What’s should be your strategy for primary market in FY25?

The earnings season for the December quarter has come to an end with 37 components of the Nifty pack reporting a rise in quarterly profit. However, at least five companies in Nifty have logged in over 100% growth in net profit during the quarter under review.

On the top, JSW Steel posted nearly 1,150% or over 12 times growth in consolidated bottomline figures at Rs 2,674 crore in Q3FY21 over Rs 214 crore in the same period last year. Better demand and restocking from automotive, machinery, construction and infrastructure sectors aided by increased government spending supported the quarterly results.

Shares of JSW Steel have also more than doubled since the beginning of the ongoing financial year. The scrip has jumped 183% to Rs 404.20 on February 12 from Rs 142.95 on April 1 last year.

Brokerage Motilal Oswal is positive on the metal sector. “We expect strong domestic demand and low finished steel inventory to support domestic steel prices,” it said in a report. Motilal Oswal has ‘Buy’ call on metal majors like JSW Steel, JSPL and SAIL.

Cement major Ultratech Cement reported a 123% YoY rise in net profit at Rs 1,584.60 crore during the quarter under review. Shree Cement also reported nearly 103% rise in profit at Rs 631.58 crore. Shares of UltraTech and Shree Cement have advanced nearly 104% and 70%, respectively, since the beginning of the ongoing financial year.

Commenting on the robust performance of the cement space, Siddharth Sedani, Vice President, Equity Advisory, Anand Rathi Shares and Stock Brokers said, “Cement demand continues to accelerate led by robust retail demand and rising non-trade sales. Also, greater allocation to various schemes for affordable housing, rural development and infrastructure spending would be positive for the sector.”

He further added that the higher rural infra development capex and steps toward enhancing farmers’ incomes would aid in generating higher rural demand.

“Steps such as the extension of the time limit for interest and the tax holiday for affordable housing, more projects in NIP, increasing road/highway/metro-rail development are positives. We expect all cement and building-material companies to benefit from the various schemes,” Sedani added.

Aditya Birla Group firm Grasim Industries last week also reported over a twofold growt in its consolidated net profit to Rs 2,060.50 crore for the third quarter ended December 31. It had posted a profit of Rs 1,005.04 crore during the corresponding quarter of the previous fiscal. The scrip has gained 162% to Rs 1,242 on February 12 from Rs 475 on April 1 last year.

Motilal Oswal has ‘Neutra’ call on Grasim Industries with a price target of Rs 1,215. “While the outlook for the viscose business has improved, we expect margin for the chemicals segment to remain muted due to significant capacity expansion in the next two years,” Motilal Oswal Financial Services said in a report.

Net profit of Cipla also grew by 113% to Rs 752.51 crore from Rs 353 crore during the same period. Shares of the pharma major have jumped 105% to Rs 849 on February 12 from Rs 413.55 on April 1, 2020. Overseas financial services firm CLSA is positive on Cipla with a price target of Rs 1,020.

“Cipla’s Q3FY21 net profit was 28% ahead of out estimate is driven by strong performance in India and EMs along with lower operating expenditure,” CLSA said.