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The quarterly business updates from banks ahead of earnings announcements, indicate that loan growth was strong in Q4FY22. According todata released from RBI, total advances grew 9.6% YoY to Rs 118.9 lakh crore in Q4FY22 with private banks contributing 50.4%, over half of total advances, while public sector banks lagged behind with a contribution of 44.7%. Brokerages likeICICI Securities, andEmkay Global attribute this to an increase in economic activity and healthy business growth in Q4FY22. 

Loan growth will remain steady going forward, and growth will be mostly driven by loans to SMEs and retail loans, according to ICICI Securities. This trend is pervasive across banks.HDFC Bank’s Q4FY22 loanadvances grew 21% YoY to Rs 13.7 lakh crore with retail loans growing 15% YoY at the end of Q4FY22. Similarly,Federal Bank’s grossadvances grew 9.5% YoY to Rs 1.5 lakh crore, and retail advances grew 10.4%, higher than the remaining segments.

Corporate credit growth has picked up pace and is contributing well to loan growth for banks. HDFC Bank’s corporate loan growth was higher than retail loan growth at 17.5% YoY. EvenIDFC First Bank’s corporateloans grew 6% YoY. With industrial growth picking up, this segment is likely to report better growth than FY21. This, according toICICI Securities, can lead to a 20% YoY growth in net interest income for banks in Q4FY22.

1. Macrotech Developers: ICICI Securities upgrades its rating to ‘Buy’ from ‘Hold’ on this realty company with a target price of Rs 1,348, indicating an upside of 17.9%. The company’s Indian business sales booking rose 37% YoY to Rs 3,460 crore against the brokerage's estimate of Rs 3,250 crore. “We believe that the sales were largely sustenance driven with no major launches during the quarter and the company has achieved its FY22 sales guidance of Rs 9,000 crore,” says analyst Adhidev Chattopadhyay. The company added new projects with a total saleable area of 8.8 million square feet that are slated to launch in FY23. 

Considering the strong launch pipeline and momentum in sustenance sales, the brokerage expects a sales booking of Rs 11,010 crore.  The company’s net debt reduced 20.6% QoQ to Rs 9,930 crore in Q3FY22 and further reduced by 6.2% QoQ to Rs 9,310 crore which the brokerage believes is driven by improved collections and may enable further debt reduction over FY 23-24.

2. Tata Steel: Axis Securities initiates coverage on this steel-maker with a ‘Buy’ rating and a target price of Rs 1,700, indicating an upside of 30%. The brokerage is bullish on Tata Steel as it expects steel prices to remain high in the coming quarters due to the Russia-Ukraine conflict. This bodes well for the company as it could drive strong cash flows in the upcoming quarters and allow it to continue deleveraging, while pursuing its growth capex. Analyst Aditya Welekar says “strong steel prices, disciplined capex outflow, and working capital management has put the company’s balance sheet on a solid footing”. 

The brokerage expects high international steel prices and China’s decarbonisation leading to lower steel exports, to create export opportunities for Indian steelmakers like Tata Steel. A 40% MoM jump in steel prices in Europe incentivises Indian steelmakers to export to the EU. Although higher coking coal prices would impact margins in H1FY23, the analyst expects the margin trajectory to be above the historical average due to strong steel prices, thereby driving profitability higher.

3. Oil And Natural Gas Corporation (ONGC): HDFC Securities gives this oil and gas explorer a ‘Buy’ rating with a target price of Rs 275 indicating an upside of 62.1%. ONGC “outperformed the Sensex by 74/42% over the last twelve months, as Brent crude price increased by 68%. We expect the outperformance to continue,” say analysts Harshad Katkar, Nilesh Ghuge, Akshay Mane, and Rutvi Chokshi. 

Domestic administered pricing mechanism gas price was revised upwards by 110% to $6.1 per metric million british thermal unit in H1FY23 and the brokerage expects it to rise further by 45%. The brokerage also expects the company to produce 20.8 million metric tonnes of oil and 22.3 billion cubic metres of gas in FY23. It also expects oil and gas production to grow at a CAGR of 3% and 1% respectively in FY23. The analysts add, “ONGC should also benefit from the increase in gas production from the Krishna Godavari basin, with an estimated production target of 3 billion cubic metre and 3.8 billion cubic metre in FY23 and FY24.” 

4. HDFC Bank: Prabhudas Lilladher maintains a ‘Buy’ call on this bank stock and raises its target price to Rs 2,000. This indicates an upside of 34%. The brokerage maintains its stance as HDFC will merge with HDFC Bank. As of December 2021, the total loan size of the merged entity would be Rs 18 lakh crore with the share of mortgages expected to increase from 11% to 33%. “Post the merger, the Bank would be the second-largest entity in terms of loan advance share,” say analysts Gaurav Jani and Palak Shah. HDFC was prohibited from taking CASA Deposits, however with the merger, CASA accretion would be possible resulting in lower funding cost that would improve spreads in the mortgage business.” 

The brokerage expects HDFC to benefit from lower funding cost of HDFC Bank and large distribution franchise, while the bank would gain from the former’s expertise in real estate and efficient loan processing.  The merger would also provide both entities to cross-sell opportunities to their respective customers.

