Are RIL, HDFC Bank, IndusInd good investments post robust profits in Q4?

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Updated: April 25, 2016 1:20:22 PM

Index heavyweights such as Reliance Industries (RIL), HDFC Bank and IndusInd Bank announced their results for Jan-March quarter last week. The results were in line with expectations.

RIL, HDFC Bank, IndusInd BankIndex heavyweights such as Reliance Industries (RIL), HDFC Bank and IndusInd Bank announced their results for Jan-March quarter last week. (Photo: Reuters)

Index heavyweights such as Reliance Industries (RIL), HDFC Bank and IndusInd Bank announced their results for Jan-March quarter last week. The results were in line with expectations.

With the help of brokerages, who have come with their research reports post these companies’ results, we take a look at which companies are good bets.

Below are five stocks on which experts gave ‘buy’ rating post their Q4 results.

Reliance Industries: Reliance Industries (RIL) on Friday reported its highest quarterly net profit in over eight years as fall in oil prices boosted refining and petrochem margins, helping the company post a 16 per cent jump in earnings for the three-month period ended March 31, 2016. Consolidated net profit in January-March at Rs 7,398 crore or Rs 25.1 a share was 15.9 per cent higher than Rs 6,381 crore or Rs 21.7 per share profit a year ago. Standalone net profit was 17.25 per cent higher at Rs 7,320 crore.

JM Financial in a research report said, “We believe that significant investments in cross integrating refinery with Petchem and investment in telecom will make RIL a strong long-term play but outcome on telecom could drive near-term stock performance. We increase the fair value of RIL to Rs 1,100 from Rs 1,076 earlier.”

Reliance Industries also said the firm will increase the capital expenditure by Rs 30,000 crore this fiscal to complete ongoing refining and petrochem projects as well as for the telecom business.

Reliance Industries was at Rs 1,038.75 on Friday.

HDFC Bank: The country’s second largest private lender HDFC Bank on Friday reported a 20.2 per cent jump in its March quarter net at Rs 3,374.2 crore, helped by a healthy rise in core net interest income (NII). The bank registered around 30 per cent profit growth for over a decade till 2013-14, posted a 20.4 per cent growth in post-tax profit at Rs 12,296.2 crore for fiscal 2015-16.

For the January-March period, NII rose 24 per cent to Rs 7,453.3 crore, while the non-interest income was up 11.8 per cent to Rs 2,865.9 crore.

According to JM Financial, the bank’s growth in the past has been unhindered by its larger base and the brokerage house expects the trends to continue. Continued focus on digitisation has led to 15-17 per cent of incremental personal loans being originated through digital means. JM Financial has ‘Buy’ ratings on HDFC Bank shares with 12-month target price of Rs 1,375.

HDFC Bank was at Rs 1092.30 on Friday.

Mahindra & Mahindra Financial Services: Mahindra & Mahindra Financial (MMFS) Services on Saturday reported a 12 per cent rise in consolidated net profit at Rs 411.33 crore for quarter ended March 31. The company had posted a net profit of Rs 367.26 crore in the corresponding quarter of 2014-15.

JM Financial said, “We believe MMFS is well placed to benefit from rural recovery assuming normal monsoon and pick up in government spending. We have ‘Buy’ rating on MMFS shares with target price of Rs 345.”

Religare Institutional Research said, “We believe MMFS is the best play on a monsoon recovery. Above normal rainfall expected this year will boost rural incomes and thus result in better asset quality, lower credit costs, higher disbursements and stronger margins. We upgrade MMFS to ‘Buy’ with a revised March 2017 target price of Rs 320 (rolled over from a Sep’16 TP of Rs 225 earlier).”

Total income increased to Rs 1,904.88 crore from Rs 1,680.10 crore in the same period a year ago, it said in a BSE filing.

M&M Financial Services was trading at Rs 275.55 on Friday.

IndusInd Bank: Private sector IndusInd Bank posted a rise of 25.25 per cent in net profit at Rs 620.35 crore for the last quarter of 2015-16 fiscal. The bank’s net profit in the corresponding January-March quarter of the previous fiscal stood at Rs 495.27 crore.

According to KR Choksey Shares and Securities, with consistent delivery on operating matrix and earnings front, Indusind Bank continues to surprise positively each quarter. While the robust loan book growth outlook remains intact aided by better growth in retail loans, the falling funding costs and better loan book mix with increased focus on non-vehicle finance have been the key catalysts to margins momentum.

The brokerage house has ‘Buy’ rating on IndusInd Bank with target price of Rs 1,203. “The bank continues to demand higher multiples and has enjoyed re-rating good number of times,” said KR Choksey in a research note.

IndusInd Bank shares were at Rs 979.75 on Friday.

Supreme Industries: For the quarter ended March 2016, Supreme Industries reported a consolidated net profit of Rs 114.56 crore, up 12.06 per cent, against Rs 102.23 crore in the same quarter a year ago. Gross sales of the company jumped 4.17 per cent year-on-year (yoy) to Rs 1191.42 crore.

Sharekhan in a research note said, “We have marginally upgraded our earnings estimates by 1.5-2 per cent mainly to accommodate the lower interest cost. The expected investment uptick in infrastructure development schemes particularly in housing construction, sanitation, and irrigation are likely to keep the demand buoyant for Supreme Industries’ products. We are marginally revising our price target upwards to Rs 820.

Supreme Industries was at Rs 801.20 on Friday.

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