From green to red! 12 stocks under the lens after Q3 loss. Buy or sell?

NEW DELHI: Although stock prices are often seen taking a random walk on Dalal Street in the short term, yet in the long run they are a slave to earnings. At least 12 companies, which had reported profit in the year-ago period, reported loss in the just-concluded December quarter earnings season.

For the analysis we have considered only those stocks with a market capitalisation of over Rs 500 crore and sales growth of at least 10% during the third quarter of the ongoing financial year.

Out of these 12 stocks, 7 of them have given negative returns in the last one year while one turned multibagger.



Smallcap ITeS company Axiscades Tech reported a sales growth of 26% in Q3 but reported a net loss of Rs 10.35 crore in Q3. In the December quarter of the previous financial year, the company had reported 7.8 crore profit. Despite the loss, the stock is up 217% in the last one year.

On the other hand, stocks like Birla Corporation, Birlasoft, Coffee Day Enterprises, Jubilant Pharmova, Network18, Sagar Cements and Voltas have given double-digit losses in the last one year.

Mangalore Refinery And Petrochemicals, which is up 26% in the last one year, also disappointed with a loss of Rs 194.95 crore in Q3 as compared to a profit of Rs 589 crore in the year-ago period.


What should investors do?
Stock prices have been under pressure this year amid uncertainty around global growth, relatively expensive valuations in the Indian market, rising interest rates, shifting of FII allocation towards other emerging markets and lack of positive triggers in the quarterly earnings season.

"Auto, financial services, capital goods, pharma and banks had maximum beat in PAT while aviation, chemicals and capital goods disappointed," domestic brokerage firm Prabhudas Lilladher said.

Nuvama, which thinks that the Q3 season was a mixed bag, is overweight sectors with margin tailwinds - FMCG, pharma, cement, domestic auto, IT, Telecom and internet - and underweight cyclicals - BFSI, Industrials, metals and durables.

Motilal Oswal has pruned FY23 Nifty EPS by 1% to Rs 812 from Rs 820 due to notable earnings downgrade in the metals stocks. It has upgraded Tata Motors, ONGC, Bajaj Auto, Dr Reddy’s Labs and Coal India while downgrading Divi’s Lab, Bharti Airtel, Eicher Motors, JSW Steel and Tata Steel.

(With data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)