The week that went by was a turbulent one for Indian equities. After falling sharply in the first half of the week, bellwether indices witnessed some recovery towards the fag end of the week, to close the week with a decline of about a per cent. While RBI’s monetary policy announcement was on expected lines, expectation that the economy will continue to remain resilient aided the bounce back. Even as the benchmark indices closed the week in red, some stocks still managed to record positive weekly returns, even in a volatile market.
The stock of ESAB India, which makes welding and cutting equipment, topped the returns chart last week, gaining about 13 per cent, week-on-week. Strong financial performance resulting in an impressive balance sheet with zero debt has aided the 67 per cent rally in the stock over the past year. Robust demand across sectors, with leadership in the organised welding industry with about 30 per cent share, has helped the company enjoy best-in-class margins over the last few years. In Q1FY23, the company grew its revenue by 34 per cent to ₹243 crore and net profit by 30 per cent to ₹26 crore. The stock currently trades about 40 times its estimated FY24 earnings.
Second in the winners’ list last week was the stock of Bajaj Electricals, recording over 12 per cent gain. An order win worth ₹332 crore, helped the rally in the stock. According to the company, the EPC business segment of the company was awarded a supply of goods/services contract by Power Grid Corporation of India. The total order size is ₹332 crore, and is expected to be completed in 15 months, from acceptance of the letter of offer. The order pertains to expansion of transmission network in Gujarat. In Q1, the company grew its revenue by 43 per cent. From a loss of ₹25 crore, the company clocked profit of ₹41 crore, year-on-year. Softening input costs and strong demand in fans and lighting segment coupled with traction in EPC segment, should help the company’s revenue and profit growth. The stock currently trades about 39 times its consensus estimate for FY24.
The stock ofKIMS (Krishna Institute of Medical Science) was the other stock that added some sheen to the lacklustre market last week, gaining over 10 per cent. One of the largest healthcare providers in the state of Andhra Pradesh and Telangana, the company provides multidisciplinary healthcare services with primary, secondary, and tertiary care across tier-2 and tier-3 cities and has quaternary healthcare facility in tier-1 cities. The company enjoys best-in-the industry operating profit margins, of almost 30 per cent, higher than Apollo Hospitals. With best-in-class return ratios of 34 per cent ROCE, twice that of Apollo, the stock trades 38 times its trailing earnings per share, which is a steep discount to 71 times for Apollo Hospitals, which is the largest in the listed space, in terms of market capitalisation.