FSN E-Commerce Ventures (Nykaa): This online fashion and beauty products company’s stock rose 3% on Monday even after its Q4FY22 net profit fell 96.5% YoY to Rs 8.6 crore. According to Trendlyne’s Forecaster, it missed profit estimates by 78% in Q4FY22. The street’s consensus is still positive on this stock with it having 12 ‘Buy’ ratings, one ‘Sell’ and three ‘Hold’ ratings.
Nykaa reported negative operating cash flows (Rs 354 crore) for FY22. This could be because of an increase in inventory as the company expanded its warehouses on a regional level. As a result, cash is tied up in inventory. The company is expanding its warehouse coverage to reduce the delivery time of products, which improved serviceability of orders by 98% in FY22. Almost 95% of orders were delivered in five days. This helped revenue rise 31.4% YoY to Rs 973.3 crore and a 71% rise in the GMV or gross merchandise value to Rs 6,933 crore.
ICICI Securities remains positive on the stock as it expects Nykaa’s investments to build a sustainable growing business. However, the management remains cautious and highlighted inflation, reduction in discretionary spending, and Covid uncertainty to be major challenges in FY23. CEO Falguni Nayar is targeting growth in the fashion space, which is expected to grow to $125 billion by 2025, even though it’s a crowded industry.
Coal India: This coal miner’s stock outperformed the Nifty 500 over the past month. Although the stock fell by nearly 10% in the second week of May, it rose again ahead of Q4FY22 results. The company’s Q4FY22 net profit rose 46.3% YoY to Rs 6,715 crore, while revenues increased 22.6% to Rs 30,046.2 crore. Its raw coal production also increased 2.8% YoY to 209 million tonnes.
The uptrend of the stock began after the company announced its divestment of a 25% stake from its unlisted arm Bharat Coking Coal (BCCL). It also plans to get BCCL listed after getting the necessary approvals from the Ministry of Coal.
While BCCL’s performance isn’t something to write home about as its FY21 production missed its target, the divestment plan enthused investors sending Coal India’s stock higher. BCCL posted a loss of Rs 1,577.6 crore in FY21 on a turnover of Rs 6,149.8 crore (up 31.4% YoY).
For now, Coal India’s growth prospects look good and its recent production numbers look decent. The company’s coal production in May 2022 rose 30% YoY to 54.7 million tonnes and coal offtake increased 11.3% to 61.2 million tonnes.
United Spirits: This alcohol company’s stock rose 6% since Monday after announcing its Q4FY22 results, despite its net profit falling 12.9% YoY to Rs 181.7 crore. United Spirits shows up on a screener for companies that declared their results in the past week with a declining net profit YoY and QoQ. So why did the stock rise despite posting a bad show in Q4FY22?
The company announced that it will sell 32 ‘popular’ brands or entry-level brands to Inbrew Beverages (Inbrew) for Rs 828.5 crore. The sale of these brands was on the anvil for a while, and now that it is finally done, the company plans to use the funds received from this slump sale to wipe out its accumulated losses. The Diageo-owned company and Inbrew have entered into a five-year franchise arrangement for 11 other brands. According to the agreement, the legal titles of the franchise brands will remain with United Spirits and it will receive royalties over the franchise period. The company also granted Inbrew a right to convert the fixed-term franchise arrangement into one with perpetual rights with a call option to acquire the brands at Rs 1,331 crore. This transaction is expected to be completed by September 30.
Sun TV Network: This broadcaster’s stock rose 4.1% since it announced its Q4FY22 results last Friday evening. This is despite its net profit falling 15.8% YoY to Rs 410.2 crore as operating expenses rose 20.6% to Rs 142.7 crore. However, its profit beat Trendlyne’s Forecaster estimates by 8.2%. The stock’s up move after the results helped it outperform the Nifty 50 index over the past week. The reason profit fell is due to a high base, caused by a deferred tax credit of Rs 426.8 crore in Q4FY21. The growth in revenue was driven by a 7% YoY rise in advertisement revenue, as overall viewership improved. The company’s revenue from IPL (Indian Premier League) stood at Rs 28.9 crore in Q4FY22 and is set to recognize a large part of the revenue from IPL in Q1FY23. Sun TV also owns the Sunrisers Hyderabad team.
The company is increasingly investing in content creation in the South Indian market, as it expects to maintain its growth momentum in viewership in the coming years. As it is nearly debt-free and has a positive cash flow, this offers it the flexibility to intensify investments in the OTT (over-the-top) content as well. But as the company has not held an earnings conference call since November 8, 2021 (Q2FY22 earnings call), there is no management guidance regarding its OTT investments.
Go Fashion (India): This clothing and apparel retailer saw itspromoter’s pledged shares rise to 11.65% of the shares they held in the company at the end of Q4FY22. At the end of Q3FY22, there were no pledges on any promoter shares. For context, the promoter group entities–VKS Family Trust and PKS Family Trust–had pledged 16.56% stake in the company to Tata Capital Financial Services before the IPO for a loan facility of Rs 40 crore. These entities, along with other promoters, hold a 52.8% stake in the company post the IPO. A part of the IPO proceeds received by the promoters went towards paying off this debt.
Then came the bumper listing which saw the stock double from its issue price of Rs 690, but now it’s been trading around Rs 1,000 levels for a while. On April 1, PKS Family Trust pledged a 2.47% stake in the company. This takes the total pledged promoter holding to 16.32% of the shares held by the promoter and promoter group entities.
Trendlyne's analysts identify stocks that are seeing interesting price movement, analyst calls or new developments. These are not buy recommendations.
