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1. RBL Bank: This bank stock rose by 20% on Wednesday as it sold off its entire stake in Kilburn Engineering. The stake cut began on May 17 with RBL Bank holding a 19.6% stake in the company. It acquired shares in Kilburn on February 23, 2021, as a part of its debt restructuring plan which had a one-year lock-in period. With the lock-in period over, the bank went on a selling spree and held a 1.89% stake on Aug 19. The final announcement on Tuesday revealed that the bank has sold off the remaining stake and does not hold any equity shares in the company.  

On Monday, the bank announced the issuance of debt securities worth Rs 3,000 crore on a private placement basis, meaning the offering of securities is for a certain set of people (less than 50 people) as it is not a public offering. 

RBL Bank also shows up on the screener with changes in FII holdings in Q1FY23. RBL Bank’s FII holdings fell 2.1% QoQ. On Wednesday, College Retirement Equity Fund bought a 0.76% stake (45.8 lakh shares) in the bank worth Rs 49.9 crore. Reports suggest that the stock rose 5% on Thursday on short-term positive sentiment. The stock is also outperforming the Nifty 500 index by around 30% over the past month.

Emkay Global gives a ‘Buy’ call on the stock as it sees the bank’s capital to be at comfortable levels, according to reports. RBL Bank’s gross NPAs are falling since Q3FY22 and net interest income increased 6% YoY, indicating an improvement in the bank’s asset quality.

2. Lupin: This pharma company had an eventful week as it received USFDA approval for its abbreviated new drug application, acquired two brands for Rs 207 crore, and entered into a licensing agreement for a biosimilar drug. 

On Wednesday, Lupin received USFDA approval for its Formoterol Fumarate inhalation solution. This drug, which is used to treat patients with asthma, is the generic equivalent of Perforomist inhalation solution with an estimated annual sales of $282 million in the U.S. On Thursday, the drug maker entered into a licensing pact with Japan-based I'rom Group Co for a biosimilar product used in the treatment of osteoporosis in women. Under the terms of agreement, Lupin and the Japanese drug maker will conduct clinical trials, and market biosimilar Denosumab in Japan on an exclusive basis. Lupin will also receive multiple milestone payments. Currently, Denosumab has a market size of about $500 million in Japan. 

This comes at a time when the company is restructuring its businesses in the US and is also diversifying away from the US. This, alongside the prevalent price erosion caused Lupin to post weak Q1FY23 results. Both revenue and net profit missed Trendlyne’s Forecaster estimates by a big margin in Q1. As a result, it shows up in a screener that lists companies with broker downgrades in price or rating in the past month. However, mutual funds increased their holdings in the company in the past month and promoters also raised their shareholding in the past quarter. 

3. New Delhi Television (NDTV):The stock of this media company rose 10% in just two trading sessions till Thursday after the news of stake acquisition by Adani Group on Tuesday. Adani Enterprises’ media arm, namely AMG Media Networks will acquire 29.18% stake in NDTV through its subsidiary Vishwapradhan Commercial (VCPL). Adani Group bought VCPL for Rs 114 crore and this company simplyexercised its pre-existing warrants to take over the complete holdings of the promoter entity RRPR Holdings.

The key promoters in this company are Radhika Roy and Prannoy Roy who together hold a 32.2% stake in NDTV. Meanwhile, Foreign institutional investors hold 14.2% share in the company. Now, AMG Media announcedan open offer to acquire 26% stake from the other public shareholders of NDTV owing to regulatory requirements. Will this action cede controlling stake to the Adani Group? Here’s the catch. Adani Group companies have set the offer price as Rs 294 apiece, which is at a discount of 28% to Thursday’s closing price. With no money left on the table and rather a clear loss, shareholders will likely not opt for this open offer. This also putsinto question the ability of Adani Group to acquire additional stake in NDTV, let alone control this media entity. 

If we analyze the revenue growth of NDTV and market leaders likeZee Entertainment andSunTV for the past three years, it has been either flat or negative. Fall in advertising spends across sectors post the pandemic clearly impacted the growth trajectories of these companies. However, NDTV did see its profits jump nearly 8X between FY19 and FY22 backed by cost control measures. This does provide a compelling case for Adani Group to buy a material stake in this media house. 

4. Deepak Fertilisers & Petrochemicals Corp: This commodity chemical maker’s stock rose 5% and hit the upper circuit, touching an all-time high of Rs 977.1 on Tuesday. In fact, over the past month, the stock has risen 48.1%, mainly due to robust profit growth and a healthy business outlook. In Q1FY23, the company’s net profit rose nearly 3.4X YoY to Rs 433.9 crore and revenue grew 59.3% YoY, beating Trendlyne Forecaster’s revenue estimates by 5%. The company’s profitability has been improving on better operational efficiencies and diversified end-user segments. This has helped it show up on a screener which lists stocks that effectively use shareholder’s funds. Its return on equity has been improving over the past two years. The proportion of promoters’ shares that is pledged reduced to 27.7% from 90.6% QoQ.

