Stocks for the long haul: Solid profit growth year after year, doubling of stock prices in 5 years
And there could be more, as many of these companies are yet to announce their annual earnings.
The stocks are Lux Industries, Caplin Point Laboratories, HDFC Bank,
, Vaibhav Global and AstraZeneca.
Lux Industries reported a 52 per cent surge in FY21 profit after tax at Rs 269.38 crore compared with Rs 177.25 crore in FY20. The company had reported a 79 per cent jump in FY20 profit, 27 per cent expansion in FY19, 30 per cent in FY18 and 16 per cent in FY17.
Lux ended FY21 on a sound footing, Anand Rathi Financial Services said, while noting that the company’s free cash flow grew nearly 135 per cent for the year driven by greater profitability and better working capital.
“In FY21, market share gains continued with a 15 per cent market share in organised men’s innerwear. We are upbeat on Lux’s long-term growth prospects due to its strong brand equity, new launches and long-standing operations in the innerwear segment. Its merger with group companies Ebell Fashions and JM Hosier will unlock synergies to further propel growth,” said Anand Rathi Financial Services.
Despite a 50 per cent rise in the stock from since March, the brokerage has maintained a ‘buy’ rating on the stock. The stock is up 318 per cent in the last five years.
In the case of Caplin Point Laboratories, profit growth at 17 per cent in FY21 was healthy, even as it was the lowest in five years. The profit growth for FY20 and FY19 stood at 20 per cent each. ICICIdirect said Caplin’s March quarter and FY21 numbers were strong.
“After scripting a unique story by growing in the uncharted territory, it is looking at growth in known markets. These new markets of South America and the US are a big opportunity, but are fraught with new challenges. That said, we continue to believe in Caplin’s capability to replicate the success story in new markets,” the brokerage said.
“By thriving in the lesser-known markets and cracking the most difficult US generic pharma code of injectables, that too in different therapies, the company has created its own identity with long-drawn plans on the back of significant capex lever. Caplin continues to present a compelling risk-reward scenario at current valuations,” ICICIdirect said.
This stock is up 200 per cent in the last five years.
In the case of HDFC Bank, brokerages such as
, Elara Securities, Edelweiss and CLSA have maintained their buy ratings on the stock.
Edelweiss said uncertain times put a premium on resilience, which, it says, is what HDFC Bank offers — a strong balance sheet and likely higher residual capital than most. The private bank has reported a consistent 16-21 per cent profit growth in the five-year period.
The Kotak Mahindra Bank stock is, however, low on analysts’ radar. The lender reported a 15 per cent rise in FY21 profit. The profit growth for the bank stood at 21 per cent in FY20, 16 per cent in FY19 and 24 per cent in FY18, and 44 per cent in FY17. Most analysts do not see much upside for the stock, even though they believe the asset quality performance of the bank in FY21 was largely in line with top three private banks.
CLSA said expectations are still high from the bank and believes risk-reward is better in banks such as Axis Bank and ICICI Bank. Credit Suisse has a ‘neutral’ rating on the stock while HDFC Institutional Equities has continued to maintain ‘reduce’ on the stock.
While HDFC Bank has gained 150 per cent in last five years, Kotak is up 140 per cent during the same period. Vaibhav Global is not tracked much by analysts but has seasoned investors Vijay Kedia and Ashish Kacholia among its shareholders.
The company reported 43 per cent rise in FY21 profit compared with 23 per cent growth in FY20. The growth for FY21 was highest for the company since FY18, when it had expanded 74.15 per cent. The scrip has climbed 290 per cent in the last one year and 1,486 per cent in last five.
MNC drug maker AstraZeneca has reported at least 29 per cent profit growth in each of the last five years, but is not tracked much by analysts. This stock has gained 28 per cent in last one and 260 per cent in last five years.
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