From Bajaj Finance to Wipro: Stocks that sailed through market storm

The Indian equity market continues to grind lower after hitting a new high in September last year.

 

The broad-based Nifty 200 index is down 15.9 per cent since September end while largecap-oriented Nifty 50 has fallen 13.2 per cent during this period.

 

The sell-off has been across the board with 185 or 92.5 per cent of all Nifty 200 stocks witnessing a price decline and 68.5 per cent (137 of 200) falling 15 per cent or more during this period.

 

The wider sell-off has caused losses for most of the diversified portfolios, but the correction has also produced quite a few winners.

 

Most of these out-performers are those stocks that struggled during the market rally in the previous two years.

 

After sitting out the market rally in FY23 and FY24, they have turned into safe havens for investors. This is owing to their relatively low valuation and likely turnaround in their growth and earnings in FY26.

Here are 10 stocks from the Nifty 200 index that have been among the top performers since the end of September 2024.

 

The stocks are largely from sectors such as chemicals, finance and cement, which struggled earlier but the worse seems to be behind them.

 

The list is led by SRF, which has rallied 18 per cent since the end of September 2024, followed by Indian Hotels and Mazagon Dock Shipbuilders that are up around 10 per cent each.

 

Despite their recent rally, brokerages see further upside in many of these stocks due to attractive valuations and a faster earnings growth in FY26.

 

However, a few of these stocks have also become expensive after the recent rally limiting their upside from current levels.

 

Here are the details of these 10 out-performers. 

SRF

 

> After muted results in the past few quarters, country’s largest-listed specialty chemicals company posted robust results in Q3. The chemical business is expected to improve further in the March quarter, led by specialty chemicals

> The firming up of the refrigerant gas prices globally, led by increase in pricing in China, and phase down-led cuts in some geographies are also a positive

> While the packaging films business is likely to witness near-term pressure, improvement in pricing and margins is expected in the next three years

> Sharekhan Research points out that investment in the right areas of specialty chemicals and good domestic demand for refrigerant gas in fluorochemicals will drive a 28 per cent growth in net profit during FY24-27 

 

Wipro

 

> While the company’s revenue growth in the December quarter (Q3) was in line, margins, which came in at a 12-quarter high, surprised the Street

> Better utilisation, offshoring, fixed price productivity, and lower subcontractor costs, despite headwinds from wage hikes has helped improve margins

> The total contract value hit $3.5 billion in Q3 with large deals contributing just under $1 billion 

> There has been a rise in smaller- and medium-sized deals in Q3 indicating the increased momentum in short-cycle deals and signalling a recovery in discretionary spending

> Systematix Research has increased its revenue forecast to 3.6 per cent annually over FY24-27 (2.2 per cent over FY24-26) baking in a superior demand environment and stronger deal wins 

 

Indian Hotels Co

 

> The industry leader, Indian Hotels is expected to be a key beneficiary of the upcycle in the hospitality sector, led by robust demand across leisure, business, and meetings, incentives, conferences and exhibitions

> Most of its hotels are clocking occupancy rates of 80 per cent in key cities, providing it with an ability to charge higher for the room per night

> The Tata group company expects revenue per available room to continue to growth in high-single to low double-digits in the coming quarters

> The mix (managed/owned hotel properties) is further expected to shift in favour of managed rooms to 60:40 by FY28-29 (43 per cent in FY24), resulting in improved return on capital employed as well as margins, says YES Securities 

 

UPL

 

> After six quarters of contraction, the company posted a strong show in the third quarter (Q3) on back of a recovery in agrochemical demand

> Normalisation of inventory across key markets aided volume growth in Q3

> The company improved its operating profit margins by 15 percentage points to 19.8 per cent in Q3. It has introduced multiple cost saving initiatives which should help improve its margins going ahead 

> UPL expects to achieve its debt reduction target in the March quarter ($300-$400 million in FY25, overall debt at $3 billion) and have a favourable net debt-to-operating profit ratio in FY26

> While Nuvama Research has cut UPL’s FY25 earnings by 6 per cent, it has raised its FY26-27 earnings estimates by 10-12 per cent anticipating a likely revival in the demand environment 

 

Shree Cement

 

