Three Stocks Turning Around as Market Mood Improves
Equity markets have shown remarkable resilience, with sentiment staging a sharp turnaround in recent days. Factors such as a relatively benign Union Budget for 2026-27, improving global risk appetite, and two back-to-back trade deals with major economies have reignited animal spirits. This shift coincides with an intriguing development from the current earnings season: a set of businesses where financial turnarounds have emerged just as market optimism returns.
This synchronization is crucial. When profits recover after a stock has already been revalued, the potential gains are limited. However, when operational improvements align with a sentiment shift, markets often respond disproportionately. This analysis focuses on three companies—JSW Cement, Pine Labs, and Delhivery—where profitability returned in the third quarter of fiscal year 2026 through genuine operating leverage and cost discipline, rather than accounting maneuvers. We examine how their fundamentals and risks stack up against stock prices at this critical inflection point.
JSW Cement: Cost Leadership Bears Fruit
The stock of JSW Cement rallied over 9% on Thursday following the company's report of a smart turnaround into profits during the December quarter. Despite incurring exceptional expenses of ₹34 crore due to new labour codes, the company shifted from an ₹80 crore loss in Q3FY25 to ₹131 crore in profits in Q3FY26. Recovering from a weak demand environment, particularly in its mainstay southern and eastern markets, JSW's intrinsic cost advantage is finally paying off.
With the lowest clinker factor in the industry at about 50%, JSW benefits from reduced fuel and energy consumption. Additionally, its high 40% share of ground granulated blast furnace slag (GGBS) in output has helped expand margins. The company is also focusing on premiumizing its product mix, increasing green power usage expected to triple to 63% by FY27, and optimizing logistics. These efforts are projected to boost Ebitda per tonne from ₹802 in Q3FY26 to over ₹1,000 by FY28.
Capacity expansion plans are ambitious, slated to grow from 22 million tonnes per annum (mtpa) to 34 mtpa by 2028 and 42 mtpa thereafter, facilitating growth and diversifying geographical risk beyond South India. However, this debt-funded expansion could undermine progress made on net-debt reduction post-IPO, with net debt-to-Ebitda at 2.9x in the December quarter. Risks include delays in regulatory approvals for expansion and pricing pressures amid intense competition, as evidenced by a sequential decline in realizations during Q3FY26. Free cash flows may also turn intermittently negative due to investing cash outflows. Nevertheless, with the stock trading above a critical support level of ₹120 per share, sustained profitability trends could drive further appreciation.
Pine Labs: Post-IPO Profitability Fails to Lift Sentiment
Fintech firm Pine Labs listed in early November 2025 at a nearly 10% premium to its IPO price. Since then, broader market pessimism and increased caution have caused the stock to fall below its IPO price. Even a turnaround into profitability during the December quarter, with ₹42 crore in profit compared to a ₹57 crore loss in the year-ago period, has not boosted investor sentiment. The stock corrected over 5% after the earnings announcement on January 28.
Pine Labs achieved 29% growth in gross transaction value to ₹4.5 trillion, driven by higher-margin software-led revenues. Lower depreciation and Esop costs supported margins, offsetting ₹10 crore in additional expenses from new labour codes. However, investors remain cautious as Q3 profits did not translate into cash flows, with high working capital leading to intermittently negative operating cash flows.
Competition is intense, with PhonePe preparing for its IPO and players like Razorpay, PayU, and Google Pay dominating the online acquiring, gateway, and buy now, pay later (BNPL) segments, potentially affecting Pine Labs' pricing power and margins. Regulatory uncertainties, such as those around BNPL lending and GST on gift card sales, add to risks. The growing share of international revenues also poses challenges due to lower take rates. Additionally, partner-concentration risk is a concern, as losing key bank or retail partnerships could significantly impact fortunes. The transition to an asset-light business model requires close monitoring of execution and top-line growth as the focus shifts from hardware-led to software-led revenues.
Delhivery: Volumes Drive Profitability
Investors in Delhivery have cheered business developments ahead of its recent earnings announcement, with the stock rallying almost 15% in less than two weeks in anticipation of a profitability turnaround. This comes after over three years of subdued sentiment. During the December quarter, integration expenses related to the E-Com Express acquisition added ₹35 crore to costs, but operating leverage and margins benefited from an impressive 43% year-on-year increase in parcel volumes.
A growing share of margin-accretive e-commerce supported this, with service Ebitda margin reaching a record high. Adjusted Ebitda margin stood at 5.2%, and management has guided for free cash-flow breakeven at a 6% margin. However, the margin trajectory depends on successful execution of the E-Com Express acquisition, especially amid year-on-year moderation in B2C per-shipment realizations due to intensifying competition. Ebit margins need close tracking as expansion adds to depreciation costs.
If acquisition synergies materialize, volumes and margins could improve through network densification, scale benefits, potential pricing power, and cross-selling into new growth adjacencies. This would be positive for a stock trading at nearly 200x P/E. Technical indicators could align with the fundamental turnaround if the stock sustains above ₹400 per share, potentially driving earnings upgrades.
Caveats and Key Considerations
When corporate results synchronize with sentiment rather than lagging, guarded optimism can turn into a durable re-rating. However, a headline profit or sequential bounce does not guarantee sustained improvement. A deep dive is essential, focusing on key questions: Are the earnings durable? Are revenue drivers repeatable? Is margin expansion sustainable? Does the balance sheet support the turnaround?
Risks always persist, but if the risk-reward appears promising, investments can yield multibagger returns. For more detailed analysis, readers are encouraged to consult financial professionals and conduct their own research before making investment decisions.
