Turnaround stocks of 2024: Top 5 shares that are potential multibaggers

In addition, a cohort of companies have been buzzing in the market due to their turnaround stories.

These stocks have reported stellar performance in FY24 and finally turned profitable after a slew of losses.

The earnings scorecard of India Inc is much better than expected, and companies have kickstarted the new financial year on a good note.

This article will look at FY24’s top 5 turnaround stocks that could do well in the coming quarters.

These companies have turned profitable after one year of loss in FY23 or repeat years of losses.

Take a look…

#1 Interglobe Aviation Ltd (IndiGo)

Interglobe Aviation Ltd (IndiGo) is India’s largest passenger airline operating as a low-cost carrier.

Serving 86 destinations including 24 international destinations, it provides passengers with a simple, unbundled service.

IndiGo is currently the 7th largest airline in the world measured by daily departures and the first Indian airline with a large fleet of 300+ aircrafts.

After consecutive losses for four years, IndiGo recorded an annual net profit of around ₹82 billion (bn) in FY24.

After five years, the company has been profitable in all the 4 quarters in a financial year. For the financial year 2024, it reported its highest ever total income of around ₹712 bn which is 27% higher than FY23.

Due to favourable macro-economic trends in the country such as the rise in per capita income and favourable demographics, new travel trends are emerging.

These are experiential travel, growth in spiritual tourism, and increasing demand for international travel. All of this has helped IndiGo turn around and drive its revenue to new heights.

A stride forward in this direction was the company's order for 500 A320 Neo family aircraft announced in June 2023. This was not just IndiGo’s largest order, but also the largest-ever single aircraft purchase by any airline with Airbus.

During FY24, it launched 7 new international destinations across Asia and Africa and also expanded direct routes by 25%.

On the international network side, IndiGo’s codeshare partnerships continue to grow. It saw an impressive growth of around 45% in the number of passengers flying through codeshares in FY24 compared to last year.

The company also signed a few codeshare agreements with British Airways, Qantas, and Malaysian Airlines.

As far as future plans are concerned, IndiGo will be launching a tailor-made business product on the busiest routes and business routes of the country before the end of this year.

There is an ever-growing need for premium travel in India and launching this new product will create a desired option for many who are aiming to travel business. The expansion plan will be revealed in detail later by August this year.

The company’s current pending orderbook of a little short of 1,000 aircraft to be delivered up until 2035 provides long-term visibility. So safe to say that there’s nothing but blue skies ahead for IndiGo…

#2 Info Edge (India) Ltd

Info Edge is India’s premier online classified company with a portfolio of brands. It owns various brands in different fields like naukri.com (online recruitment), 99acres.com (online real estate), jeevansathi.com (online matrimonial) as well as shiksha.com (online education information services).

It also acts as an investor and has invested in many start-ups in the online space and is actively growing its investment portfolio.

Info Edge has recently caught the market’s eye with its impressive financial performance.

Info Edge reported a net profit of ₹603 million (m) in the fourth quarter of FY24, bouncing back from a loss of ₹2,728 m during the similar period a year ago.

The company earned ₹6,574 m in revenue from operations during the quarter ended March 2024, with an 8.7% year-on-year (YoY) growth.

In FY24, Info Edge earned a total profit of ₹5,750 m, a turnaround from the ₹1,070 m loss incurred in FY23.

The excellent execution in both 99acres and Jeevansathi helped reduce the operational losses in these verticals from ₹1,980 m in FY23 to ₹680 m in FY24, with ₹210 m cash generation in the fourth quarter.

Expanding beyond the core job portal into real estate, matrimony, and education reduced risk and opened new revenue streams.

For instance, 99acres’ revenue grew by 23.6%, and Jeevansathi and Shiksha saw a combined growth of over 25%. Focused efforts on user engagement, especially in platforms like Jeevansathi.com, boosted subscription income.

Improved website features and customised services attracted more viewers and advertisers.

Going forward, the future looks promising for Info Edge. The company is optimistic about the recovery in the recruitment sector and expects continued growth in the coming years.

#3 Swan Energy

Swan Energy was originally incorporated in 1909 as Swan Mills, a manufacturer and marketer of cotton and polyester textile products in India.

Over the years, it diversified into real estate and is developing a floating storage and regasification unit-based liquid natural gas (LNG) import terminal.

Swan Energy saw a remarkable growth in its consolidated revenue for the full financial year after back-to-back losses in the previous 4 years.

This dramatic turnaround is reflected in its share price performance, which shot up nearly three times in the last year.

The company’s revenue from operations surged nearly 252% YoY to ₹51 bn in FY24, compared to ₹14.5 bn in FY23.

