Companies like Bajaj Finance, ZEE Entertainment, DB Corp and Bharat Financial Inclusion are among the majors which had reported better-than-estimated financial numbers.
The earning season is underway and most of the big names have already announced their quarterly results. It has been a mixed bag so far. With the results, brokerage houses are out with their research reports on companies that have announced their results for the quarter ended June 30, 2016. Companies like Bajaj Finance, ZEE Entertainment, DB Corp and Bharat Financial Inclusion are among the majors which had reported better-than-estimated financial numbers. However, biggies like Infosys and Dr Reddy’s Laboratories disappointed the street.
Below are 5 stocks on which brokerage houses are looking bullish post Q1 results:
1) Sanofi India: The company posted 32.87 per cent rise in net profit at Rs 85.30 crore for the quarter ended June 30, 2016 against Rs 64.20 crore in the same quarter a year ago. Net sales of the company grew by 9.92 per cent year-on-year to Rs 565.30 crore. According to Motilal Oswal, Sanofi India revenue growth to sustain at 13 per cent over CY15-17, in line with industry growth. High growth of brands like Lantus, Allegra, Amaryl M and Cardace, and new product launches should drive Sanofi India’s revenue growth. The brokerage house is bullish on Sanofi India shares with target price of Rs 4,500.
2) Zee Entertainment: The company on Tuesday registered a 21.76 per cent jump in consolidated net profit at Rs 216.96 crore for April-June 2016 quarter against Rs 178.18 crore in the corresponding quarter a year ago.
According to Sharekhan, for Q1FY2017, Zee Entertainment Enterprises (ZEEL) has delivered a strong operating performance. ZEEL continues to outperform the broadcasting advertising industry and expects to continue the momentum, with the ongoing gradual improvement in the macro-economic prospects. The management has indicated that the strong momentum will continue in the ad revenue growth, underpinned by higher investments in content, focus on international markets and market-share gains. Given the positive management commentary on both revenues and margins, Sharekhan has revised upward ZEEL estimates for FY2017/2018E. Sharekhan has ‘Buy’ rating on ZEE with target price of Rs 525.
3) Maruti Suzuki: Carmaker Maruti Suzuki on Tuesday reported 23 per cent increase in bottomline figures at Rs 1,486.2 crore for the quarter ended June 30, 2016, its best-ever quarterly result, on the back of higher non-operating income and material cost reduction. The company had registered a net profit of Rs 1,208.10 crore in the same quarter last year.
According to Sharekhan, Maruti Suzuki India’s first quarter earnings stood in line with estimates on the operating front. The brokerage house said, “We expect Maruti’s margins to improve by 60 basis points in 2017-18. We have marginally raised our estimates by around 4.4 per cent and 3.9 per cent for 2016-17 and 2017-18, respectively considering the lower depreciation expenses. Maruti is our preferred pick in the automotive space. We maintain ‘Buy’ rating on the stock with a revised price target of Rs 4,950.”
4) Bajaj Finance: Bajaj Finance also registered its best-ever quarterly results with a 54 per cent rise in profit after tax figures at Rs 424 crore for the quarter ended June 30, 2016. The rise in net profit figures can be attributed to a strong growth in retail and SME advances. Sharekhan said, “For Q1FY2017, Bajaj Finance reported a strong set of numbers on the operational front while the business growth has also been sturdy. The company continues to have strong risk management systems, reduced dependence on acquired business (DSA sourcing) and operating leverage benefits. The management has announced a 1:5 stock split and 1:1 bonus issue. We expect net profit to increase at a compounded annual growth rate (CAGR) of over 35 per cent year-on-year over the next 2-3 years, considering the strong business traction. We believe that the premium valuation of Bajaj Finance will continue owing to strong return ratios, superior asset quality and healthy growth outlook. We have revised our price target to Rs 11,200 and upgraded our rating to ‘Buy’.”
5) Bharat Financial Inclusion: For the quarter ended June 30, 2016, Bharat Financial Inclusion reported 285.75 per cent rise in net profit figures at Rs 235.91 crore against Rs 61.16 crore in the same quarter a year ago. Gross sales of the company jumped by 53.76 per cent year-on-year to Rs 334.12 crore.
Nirmal Bang Institutional Equities in a research report said, “Bharat Financial Inclusion posted an excellent set of numbers for 1QFY17. Net interest income grew 56 per cent, which was 12 per cent above our estimate. We have increased assets under management growth estimate for FY17 to 48 per cent from 43 per cent earlier. In line with the management’s guidance, we have factored in equity issuance of Rs 750 crore in FY18. As a result, we have increased our adjusted book value (ABV) estimate by 23 per cent for FY18. We have valued the stock at 4 times P/ABV FY18E financials with a revised target price of Rs 1,050 (Rs 750 earlier) and retained ‘Buy’ rating on it.”