Brokerage firm Nuvama has shared its top stock picks following the Q3FY25 earnings season, highlighting companies that have delivered strong performances or hold promising growth potential.
Divi’s Laboratories: Nuvama noted that Divi’s Laboratories outperformed consensus estimates across key financial metrics, with revenue, EBITDA, and PAT surpassing expectations by 3 percent, 8 percent, and 18 percent, respectively. The company posted a robust EBITDA margin of 32 percent, exceeding consensus by 144 basis points. Even after adjusting for a lower tax rate, PAT remained 7 percent ahead of estimates. Divi’s is actively expanding its product portfolio and client base, with GLP-1 emerging as a key growth driver. Nuvama retained a ‘BUY’ rating with an unchanged target price of ₹6,830.
LIC Housing Finance: LIC Housing Finance (LICHF) reported a Q3FY25 PAT that was 7 percent above consensus, driven by a provision reversal of ₹2.6 billion on a fully provided NPL sold to an Asset Reconstruction Company (ARC). However, loan growth remained tepid at 2 percent quarter-on-quarter (QoQ), while disbursals declined 6 percent QoQ due to challenges in Karnataka and Hyderabad, which negatively impacted disbursements by ₹7–8 billion. Net Interest Margin (NIM) remained steady at 2.7 percent. While LICHF reversed ₹2.6 billion in provisions, net provisioning reversal stood lower at ₹440 million due to increased overlay provisions, said Nuvama.
Aarti Industries: The brokerage stated that Aarti Industries fell short of Nuvama’s sales and EBITDA projections but met consensus estimates. PAT declined due to forex losses of ₹230 million on interest costs related to External Commercial Borrowings (ECBs). The company continues to face pricing challenges, with overcapacity in China expected to persist in the medium to long term. Nuvama noted that the company’s gradual recovery may take longer, leading it to moderate estimates for future performance.
GR Infraprojects: As per the brokerage, GR Infraprojects (GRIL) reported a 17 percent year-on-year (YoY) decline in Q3FY25 revenue. However, higher other income from distributions via its Infrastructure Investment Trust (InVIT) boosted adjusted PAT by 15 percent YoY. The company ended the quarter with an order book, including L1 orders, worth approximately ₹200 billion, representing a book-to-bill ratio of 2.9x. Net working capital days increased slightly to 142 from 138 in Q2FY25.
MedPlus Health Services: MedPlus Health Services’ Q3FY25 revenue missed Nuvama’s projections by 2 percent, but operating EBITDA and PAT exceeded expectations by 8 percent and 20 percent, respectively. Revenue growth was moderate at 8 percent YoY; however, the company achieved a record-high gross margin of 25 percent, signaling operational efficiency improvements.
Texmaco Rail: Texmaco Rail posted a 21 percent YoY increase in Q3FY25 revenue despite challenges related to wheelset availability. PAT surged 60 percent YoY, supported by increased wagon dispatches—2,200 in Q3FY25 and 6,600 in 9MFY25—representing YoY growth of 18 percent and 37 percent, respectively. The company ended the quarter with a standalone order book of ₹68 billion, reflecting a book-to-bill ratio of 1.6x, hightlighted Nuvama.
Dhanuka Agritech: Dhanuka Agritech reported a 12 percent YoY volume growth in Q3FY25, alongside a 160 basis points YoY expansion in EBITDA margins, beating Nuvama’s EBITDA and PAT estimates. The company’s product pipeline remains robust, further strengthened by two newly acquired brands from Bayer, which are expected to drive future growth.
Flair Writing Instruments: Flair Writing Instruments missed Nuvama’s Q3FY25 estimates, with revenue growing 18 percent YoY but declining 2 percent QoQ. EBITDA margin expanded 175 basis points YoY to 17.1 percent but contracted 160 basis points QoQ, falling short of the brokerage’s estimate of 18.5 percent. While annual growth remains strong due to last year’s low base, the QoQ dip was attributed to a post-festive season slowdown. Management expects Q4FY25 to benefit from the back-to-school season and has maintained a double-digit growth outlook for FY25, with EBITDA margins projected to rebound to 19–20 percent within one to two quarters.
Nuvama’s post-Q3FY25 recommendations highlight a mix of strong performers and companies with promising long-term growth potential. While some, like Divi’s Laboratories and Texmaco Rail, delivered solid results, others, such as Aarti Industries, continue to navigate headwinds. Investors may find opportunities in these stocks based on their respective growth trajectories and market positioning.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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