15 growth stocks that gave spectacular returns when Nifty 50 did not

medium118362992Laurus Labs is in a tight spot. The stock has fallen for seven straight sessions. It has lost 15% over the past five days, while the Nifty 50 declined almost 3%. But if we look at the six-month data, Laurus went up 27%, even as the Nifty 50 dipped 5% and the pharma index 5%. Mutual funds selling the stock are partially dragging Laurus Labs lately.To be sure, pharma stocks have always been part of investors’ defensive strategy because they tend to be less volatile since people need to buy medicines no matter what the economic cycle is. During times of market downtrends, pharma stocks ideally perform well against the broader index. But in the case of Laurus, the stock has been a serious market outperformer. However, now the trend is breaking. Still, there are investors who believe that the stock is a long-term bet.Similar is the case with Narayan Hrudayalaya and SRF. Over the past six months, both stocks have given more than 10% returns. Both have outperformed the market and are expected to do so going forward. These are again classic defensive stocks and have worked as per investors’ expectations.So, will the pharma sector continue to play its role as a classic defensive? The answer is yes. But investors will have to look at fundamentals very seriously. In the case of Laurus, the company has an ROCE (return on capital employed) of 6% but there is a lot of promise in terms of growth. For a very long-term theme, the fundamentals need to improve.On the other hand, financial stocks have become a compelling narrative with companies like Bajaj Finance delivering good returns in a falling market. This cannot be true for the whole sector but the fact that Bajaj Finance is getting its act together and is part of the Nifty 50, it is one company investors can look at seriously.There is also the IT sector where Zensar Technologies and Wipro have outperformed over the past six months. They will most likely continue their upward trajectory as the rupee falls.Stocks that are outperforming in a falling market may not necessarily be great long-term bets, but they have huge potential. This is the time when you should look at the ROCE, and the P/E (price-to-earnings) ratio or P/B (price-to-book) value to see that you are investing in a strong company. So, to be on the safer side, investors choose to invest in quality. But then in many quality companies, growth is still a problem. The Nifty 200 Quality 30 index is underperforming when seen over the past year. Over the past six months, the index has given a negative return of 11%, still underperforming the broad Nifty 50 at 5%.ET Prime filtered a list of 15 stocks that have done well in the past few months despite foreign institutional investors (FIIs) pulling out money from the market. The stocks have outperformed even the benchmark Nifty 50, which has fallen dramatically in the past few days. medium118348581For instance, the Nifty 50 dipped almost 9% in the past four months and these stocks delivered more than 9% returns during the same period. Some stocks even moved up by more than 15% after the massive pullout of FII money in October.Many of these stocks have very high P/E ratios and have not moved up recently. They have been delivering spectacular annual returns for quite some time now, so they cannot be termed as value buys. Nevertheless, these are the stocks that still managed to move up despite weak broader market sentiments.Below are a few takeaways.Usually, during times of uncertainty, it is ‘quality’ as a factor that does well and so does the FMCG (fast-moving consumer goods) segment. However, this time FMCG stocks did not feature on our list. The Nifty 500 Momentum 50 fell 27% in four months, the Nifty 500 Value 50 declined 18% and the Nifty 200 Quality 30 dropped 16% during the same period.Laurus Labs is the top performer on the list. The stock moved up 14% in four months and recorded an annual growth rate of 44% over the past five years. Its P/E stands at 147x. The company recorded an 18% year-on-year revenue growth rate for the December quarter at ₹1,415 crore and a PAT (profit after tax) growth rate of almost 300% to ₹923 crore. Its Ebitda (earnings before interest, taxes, depreciation and amortisation) margins stood at 20%, the highest in the past seven quarters.“Laurus Labs beats revenue estimates with strong CDMO (contract development and manufacturing organisation) growth, but Ebitda and PAT fall short of Street expectations. We anticipate Laurus to benefit from the expansion in its CDMO and bio segments, driving growth. While the API (active pharmaceutical ingredient) segment continues to face sluggishness, we expect normalisation post FY26. We value the company at 37x FY27 EPS (earnings per share),” wrote Choice Broking in its January research report. medium nocaptionhttp://youtu.be/1dzh8WIJHRY?si=b6UEJy9dVj2ndr9hTwo finance stocks, Bajaj Finance and Muthoot Finance, made it to the list. The stocks recorded a year-on-year PAT growth of 18% and 21% at ₹4,300 crore and ₹1,391 crore, respectively. According to a Motilal Oswal research report on non-banking finance companies, the demand and asset quality trends remain weak. The report was quick to add that while the improvement in asset quality expected in the second half of the fiscal year has not materialised yet, there is no alarming deterioration either, for most of them.“Valuations at 3.4x P/BV and 18x FY27E P/E are not inexpensive, and the focus now will shift to the management transition and the role that Rajeev Jain will play in the company from April onwards. We expect asset quality to stabilise from Q4 FY25 onwards, allowing Bajaj Finance to navigate this mini-credit cycle effectively. However, we do not see any significant upside catalysts in the near term given that the management transition will be very keenly watched until more clarity emerges,” stated a January Motilal Oswal research report.Both Shree Cement and JK Cement reported a de-growth in revenue and PAT on a year-on-year basis. Shree Cement saw a massive decline in profits from ₹700 crore in December 2023 to ₹193 crore in December 2024 — a steep 72% decline. JK Cement reported a 33% decline in profits at ₹189 crore during the same period. It is striking that Shree Cement, with a top line of ₹4,500 crore, reported PAT just slightly higher than JK Cement whose revenue is much lower at ₹2,900 crore.“Although SRCM (Shree Cement) has delivered industry-leading profitability over the last decade and been a pioneer in cost efficiencies, aggressive leaders can put pressure on the company’s volume growth, which was evident in recent quarters. Most of SRCM’s upcoming capacities are in relatively stronger regions, however valuation appears full. We have increased our FY26/27E Ebitda by 4%/10% on account of improving demand and pricing across regions. We expect SRCM to focus on cost efficiencies, decrease in logistics costs, commissioning of rail sidings, etc,” wrote Prabhudas Lilladher in its recent research report.Two IT stocks, Wipro and Zensar, featured on the list. While Wipro reported 25% year-on-year profit growth at ₹3,366 crore for the December quarter, Zensar reported a 1% de-growth in profits. They are trading at an average P/E of 27x.“The company has witnessed gradual recovery in its operational performance, while the weakness in other verticals and geographies would keep the top line growth a little volatile. The margin recovery is notable in Q3, majorly attributed to the pyramid exercise, FPP optimisation and cost-controlling measures, which we believe is sustainable at the current level. We estimate USD revenues/earnings CAGR (compound annual growth rate) of 2.7%/11% over FY24-FY27E. We are assigning a P/E of 22x to FY27E,” stated Prabhudas Lilladher in a January research report.