ETMarkets sifted through the financial numbers of all listed companies with over Rs 2,000 crore market capitalization and found that Zomato reported the highest growth in profit on a year-on-year (YoY) basis – a staggering jump of 12,550% in Q1 of FY25.
The June quarter profit of food delivery firm Zomato, which recently acquired Paytm’s movie ticketing and events business for Rs 2,048 crore, skyrocketed to Rs 253 crore from just Rs 2 crore in Q1 of FY24.
Having already more than doubled so far in the calendar year 2024, the target price for Zomato shares now go up to Rs 350 to signal an upside potential of up to 33%.
Next on the profit parade is Shakti Pumps whose quarterly profit jumped from just Rs 1 crore to Rs 93 crore in 12 months, an eye-popping growth of 9,166%. The bottomline growth is accompanied by sales growth of 402% on a YoY basis.
No wonder, the smallcap stock has given a massive return of 334% this year itself.
During the quarter, Reliance Consumer Products-owned Lotus Chocolate also posted jaw-dropping numbers. Its net profit jumped 4,701% to Rs 9.41 crore in Q1 vs a small profit of just Rs 20 lakh in the corresponding quarter of the previous year. As a result, the stock is up over 700% year-to-date.
Other rock stars in the list include Jubilant Pharmova, Dolphin Offshore Enterprises, Spright Agro, SG Mart, Maharashtra Scooters, Blue Cloud Softech, Shilpa Medicare and Dilip Buildcon.
What should investors do?
As stock prices are a slave to earnings in the long run, one cannot ignore the profit numbers but investors should not look at numbers in isolation. For example, a jump in bottomline could be due to a one-off gain.
Also, returns in the stock market are not made by looking at the rear mirror. While selecting a stock, growth outlook is of utmost importance as markets, by nature, are a forward looking animal.
At this stage of the bull market cycle, many top investors are avoiding making new purchases as valuations are factoring in multiple years of growth.
“I would not really go out looking for value in a market that has none. We have been in this state for some time now. As an active manager, we need to move our lens to 2030, then we could look at some probable opportunities that would be a part of the portfolio. But I would never say there are value opportunities in the current market environment,” Kenneth Andrade, CIO, Old Bridge Mutual Fund, told ETMarkets.
Kotak Institutional Equities’ Sanjeev Prasad argues that earnings are less relevant in the current sentiment-laden market, with the market rewarding modest beats in certain cases and ignoring large misses in Q1.
“The Indian market offers very little value across sectors and stocks, with parts of the market trading at fair valuations, parts at full valuations and parts at frothy valuations. The high level of irrational exuberance among non-institutional investors has made valuations largely redundant for large parts of the market, particularly the mid-cap and small-cap spaces, investment-related sectors, and PSU stocks,” he said.
(Data: Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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