Stock prices in the small-cap segment have been significantly influenced by earnings, particularly amidst a recent market upswing, where valuations have stretched. Notably, in the BSE Smallcap index, over 30 companies have reported over 100% growth in net profits for the quarter ending March 2024. Analysts suggest that the market might witness corrections specific to individual stocks, especially where earnings visibility remains uncertain.
In light of this, focusing on companies with robust bottom-line growth in the latest quarter seems prudent. For instance, Mahindra Lifespace Developers recorded a substantial surge in net profit during Q4FY24. The company’s consolidated bottom line escalated to Rs 71.50 crore from Rs 0.53 crore in the corresponding period last year. This boost was largely supported by a share of profits from joint ventures and associates, amounting to Rs 78.80 crore. However, gross sales saw a sharp decline to Rs 14.29 crore compared to Rs 255.37 crore in Q4FY23.
Another standout performer is Shakti Pumps (India), which witnessed a staggering 3,888% YoY rise in consolidated net profit to Rs 89.66 crore for the quarter ended March 2024. Notably, it’s the sole company offering a diverse range of in-house products, including variable frequency drives, structures, motors, and inverters for solar water pump installation. As of December 2023, Shakti Pumps commanded approximately 25% market share in the domestic solar pump market under the PM-KUSUM Scheme.
Other companies such as Multi Commodity Exchange of India, Mahindra Logistics, and Dolat Agrotech also reported significant rises in net profit for Q4FY24. Meanwhile, entities like Kesoram Industries, PNB Gilts, and Welspun Specialty Solutions witnessed notable growth as well.
Among these, Welspun Specialty Solutions is notable for its development of high-value grade stainless steel bars and pipes for power and infrastructure sectors. Ventura Securities highlighted the company’s 397% YoY growth in net profit, attributed partly to a tax gain of Rs 34 crore in Q4FY24. Notably, the company isn’t currently paying taxes due to a tax credit of over Rs 600 crore, which it plans to utilize in the future.
Similarly, Symphony, known for its air coolers, saw its profitability double due to above-normal temperatures in both domestic and international markets. Geojit Financial Services has an ‘Accumulate’ rating on Symphony with a target price of Rs 1,151.
Furthermore, companies like Jupiter Wagons, with robust revenue, EBITDA, and PAT growth, have caught the attention of analysts. Systematix Institutional Equities has a ‘Buy’ rating on Jupiter Wagons with a target price of Rs 535, given its impressive performance and healthy order book.
