Indian markets closed the week on a positive note, with bellwether indices gaining about a per cent over the last five trading sessions. Interestingly, S&P BSE Sensex gained about 3.2 per cent in November 2022. Markets remained unaffected by the below-expected GDP of 6.3 per cent for the July-September 2022 period.

Last week too, several stocks managed to outperform the market by a wide margin.

Topping this week’s returns chart is the stock of textile, Real Estate and lifestyle major RaymondLtd, with a 22 per cent gain in the last five trading sessions. Interestingly, the stock gained over 17 per cent just on Friday. While the stock’s up move followed a spurt in trading volume, there was no specific news about the company’s business. It had reported stellar results in the September 2022 quarter. Revenue grew 40 per cent year-on-year to ₹2,168 crore, the highest level in the company’s history. Likewise, the company’s operating profit margin rose from 11.6 per cent in September 2021 quarter to 15.4 per cent in the July-September 2022 period.

While the company’s total debt remained largely flat at ₹2,399 crore, implying a debt-equity ratio of 0.92, interest cost rose by about 8 per cent to ₹63 crore, thanks to the higher interest rates. However, the strong operating performance, helped the company almost treble its net profit to ₹162 crore in the September 2022 quarter versus ₹56 crore in the same period last year. It may be interesting to note that FIIs have increased their holding in the company from 10.2 per cent in March 2022 to 14.97 per cent in September 2022.      

The stock of payments services platform company One97 Communications which owns Paytm brand rose 16 per cent last week. The company hosted its Analyst Day last week, post which leading foreign brokerages – CLSA upgraded the stock to buy, while Goldman Sachs maintained a buy rating on the stock. Morgan Stanley retained its equal-weight rating. The management during the presentation highlighted the large growth opportunity for the payments business in India, taking the total potential merchants to 10 crore and payment customers to more than 50 crore, in addition to an opportunity to cross-sell financial services and commerce business offerings.

The management expects to become free cash flow (cash from operations – capital expenditure) positive in 12-18 months’ time. While CLSA has a target price of ₹650 a share, Morgan Stanley at ₹695 a share, Goldman Sachs has a much higher target ₹1,100 for the stock.

Stock of the media company and subsidiary of Reliance Industries - Network 18, was the other significant gainer last week, rising 18 per cent. There has been no significant news pertaining to the company. Network 18 reported poor performance in September 2022 quarter. Even though the company managed to increase revenue from ₹1,387 crore to ₹1,549 crore, the operating performance deteriorated significantly, leading to a drop in operating profit margin from 18 per cent in September 2021 to 2 per cent in September 2022 quarter.

From a net profit of ₹199 crore, the company reported loss of ₹29 crore in September 2022 quarter. Interestingly, FIIs and domestic institutions have increased their stake over the last 6 months. FIIs have increased their holding from 4.8 per cent in March 2022 to 5.41 per cent in September 2022. DIIs have upped their stake from 0.46 in March 2022 to 0.63 per cent in September 2022.

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