which it has received Rs 1620 crore to date.
Following RBI’s circular on debt restructuring (that led to withdrawal of proposed SDR of Lavasa), HCC submitted its resolution plan to Lavasa’s lenders.
Clarity on Lavasa debt resolution (and consequently HCC’s liabilities) along with the receipt of balance claims will be key catalysts for the stock.
We maintain a ‘buy’ rating on the stock with a SOTP-based target price of Rs 17,” Edelweiss said in a report.