The company manufactures industrial, agricultural and mining chemicals, which enables it to possess a diversified product portfolio. The management has a positive outlook on the mining, infrastructure, and power sectors, and expects demand from these sectors to fuel business growth in the coming quarters. It anticipates increased demand for mining chemicals such as technical ammonium nitrate (TAN) to drive profitability. To meet the expected rise in demand for mining chemicals, the management plans to add a capacity of 3.76 lakh million tonnes per annum by FY25. 

Going forward, the management expects the demand and prices for nitric acid to remain strong in the coming quarters aided by diminishing availability of the product in China. It also expects to benefit from the China plus one policy as the shift in global supply chains towards India will continue to increase demand from its downstream customers.

5. Kalyan Jewellers India: This jewellery company’s stock rose 15.1% over the past week on healthy earnings and a positive business outlook. It is expected to benefit from the surge in demand this festive season due to a growing shift in preference for organised retail in jewellery, according to IDBI Capital. In Q1FY23, the company was back in black on a YoY basis and revenues surged more than 2X YoY. It turned profitable on the back of robust growth in footfalls, store expansion in the non-South Indian market and increased studded jewellery sales. This helped the company beat Trendlyne Forecaster’s consensus profit estimates by 3.7%. The company shows up on a screener which lists stocks in the PE buy zone with a reasonable durability score and a rising momentum score.

Going forward, the management is focused on penetrating newer markets by increasing the number of stores outside of South India, its core market. They see considerable headroom to grow in the non-south regions where studded jewellery is preferred by customers. This bodes well for the company as studded jewellery has higher margins than gold jewellery.  Revenues from the non-South Indian regions grew 145% YoY and revenue contribution increased to 35% in Q1. In addition, the management expects organised retail to have a 40% share in the entire jewellery market by 2025. To increase its market share and accelerate expansion, the company has adopted a franchise model. It plans to add 12-15 new showrooms in India annually over the coming years and will be adding 18 new stores in FY23.

Trendlyne's analysts identify stocks that are seeing interesting price movement, analyst calls, or new developments. These are not buy recommendations.

The markets became more volatile this week. Despite this, inflows from foreign institutional investors continue to rise - in the last week, foreign investors bought over Rs 5,700.5 crore worth of Indian shares. 

Consumer confidence is also improving, and Indian households are reporting an increase in spending. 'Outdoor businesses' are in particular, benefiting from this - after too many pandemic months sitting indoors and looking out of the window, Indians want to be outside. Traffic jams are back, shopping malls are packed, and its hard to get a hotel room anywhere.

In this week’s Analyticks,

• Outdoor sectors recover as restrictions disappear in Q1FY23 
• Screener: Stocks outperforming their sector in Q1 growth, with high Piotroski score

Outdoor sectors are making a comeback

The Covid-19 pandemic in India hit some sectors harder than others. Some industries like pharma and healthcare services caught investor interest and emerged as stars, due to increased demand for their products and services. But outdoor industries like transport and hotels were impacted by lockdowns and movement restrictions, and the share prices of these companies reacted accordingly.

With the pandemic now in the rearview mirror, outdoor sectors like retailing, transportation, diversified consumer services, and hotels, restaurants, and tourism are seeing a comeback. 

After the Q1FY23 results, outdoor sectors are outperforming the benchmark Nifty 50 index in the past month. This is because for the first time in two years, companies in these sectors had a fiscal quarter with no lockdown disruptions. This helped firms post strong YoY revenue and net profit growth. Revenues of these industries in focus at least doubled YoY in Q1FY23. 

Hotels and airlines and leisure facilities’ average revenue, in particular, multiplied more than 3X as Covid restrictions were fully lifted. The leisure facilities industry saw the highest average revenue jump (283.6%) YoY in Q1FY23.

Leisure facilities industry outperforms Nifty 50 by over 46% in the past month

The overall consumer services sector outperformed the Nifty50 by 4% in the past month. This was helped by the outdoor leisure facilities industry, where share prices rose a staggering 55% on average in the past month (as of August 24). In fact this is the best performing industry in terms of % price change over this period. The companies here include waterpark amusement park chains like Wonderla Holidays andImagicaaworld Entertainment.

As life returned to normal with no disruptions, people began ‘revenge travel’, and many of these companies benefited from it. Their revenues grew exponentially YoY and losses turned into profits in Q1FY23. 

