Meet the Nifty Next 50 stocks that had a better year than Tata Motors

In February 2024, the index surged 6.68%, leaving all other major indexes in the dust. The index has steadily climbed for the past year, boasting a remarkable growth of 60% in FY2023-2024. (Image: Pixabay)
In February 2024, the index surged 6.68%, leaving all other major indexes in the dust. The index has steadily climbed for the past year, boasting a remarkable growth of 60% in FY2023-2024. (Image: Pixabay)

Summary

  • Nifty Next 50 is a map of India’s future. These 5 dynamic companies outperforming the market are poised for success.

The Nifty Next 50 index has emerged as a star performer in financial year 2024.

This index is specifically designed to track the performance of 50 promising young companies, which could be the next contenders to enter the Nifty 50 index.

In February 2024, the index surged 6.68%, leaving all other major indexes in the dust. The index has steadily climbed for the past year, boasting a remarkable growth of 60% in FY2023-2024.

Compared to Nifty 50’s top performer Tata Motors, which logged around 130% gains in FY24, several companies from the Nifty Next 50 index inched higher and outperformed.

The momentum shows no signs of slowing down. It offers a compelling opportunity to invest in the future of India’s most dynamic companies.

Let’s look at the top 5 performing stocks of the Nifty Next 50 index.

#1 BHEL

From thermal to gas, hydro to nuclear, BHEL delivers the equipment that keeps India's economy charged.

This integrated power plant equipment manufacturer is engaged in the design, engineering, manufacture, erection, testing, commissioning, and servicing of a wide range of products and services for the core sectors of the economy.

With 197GW power generating capacity, BHEL's share in the country's total installed thermal generation capacity stands at 55%. It has a pan-India presence with 16 manufacturing units and 8 service centres.

BHEL is undergoing strategic transformation, moving from a revenue-centric approach to a project-centric one. This turned out to be a winning formula as the company doubled its erection tonnage at project sites over the past three years, reaching 0.5 MT in FY 2022-23.

The company achieved this despite a decline in the overall order book and a complete halt in thermal order placement for three years, from August 2019 to September 2022.

The recent triumphs in the Maitree and North Karanpura projects are prime examples of BHEL's new strategy in action. The North Karanpura plant is India's first utility-scale power plant to utilise air-cooled condensers. When fully operational, this can conserve 30,500 m litres of water annually.

BHEL also secured 235.5 bn of orders – the highest in the past five years. After a four-year hiatus, it emerged victorious by winning the 2 x 660 MW NTPC Talcher Thermal Power Plant order.

Its spares and services business also boasts an impressive 25% growth. With a total outstanding order book of 913.4 bn, BHEL is experiencing its strongest position in four years.

In the last year, BHEL share price has shot up by over 250%.

 

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A potential short-term revival in the thermal power sector presents an opportunity for BHEL to fuel its diversification goals. The company plans to generate 50% of its revenue from non-coal businesses.

Its world-leading coal gasification technology, specifically designed for India's high-ash coal, is a game-changer. Its JV with Coal India Ltd for a coal-to-ammonium nitrate plant is also in advanced stages.

The company's success in developing sucker rod pumps, previously dominated by Chinese imports, strengthens its position in the oil and gas industry.

#2 Torrent Power

Torrent Power is an integrated power utility managing the entire chain – generation, transmission, and distribution across four key Indian states. It is a part of the illustrious Torrent Group, which ranks 5th in the Indian pharmaceutical market.

Since 2018, Torrent Power has quietly built an impressive City Gas Distribution (CGD) network. With 17 operational geographical areas (GAs) spread across 7 states and 34 districts, the company is a significant player in India's clean energy future. It focuses on providing Compressed Natural Gas (CNG) that burns cleaner than traditional fuels.

The company has committed 90 bn in capex spends over the next five years to solidify its hold on the Indian power sector. It has secured a 300MW Power Purchase Agreement (PPA) with TPLD for 25 years, ensuring a long revenue stream.

It has also signed a PPA with SECI for a 300MW wind power project. The company is actively developing a 175MW combined wind and solar power project for the merchant market.

