Three stocks that swam against the tide in week ended Jan 27

The pre-budget week turned out to be a dark one for Indian equity investors, as equity indices took a nosedive losing almost 1.5 per cent in Friday’s trade alone. For the week, bellwether indices Sensex and Nifty shed over 2 per cent.

The fall though was led by Adani Group stocks, which were on a free fall on Friday, following research firm and short-seller Hindenburg Research’s report on Adani Group.

The Group’s flagship company Adani Enterprises closed over 18.5 per cent lower on Friday. While the Adani Group stocks led the fall, several stocks saw their value tumble last week.

However, even as the carnage continued across sectors including banking, automobile as a pack, stood apart and managed to buck the market weakness.

Sona BLW Precision

Topping the returns chart for the week ended January 27 was the stock of automotive technology company Sona BLW Precision, gaining a good 10.7 per cent in the last 5 trading sessions.

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Sona BLW is into design and manufacturing of engineered automotive systems and components such as differential assemblies, gears, conventional and micro-hybrid motors, and EV traction motors.

The company’s strong performance in December 2022 ended quarter, aided the stock’s up move. Sona BLW reported a 43 per cent year-on-year increase in revenue for the December 2022 quarter.

Operating profit margin for the quarter improved by 0.7 percentage points to 27.1 per cent, compared to the same period last year.

The company’s net order book increased to ₹23,800 crore as of December 2022, compared to ₹20,500 crore as of September 2022.

The stock currently trades about 71.7 times its trailing twelve-month earnings. The stock interestingly had been an underperformer in 2022, shedding about 28 per cent in the last year.   

Tata Motors

Second on the list is the stock of automobile major Tata Motors, which gained 10.5 per cent during the week.  

Stellar results in the Q3 FY23, with the company posting profit for the first time in the last two years, led to an increased investor interest in the stock.

Buoyed by the strong demand for passenger and commercial vehicles (heavy and medium commercial vehicle) the company reported a robust 23 per cent increase in revenue in Q3 FY23, compared to a year ago period.

Strong growth at its subsidiary JLR aided the performance. Operating profit margin improved by 2.4 percentage points to 12.2 per cent.

Strong operating performance coupled with higher other income helped the company post a net profit of ₹3,043 crore, versus a loss of ₹1,451 crore in the same period last year. The stock had shed over 10 per cent in the last year.

Bajaj Auto

Third on the list is the stock of two and three-wheeler maker Bajaj Auto, which gained 10.2 per cent over the week.

The outperformance came on the back of robust results in the 3Q FY23. Even as Bajaj Auto’s revenue grew at a modest 3 per cent year-on-year, the company managed to beat market expectations at the operating profit level.

The operating profit margin expanded by 3.6 per cent year-on-year to 18.8 per cent in the December quarter. This was mainly driven by lower raw material cost which as a percentage of sales was lower by about 4 percentage points.

Net profit however, remained flat, due to higher tax outgo and lower other income. The stock currently trades about 20 times its twelve-month trailing earnings and had delivered about 13 per cent gains in the past year.