Another factor that impressed investors was that these two amusement parks saw footfalls and revenue surpassing the pre-Covid level in Q1FY23.

Metro Brands and Campus Activewear jump, outperforming the footwear industry

Another industry affected by lockdowns was footwear. But as the pandemic waned, two big companies got listed on the bourses and are currently among the top four (in market capitalization) in the industry. While the Jhunjhunwala-backed Metro Brands was listed in December 2021, Campus Activewear was listed in April 2022. 

Notably, both these companies’ stocks have outperformed their older peers Bata India and Relaxo Footwear by a huge margin in the past month. Store expansion and e-commerce sales growth remain key drivers for footwear companies as they focus on an omnichannel strategy. Metro Brands also posted its best quarter ever revenue-wise in Q1FY23 with a net addition of 20 new stores. Recently listed Campus Activewear’s volume rose over 2.5 times YoY in Q1FY23 to 5.6 million pairs – its highest ever volume in Q1.

Hotel companies back in black in Q1FY23 

Among the industries in focus, hotels and airlines are the best performers in YoY revenue growth in Q1FY23. The top four listed hotel companies - Indian Hotels Company, EIH, Chalet Hotels, and Lemon Tree Hotels posted profits in Q1FY23, against losses in the same quarter the previous year.

EIH’s stock rose around 18% in the past month and outperformed its peers by a huge margin. Its revenue rose over three times YoY in Q1FY23 and crossed pre-Covid levels. According to the management, revenue per available room or RevPAR and occupancy in domestic hotels comfortably surpassed pre-covid levels in Q1FY23.

In the airline industry, InterGlobe Aviation (Indigo) managed to post strong revenue growth of 327.5% in Q1FY23. Jet Airways’ revenue fell 83% YoY in Q1 and SpiceJet is yet to announce the last two quarters’ results, citing a ransomware attack. Spicejet’s Q4FY22 revenue is scheduled to be announced on August 31. 

Top performer Indigo’s load factor rose 310 bps to 79.6%, but it is still below pre-Covid levels of 89%. This is due to increased ticket prices on the back of soaring fuel costs. According to its management, Indigo’s international flight operations in Q1FY23 reached pre-Covid levels and it expects to grow in the coming months with the easing of international travel protocols. 

Restaurant and department store companies beat Forecaster revenue estimates  

The top three listed companies in the restaurants and the department stores industry beat Trendlyne Forecaster’s revenue estimates in Q1FY23. 

In the restaurant industry, Westlife Development’s Q1 revenue rose over 2X and beat Trendlyne Forecaster’s estimates by over 12%. This surprise was due to same-store sales growth or SSSG of 97% YoY in Q1FY23, with the dine-in channel (58% of revenue) rising 14% from pre-Covid levels. All restaurants continued their growth momentum in terms of store additions, with Jubilant Foodworks at the forefront adding 230 new stores.

Trent leads the pack in department stores as it beat Forecaster consensus revenue estimates by over 20%. Its revenue jumped over 3.5 times YoY in Q1 on the back of robust growth in its Westside and Zudio brands, with Westside clocking a like-for-like or LFL growth of 24% in Q1FY23 vs Q1FY20. As a result, Trent outperformed its top peers and rose around 15% in the past month. 

With the pandemic at bay, the outdoor sector could continue its growth momentum in Q2FY23 as several industries have surpassed pre-covid levels both in terms of revenue and volumes. However, another Covid wave or a weakening economy remain  key risks. 

Screener: Stocks with a high Piotroski score, which are outperforming their sector in net profit and revenue growth 

Post the June quarter results, we take a look at stocks that delivered a strong performance in the quarter. This screenershows stocks in the Nifty 500 that outperformed their sectors in net profit and revenue growth in Q1FY23 with a high Piotroski score. 

These 12 companies are not dominated by any one sector and include stocks from chemicals & petrochemicals, food, beverages & tobacco, and realty. Stocks in the screener include Hindustan Zinc, GAIL (India), United Spirits, and United Breweries.

Hindustan Zinc has the highest Piotroski score (9) among the 12 screener stocks, indicating high financial strength. It also beat the metals & mining sector in YoY net profit and revenue growth in Q1FY23. Its net profit grew 55.9% YoY compared to an average 21.1% fall in net profit for the sector.

Bharat Dynamics also has the highest Piotroski score. It beat the general industrials sector in YoY net profit growth by 147.5 percentage points, and revenue by almost 400 percentage points in Q1FY23.

GAIL (India) has a Piotroski score of 8. The company beat the utilities sector in YoY net profit growth by 29 percentage points and revenue growth by 60.5 percentage points in Q1FY23.

You can find more expert screeners here.