Recognising the demand for industrial power, Torrent Power is involved in various C&I projects totalling 215MW, with 13MW already commissioned.

In the past one year, the company’s shares have rallied over 167%.

Torrent Power share price – 1-year performance

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Torrent Power has renewed its focus on clean energy solutions, actively pursuing renewable projects and leveraging Regasified Liquefied Natural Gas (RLNG) in its gas-based plants. Its coal-based generation and distribution also experienced high volumes.

In just one year (FY2022 to FY2023), the company managed to cut down distribution losses from 15.2% to 12.5%, adding to its profitability. Its EBITDA also showed a remarkable 34% increase in FY2023 due to newly acquired licenses for renewable projects.

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#3 Oracle Financial Services (OFSS)

Since 1989, Oracle Financial Services has been providing a comprehensive suite of financial solutions, from core banking and risk management to customer experience and cloud infrastructure.

In the past one year, OFSS share price has rallied over 160%, registering one of its best years.

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Going forward, the company’s management expects the current quarter revenue growth to come at 5%, with a cloud revenue boost of 23%. The recent acquisition of Cerner, a healthcare IT company, is expected to be a temporary headwind for revenue growth. However, the company is confident it will return to revenue growth by May 2025.

Recently, the company signed a significant cloud deal with Navy Federal Credit Union in the USA and has a robust deal pipeline across all the other regions.

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#4 Solar Industries

Solar Industries is a dominant player in the explosives industry, commanding a 24% market share worldwide. Its capability extends to bulk explosives, packaged explosives, and initiating systems, catering to the mining, infrastructure, and construction sectors.

In a strategic move, the company ventured into the defence segment in 2010 with the Indian Army successfully test-firing six Pinaka rockets manufactured by the company. It was the first time the army had utilised an Indian private organisation's rocket.

The company has the world's largest single-location cartridge plant in Nagpur, with the production capacity to meet the demands of its global clientele.

Last year, the company won massive defence orders which triggered a rally in its stock price.

In the past one year, Solar Industries shares have rallied 134%.

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In recent years, Solar Industries has received cumulative export orders which have presented an anticipated revenue surged of 22% to 25% from the defence segment in FY2025-2026. The company has already secured 9.9 bn worth of defence orders.

Looking ahead, the company projects a conservative volume growth target of 15% for the next 3-5 years.

It has a massive order book of 22 bn, which can translate into significant revenue growth starting from Q4 of the current financial year. The management expects its defence revenue to reach 15 bn in the next financial year.

While international business has faced headwinds from inflation and currency volatility, the company is expanding into new geographies like Kazakhstan and Saudi Arabia.

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#5 HDFC AMC

Established in 1999, HDFC AMC boasts a rich history of managing funds for millions of investors. It is appointed as the investment manager for HDFC Mutual Fund by HDFC Trustee Company Limited. The company caters to a wide range of investors with its comprehensive suite of investment solutions.

Over the last one year, HDFC AMC’s stock price has surged by 123.3%.

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Going forward, the company has a pipeline of exciting opportunities. It has existing commitments of 8 bn from 300 clients in the fund of funds business and a planned launch of private credit products in the latter half of the year.

Its business cycles NFO garnered a positive response, attracting 100,000 investors. It also launched its innovative HDFC AMC Select AIF FOF, a category II AIF fund of funds.

The company also reported a notable increase in the number of active MFDs, product approvals, learning events, online engagement, and new SIPs.

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In Conclusion

2024 is a year of general elections in India that can result in volatility in the equity market.

Both the Lok Sabha elections in May and the US Presidential election in November can result in market jitters. News inflows, changes in investor sentiment, and pre-poll surveys will contribute to market changes as they can change the course of policymaking.

However, the cooling of oil prices and the strong earning potential of Indian companies offer a positive outlook for the market in 2024.

While investment anxiety is common, ensure that you pay attention to market views, company financials, and performance.

Stay tuned to this space as we bring detailed news on any sharp movement in the upcoming months.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

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