In FY24, net profit stood at ₹5.9 billion, marking a significant turnaround from the net loss of ₹610.4 m in FY23.

The wind beneath Swan Energy's wings came from acquiring Veritas India, a chemicals, paper, polymer, and rubber distributor in FY23.

It acquired a 55% stake in Veritas for ₹1,720 m to use its distribution network to expand into the oil & gas space. Veritas' historical performance underscores why Swan Energy chose to invest in it. In the last 12 months, most of Swan Energy's revenue came from Veritas.

The company recently won the bid to acquire the bankrupt Reliance Naval for ₹20 bn, aiming to ride the government's spending spree in the defence sector.

The company has initiated the process of revamping the Reliance Naval & Engineering shipyard infrastructure facilities to make it operational as well as building a proficient leadership team.

Additionally, it is also aggressively working on the completion of the LNG terminal project.

#4 Tejas Networks (TNL)

This Tata group company designs and manufactures wireline and wireless networking products, with a focus on technology, innovation, and R&D.

The company’s carrier-class products are used by telecom service providers, utilities, governments, and defence networks in 75+ countries. The company is currently a part of Panatone Finvest (a subsidiary of Tata Sons).

Tejas Networks turned profitable in Q4 as it reported a profit of ₹1,470 m for the quarter against a loss of ₹115 m in the corresponding quarter last year. Revenue jumped multi-fold to ₹132.7 bn against almost ₹3 bn, an up-move of 168% YoY.

The company received ₹326.6 m as incentives for FY23 under the PLI (Production-Linked Incentive) scheme for telecom and networking products.

At the close of FY24, the company's order book stood at ₹82.2 bn.

The company has ramped up BSNL's 4G/5G RAN shipments and delivered a large volume of IP/MPLS routers for the backhaul network. The company was granted 22 patents in Q4. The total count now stands at 335.

With an order book over ₹82 bn, the company is well-positioned to capitalise on upcoming opportunities such as BSNL's 4G/5G rollout, Bharat Net phase 3, private telco broadband expansions, and utility network upgrades in India and around the globe.

Tejas Network's FY25 revenue is expected to be 4 times FY24 revenue due to the BSNL and Bharatnet order execution.

#5 IFCI

IFCI, previously known as Industrial Finance Corporation of India, is an Indian government-owned non-banking finance company, established to cater to the long-term finance needs of the industrial sector.

The stock has been in the limelight ever since the company posted a profit after consecutive years of losses.

The key driver for most equity market returns is earnings growth and this was also true for this PSU’s fortune reversal.

It made losses continuously in five years from FY19 to FY23 until it became profitable again in FY24. Its consolidated net profit stood at ₹2,410 m in FY24 from a loss of ₹1,200 m during FY23.

Revenue for FY24 rose by 33.3% to ₹19.9 bn from ₹14.9 bn for FY23.

An increase in non-performing assets (NPAs) forcedIFCIto shrink its credit extension business recently and expand into advisory services instead. Hence its appointment as a project management agency contributed significantly toward profitability achievement.

As a government advisory, IFCI has been appointed as the project management agency for various product-linked incentives (PLI) schemes.

The company is focusing more on the advisory services business, and it has become a mainstay of its business. It bagged 31 assignments in FY23 including business restructuring, debt syndication, and strategic investment analysis across industries.

According to reports, IFCI may also merge with its subsidiary Stock Holding Corporation of India (SHCIL).

Stock Holding is among India's largest depository participants, the largest premier custodian in terms of assets under custody, and the highest profit-generating entity under IFCI's fold.

According to its annual report for FY23, the company holds shares in LIC as well as the unlisted National Stock Exchange of India (NSE).

As and when NSE decides to list on the exchanges, IFCI could be an indirect beneficiary via its holding in stock holding which has shares of NSE.

Back in 2019, IFCI had already realised some ₹8.1 billion from the divestment of its 2.44% stake in NSE.

In Conclusion

Apart from the above, some more companies that turned profitable in FY24 include

To sum up, earning big wealth from stocks is all about identifying the next turnaround play like Suzlon.

However, a lot of turnaround stocks that are speculative in nature, fail to turn and disappoint investors in a big way. There's a much greater risk of permanent loss of capital in them.

Always remember Warren Buffett's two rules of investing. Never lose money and always remember rule number one.

The road to a potential multibagger shouldn't necessarily be an all or nothing game. If you think that's the case and if you think you may lose your entire capital, then label it that way and invest accordingly.

This way while you may still enjoy the upside, you wouldn't lose a lot of capital as well as your sleep if the speculation goes south.

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