IRCTC, Affle among 6 cos whose sales & profit doubled in Q3. Should you invest?

Among these names, IRCTC logged a 167.39 per cent year-on-year (YoY) rise in net profit at Rs 208.81 crore on a 140.76 per cent jump in net sales at Rs 540.21 crore. Analysts said the numbers were ahead of their estimates, except for Ebitda margins. Expensive valuations, however, suggest downside potential ahead.

A median target of five analysts suggests a price target of Rs 776.40 on IRCTC, suggesting potential 5 per cent downside from current levels. IIFL has a ‘sell’ rating on the stock with a target of Rs 722 as it believes the stock at 69 times FY23 PE is expensive.

Dalal & Broacha Stock Broking felt premium valuations are unjustifiable and said the upside is capped due to significant regulatory risk. “We recommend to book profits in the stock as we rollover our estimates to FY24 and reduce our target multiple to 50 times forward to arrive at target price of Rs 701.”

Affle India is a ‘buy’ with the median target prices of eight analysts suggesting a 28 per cent potential upside. This company reported a 103 per cent YoY jump in profit at Rs 62.28 crore on 125 per cent surge in net sales at Rs 339.39 crore. The company management has guided for a revenue growth of 25-30 per cent CAGR over the next five years in light of robust demand and rising mobile consumption.

“We believe Affle has a unique business model and has a strong strategy in place to penetrate the targeted geographies and verticals. With upgraded guidance, margin expansion, and strong return ratios, we remain positive on the stock. However, immediate pricing pressure on both international and domestic businesses may

impact margins,” Axis Securities said while suggesting a target of Rs 1,450.

ICICIdirect values the stock at Rs 1,500 as it sees Affle as a key beneficiary of a shift of advertising budget to digital medium. This scrip has jumped about 8 times since its listing in August 2019.

For Aarti Industries, profit zoomed 356.63 per cent to Rs 772.54 crore on 100 per cent jump in sales at Rs 2,375.98 crore. Its management has guided for 25-35 per cent growth in profit for FY22. A total of 20 analysts have a 12-month price target of Rs 1,058.97 on the stock, suggesting a potential double-digit return.

Anand Rathi has a target of Rs 1,230 on the scrip as it values the company at 35 times FY24 PE and 22 times FY24 EV/Ebitda.

“Growth in specialty chemicals was driven by volume as well as efficient pass-through of raw material and logistic costs. Most of the key capacities operated at 85 per cent utilisation in Q3. Nitric acid shortage affected the revenue of nitric chain products and revenue loss in Q3FY22 was estimated at Rs50 crore. The management expects the shortage to continue in Q4. Specialty chemicals margin was supported by ~US$5mn fees received on account of the cancelled contract. We expect this to normalise going ahead,” Nirmal Bang said while suggesting a target of Rs 1,100 on the stock.

In case of Tube Investments, a median estimate of four analysts, suggest an upside potential of 15 per cent over Friday’s prices. The company reported a 264.42 per cent in bottom line and 103.63 per cent jump in top line.

Jhunjhunwala stocks Delta Corp and Brightcom Group are not tracked much by analysts. Delta Corp reported a profit of Rs 71.29 crore in the December quarter compared with a modest Rs 1.04 crore profit in the year-ago quarter. Its sales rose 104.61 per cent YoY for the quarter to Rs 247.22 crore. Meanwhile, Brightcom reported 168 per cent jump in bottom line and 130.07 per cent rise in top line for the quarter.