> Shree Cement’s share price rose in recent months after being a laggard in the last five-years

> The company’s stock price is up 6 per cent since September-end 2024, outperforming the broader market and the benchmark indices by a big margin

> Sales volume was down 1 per cent while net sales and net profit were down 12 per cent and 72.4 per cent respectively in Q3FY25, on a Y-o-Y basis

> Brokerages however expect a demand revival in FY26, and expect Shree Cement’s double-digit earnings growth over the next two-years

> Motilal Oswal Securities estimates Shree Cement’s net profit to grow at a CAGR of 16 per cent during FY25-27 but has a ‘neutral’ rating on the stock 

 

MDL

 

> The order book of the defence public-sector major Mazagon Dock Shipbuilders Ltd (MDL) stands at ₹34,800 crore with major projects to be executed in the next 2-3 years

> Its capex plan of ₹5,000 crore over the next 4-5 years is expected to double its capacity over this period, further boosting its capabilities

> On the non-defence front, the focus is on ship-building and green energy platforms such as hybrid ferries, green tugs, which offer decent opportunities for growth

> Given the timely implementation of platforms, strong revenue visibility over three years, and a rowing order book, Nirmal Bang Research has raised its rating on the stock from ‘hold’ to ‘buy’ 

 

Divi’s Laboratories

 

> Pharmaceuticals manufacturer Divi's Labs has seen its stock price gain about 2 per cent since September last year, beating the broader market and benchmark indices

> This outperformance has come on the back of a muted show by the company in the previous two years

> Divi's stock price has seen a steady correction in FY23, FY24 and the first half of FY25 after hitting a high in FY22

> The recent rally has been fuelled by a sharp rise in Divi's earnings, which had declined in FY24

> Divi's net profit was up 64.5 per cent Y-o-Y and net sales by 25 per cent Y-o-Y in Q3FY25 making it one of the top performers in the quarter

> Brokerages, however, see limited upside in the stock from current levels due to rich valuation and possibility of slower earnings growth in FY26 due to the high base of FY25 

 

Bajaj Finance

 

> Bajaj Finance in the last five months has seen a sharp turnaround in its share price, after underperforming the broader market for more than three years

> The retail-lender’s stock price is up 8.3 per cent since September-end 2024 

> The stock has also been benefited from the recent RBI’s decision to roll back higher risk weights it had previously assigned to bank loans from NBFCs

> Bajaj Finance’s gross NPA rose to 1.12 per cent of assets in Q3FY25 from 0.95 per cent a year ago, while provisions & write-offs were up 63.7 per cent Y-o-Y in Q3FY25, indicating continued stress in the unsecured lending

> Its consolidated net profit was up 16.7 per cent Y-o-Y in Q3FY25, while gross interest income was up 26.8 per cent Y-o-Y

> Brokerages remain bullish on the non-bank lender and expect it to report strong double-digit earnings growth over the next two years 

 

Muthoot Finance

 

> Muthoot Finance has outperformed the broader market in the past five months, propelled by higher gold prices

> Gold prices are up nearly 11 per cent in the US $ terms, and nearly 15 per cent in Indian rupees since the end of September 2024

> Higher gold prices also made it easier for gold loan companies like Muthoot, to recover their capital in case of a loan default

> Since September last year, Muthoot Finance’s share price is up 7 per cent 

> Provisions and write-offs for the firm were up 231.3 per cent Y-o-Y in Q3FY25 due to rise in bad loans

> Brokerages remain bullish on the stock and expect the company to maintain its growth momentum in FY26 

 

SBI Cards & Payment Services

 

> SBI Cards has been an outperformer in the current sell-off with its share price up 8.4 per cent against 15.4 per cent decline in the NSE200 index since September-end 2024

> The credit cards issuer continues to struggle financially. Its net profit was down 30.2 per cent year-on-year (Y-o-Y), while gross interest income was flat in Q3FY25

> Albeit marginally, its asset quality continues to deteriorate. Elara Capital expects SBI Cards’ gross NPA to rise to 2.9 per cent of assets by the end of FY25 from 2.8 per cent at the end of FY24

> Elara Capital has a ‘reduce’ rating on the stock due to falling return on assets, poor earnings and rising bad loans