Worth buying? These companies posted over 100% jump in Q2 net profit

The second-quarter results season in India shows a mix of steady growth with pockets of caution due to global economic pressures. Starting with the Nifty 50 index, at least three companies in the benchmark index have reported over a 100% increase in net profit so far during the quarter under review.

Billionaire Gautam Adani-led Adani Enterprises emerged as the top gainer in the index. The company’s net profit surged 664% year-on-year to Rs 1,742 crore for the quarter. It had posted a profit of Rs 227.82 crore in the same quarter last year. Meanwhile, gross sales of Adani Enterprises grew by 15.66% YoY to Rs 22,608 crore.

Next on the list is Bharti Airtel. The telecom major posted a 168% YoY increase in net profit on a 12% growth in gross sales in Q2FY25. Tech Mahindra also recorded a 153% YoY increase in net profit, reaching Rs 1,250.10 crore. Brokerage Motilal Oswal Financial Services has a ‘Buy’ rating on Bharti Airtel with a target price of Rs 1,900. “Bharti Airtel reported a strong Q2FY25, driven by the flow-through of tariff hikes in the India wireless business and robust incremental margins,” Motilal Oswal Financial Services said in a report.

On the other hand, Axis Securities has a ‘Buy’ recommendation on Tech Mahindra with a target price of Rs 1,850. “Margins have likely bottomed out and are expected to improve over the next couple of quarters. In terms of demand, some early signs of recovery are visible, indicating the potential for a near-term pickup. We believe the new strategy will assist Tech Mahindra in achieving a better recovery in FY25 and demonstrate strong growth in FY26 and FY27,” Axis Securities said.

Adani Ports and Special Economic Zone (APSEZ), SBI Life Insurance Company, Bharat Electronics, Sun Pharmaceutical, and Wipro also reported net profit growth of between 20% and 40% during the quarter under review.

Motilal Oswal Financial Services is also bullish about APSEZ with a target price of Rs 1,780. “APSEZ is expected to record 1.5-2x India’s cargo volume growth, driven by market share gains and increased capacity. Furthermore, the logistics business will serve as a value addition to the domestic port business, focusing on enhancing last-mile connectivity. We largely retain our estimates for FY25, FY26, and FY27. We expect APSEZ to report a 10% increase in cargo volumes over FY24-27, driving a CAGR of 15%, 15%, and 21% in revenue, EBITDA, and PAT over FY24-27,” the brokerage said.

Sharing his views on various sectors, Trivesh, COO of Tradejini, said, “The pharmaceuticals and healthcare sectors have experienced healthy growth, powered by rising domestic demand and sustained export activity. Information technology (IT) companies also displayed resilience with stable earnings.”

A total of 38 companies, which are part of the BSE Midcap and BSE Smallcap indices, have reported over a 100% growth in net profit during the quarter under review. CarTrade Tech recorded an 825% YoY increase in net profit, reaching Rs 27.88 crore in Q2FY25. Godrej Properties, Kitex Garments, Arvind Smartspaces, and Piramal Pharma also posted growth of 402%, 375%, 371%, and 350%, respectively, in net profit for the quarter ended September 2024.

Zen Technologies, Voltas, NACL Industries, Dixon Technologies (India), Deepak Fertilisers and Petrochemicals Corporation, Piramal Enterprises, Kirloskar Pneumatic Company, Go Digit General Insurance, Infobeans Technologies, and Manorama Industries also posted YoY increases in net profit ranging from 200% to 310% in Q2FY25.

Overall, the cumulative consolidated net profit of companies in the broader market has seen a over 5% decline so far, despite a 10% increase in gross sales.

“The decline in net profit reflects challenges in margin retention and subdued performance amid higher expectations. Foreign Portfolio Investor (FPI) outflows, totaling over Rs 94,000 crore in October, underscore ongoing global concerns, compounded by factors such as US policy shifts, fluctuating crude oil prices, and uncertainties surrounding China's economic stability,” Trivesh said.