Over the last 12 months, the Sensex has been down by about 14.8%. But a handful of stocks recorded massive gains. Which were these stocks?
Last January, investors expected the market to put in another year of strong rally after the sharp rise they enjoyed in 2014, following the installation of a new government at the Centre in mid-2014. The S&P BSE Sensex was above 29,000 in January 2015 and seemed to be headed higher. Investors were expecting a “reformist” budget, the second one by the Narendra Modi government. Actually, it was first one that the government had time to plan. After all, the July 2014 budget left the government with very little time to prepare. The budget turned out to be an anti-climax. The Sensex crossed 30,000 but that was the peak. On 20th January 2016, it had touched a low of 23,839, a peak to trough decline of 20.6%.
In this decline, a lot of quality stocks have gone down more than Sensex. But there are some stocks that have bucked the trend. They have doubled, trebled and one has even gone up fivefold. Which are these stocks? We trolled our database to find out the biggest gainers. To eliminate the many thinly-traded stocks that are rigged with impunity, we limited our search to companies, which have market capitalisation of at least Rs1,000 crore and whose shares are liquid, which we have defined as trading 2,000 shares a day on 90% of trading days. Based on this database, we looked up the stocks that did the best. Here is a table that lists the result of this exercise
The biggest gainer is Kellton Tech Solutions, followed by Rajesh Exports. Kellton is a small CMMi Level 3 and ISO 9001:2008 certified global IT services organisation, headquartered in Hyderabad with development centres in the US and India. Its financials are improving and it has acquired a US software company three days ago. Rajesh Exports is a controversial company, whose price movement is unrelated to its fundamentals.
Indeed, some of these stocks are “operator-driven”, meaning they are jacked up only with the intention of dumping them at a later date. But certainly a company like Kwality or Nilkamal Plastics has a solid business model and were undervalued in January given their growth prospects. The flavour of the year was textile stocks. That is the reason why a company like Sangam India did extremely well, even though its growth has been modest. One of the big gainers is High Ground Enterprises which is into Engineering Procurement and Construction Management (EPCM) operating in oil & gas, water resource management, roads, telecom, solid waste management, fire and safety etc. In 2014-15 it entered into the business of third party certification, completing work for Indian Oil petrol pumps across 1000 cities and towns in India. Among its clients are Mumbai International Airport Authority, Indian Oil, Raymond, Essar Ports, etc. Curiously, the company is also getting into visual media, focused on content development, technical media services and post-production. It has set up a boutique digital post-production/technical media facility to cater to domestic and export market. It is difficult to say how much of this genuine.
Morepen Labs which was drowning in huge debt, has literally has come back from the dead. According to the company, Morepen is the leading supplier of Loratadine worldwide including a 90% share of the US market. It is also the largest manufacturer of Montelukast and its intermediates and is an important player in selling its patented form of Atorvastatin Amorphous. In the September quarter, it reported a net profit of Rs3.22 crore which was 10 times that of September 2014.
Another company that recorded a fantastic rise in net profit was Nilkamal Plastics. In September 2015, its net profit was Rs25.74 crore compared to Rs6.84 crore the same quarter a year ago. While Nilkamal was a profit-making company that has done even better thanks to lower input costs and wider product range, a big gainer in 2015 was a basket case. One of the most spectacular turnarounds of recent times happened in case of SpiceJet, where Ajay Singh returned at the helm with bag of financial engineering tricks that led to Rs72 crore profit for the September quarter of 2015 against a Rs310 crore loss in the same period a year before. Among the big gainers was Kwality, which was up 191%. What is not clear is as to how the shares of Kwality, whose turnover and profits merely inched up in each of the quarters last year, tripled over the year. Maybe this year will provide a clue.