India is an uncertain market, with companies either losing or making huge money amid changing consumer demand. Interestingly, 11 publicly listed companies with market capitalizations exceeding ₹2,000 crore have reported an eye-popping 1,000%+ YoY surge in their net profits during the June ending quarter of 2024. The most notable among these standout performers is Zomato, India’s beloved online food and grocery delivery startup.
What makes this achievement even more remarkable is that these 11 Indian companies went public in 2021 or 2022. Within just two to three years, they have scaled their operations and profitability to such impressive levels.
Before we dig deeper to understand the strategies that worked for these 11 mind-blogging profit-making public companies, let’s examine the yearly jump in profits they reported in Q1 FY25, ending June 30, 2024.
Indian Companies with 1,000%+ Profit Growth
- Leading the pack, Zomato‘s net profit skyrocketed 12,550% YoY to ₹253 crore in Q1 FY25. This represents the highest profit growth among the 11 companies.
- Shakti Pumps made headlines with a phenomenal 9,166% YoY increase in net profit, jumping from just ₹1 crore in Q1 FY24 to nearly ₹93 crore in Q1 FY25.
- Jubilant Pharmova, a key player in the pharmaceutical sector, reported an astounding 7,930% YoY rise in its net profit, amounting to nearly ₹482 crore during the June quarter.
- Dolphin Offshore Enterprises, a leading provider of underwater services to the Indian oil and gas industry, is the fifth company to report an exceptional 5,000%+ YoY surge in net profit during the June quarter this year.
- Lotus Chocolate, owned by Reliance Consumer Products, also reported a jaw-dropping 4,701% YoY surge in net profit, reaching ₹9.41 crore in Q1 FY25.
The Surge In Profit: Sustainable?
It is important to understand that an extraordinary surge in profits does not always indicate the company’s exceptional performance for a specific quarter or year. Often, such a dramatic increase in the bottom line can be attributed to one-time gains or exceptional events rather than sustained operational success.
Therefore, while impressive, these figures may not fully reflect the company’s ongoing financial health or long-term financial stability.
For instance, Zomato reported its first-ever profit of ₹2 crore in Q1 FY24, ending June 30, 2023, compared to a loss of ₹186 crore in Q1 FY23. However, a closer analysis reveals that a one-time deferred tax benefit of ₹17 crore played a substantial role in driving the company’s profitability.
Zomato has demonstrated impressive performance with double and triple-digit growth across all segments, including revenue, average order value, and customer base. The company’s strategic expansion beyond metropolitan areas has also contributed significantly to the massive jump in profits during the June quarter. As a result of these strong performance metrics, Zomato’s shares have surged by 108.43% year-to-date, trading at ₹259.5 as of August 26, 2024.
Shakti Pumps, which experienced an extraordinary 9,000%+ increase in profits in Q1 FY25, has shown remarkable performance since Q2 FY24. The company reported a 210.5% YoY growth in net profit during that period, and its profits have continued to grow impressively, often in triple or quadruple digits. This exceptional financial performance has driven Shakti Pumps’ stock price up by 335.25% year-to-date, reaching ₹4,480 as of August 26, 2024.
In its June quarter filing, Shakti Pumps highlighted that its impressive performance is primarily due to the accelerated execution of existing orders in both domestic and export markets. Additionally, improved margins were achieved due to a decline in raw material prices and the benefits of economies of scale from increased production during the quarter.
In sharp contrast, Jubilant Pharmova’s astonishing 7,930% YoY jump in net profit is not primarily due to a sharp increase in operating revenue or a decline in expenses during the June quarter. Instead, this dramatic profit growth is largely attributed to a reduction of ₹395.9 crore in exceptional items. This reduction includes net income from the sale of investment in SOFIE, which amounted to ₹669.2 crore, covering “Right of First Refusal” waiver fees and “Accelerated EBITDA share payments.”
Without accounting for these exceptional items, Jubilant Pharmova’s profit would have been considerably lower. The pharmaceutical company had been reporting losses, except in Q2 FY24, when its net profit surged 1162.2% YoY.
The Importance of Long-Term Financial Monitoring
In summary, it is crucial to monitor a company’s financial performance over at least two years to gain a true understanding of its performance and long-term success before investing in its stocks. While a single quarter’s surge in revenue or profits can lead to significant fluctuations in stock prices, a thorough analysis over a two-year period provides clearer insights into the company’s overall financial stability and growth potential.
Even though these 11 Indian public companies achieved over 1,000% growth in profits in Q1 FY25, these numbers may not necessarily indicate their overall success within their respective sectors.