5. Transportation Corporation of India: Motilal Oswal reiterates its ‘Buy’ call on this logistics company with a target price of Rs 880, indicating an upside of 27.5%. “The company has developed robust capabilities in multimodal logistics via its presence across major transportation modes,” say analysts Alok Deora and Dhirendra Patro. 

The company diversified its service offerings into road freight, integrated supply chain solutions, sea freight, etc. The brokerage expects these capabilities to enable consistent growth in volumes and earnings for the company. Easing of Covid-19 restrictions led to a strong pick-up in volumes from the start of Q2FY22 which are expected to continue in FY23. The company recorded margins of 13% each in Q2 and Q3FY22. 

The analysts say, “Road freight will benefit from the impact of reforms like GST and e-way bill, which will result in a shift in market share towards organised players, and improved road connectivity, reducing the turnaround time.” The brokerage expects the company to clock profit, revenue, and EBITDA CAGR of 36%, 18%, and 28%, respectively over FY21-24.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.

1. Marico: The stock of this FMCG major fell nearly 6% after it released its Q4FY22 business update on April 5. According to the company, its Q4 revenue grew in ‘low-single digits’ while there was a marginal rise in the sales volumes. What this means is that the revenue growth was primarily driven by the growth in sales realisations in the quarter gone by. This is understandable as the company hiked prices of products in its value-added hair oils segment, Saffola Edible Oils segment and the FMCG segment in the wake of the current cost inflationary pressures.

What disappointed the street in general was the YoY fall in sales volumes reported by the company’s flagship product segment Parachute Coconut Oil. This segment’s volumes grew a mere 1% YoY back in Q3FY22 as well. Another interesting trend here is softening copra prices, a key raw material for Marico, since February 2021. In fact, the company cut prices for Parachute Oil back in October 2021, December 2021 and January 2022 in order to pass the benefit of lower copra prices to customers. Volumes were still subdued in the past two quarters. A possible reason for this could be market share gains by Dabur in the coconut oil segment. While the overall volumes for the FMCG sector fell in January 2022 and February 2022 (according to Neilsen), Marico’s flagship segment particularly seems at a saturation point even though product prices remain benign.                                                                        

2. Titan: This jewellery and watchmaker’s stock fell over 3.3% on Thursday after it released its Q4FY22 business update. Titan’s jewellery segment revenue fell 4% YoY in Q4FY22 despite the quarter usually being a strong one for the jewellery industry. The disruption due to partial lockdowns in many states across India due to the Omicron wave in January 2022, which started in December 2021, hit revenues. In addition, the volatility in gold prices due to the ongoing Russia-Ukraine war also impacted jewellery sales.

The jewellery segment is a major revenue generator for the company as it contributes over 85% of total revenues. But network expansion continued to progress in Q4 in anticipation of an upbeat Q1FY23, which is expected to be a normal quarter after two years of intermittent lockdowns. Titan added 16 new jewellery stores in Q4FY22 compared to 14 stores in Q3FY22. This takes the total number of jewellery stores to 444.  Revenue from the jewellery segment rose 37% YoY in Q3FY22 to Rs 8,563 crore on the back of festive purchases in October and November.

Titan gets 9% of its total revenues from the watches and wearables segments. This segment clocked a 12% YoY rise in revenue in Q4FY22, despite a challenging external environment with sales increasing across offline channels. Smartwatches and headphones also saw brisk business on the back of new launches like ‘Titan Smart Pro’ in Q4FY22. Eyecare segment’s revenues grew 5% YoY in Q4 while other businesses’ (fragrances and fashion accessories) revenues rose 23% YoY, driven by a strong performance by the fashion accessories businesses.

3. Zee Entertainment Enterprises: The stock of this media and entertainment company slipped nearly 2% in trade on April 7, 2022 after its single largest investor, Invesco announced its intention to sell nearly 7.8% stake in the company, according to news reports. Invesco will continue to hold around 11% stake in the company even after this stake sale. This comes shortly after Invesco decided not to pursue its demand for an extraordinary general meeting to remove Managing Director Punit Goenka and two independent directors. In fact, Invesco believes that the corporate governance issues that persisted earlier will get resolved once the board gets reconstituted after the merger of Sony Pictures and Zee Entertainment.

Notably, Invesco had picked up a 11% stake in Zee Entertainment for Rs 4,224 crore back in May 2019 to rescue its promoters as they were in dire need of funds. The average price of the stock as on May 27, 2019 was Rs 357.45. Hence, it is quite intriguing that Invesco now is willing to offload its stake at a loss of roughly 20% now, even though it reiterated its faith in the Sony-Zee merger deal. Invesco is reducing its stake in Zee Entertainment in accordance with their overall ‘portfolio construction approach’ for Asian markets. With Invesco cutting its stake to 11%, the merger deal going through is almost assured.

4. Bandhan Bank: This bank’s Q4FY22 business update indicates that its fortunes are turning for the better after three painful quarters in FY22. Its loan book grew 16% YoY to Rs 1.01 lakh crore, while its deposits grew 24% YoY to Rs 96,331 crore and retail by 21% YoY to Rs 74,441 crore. This is due to a strong recovery in credit demand as lockdowns eased. With economic activity picking up, the prospects for improvement in asset quality look promising as the overall collection efficiency ratio (CER) was 96% in Q4FY22 compared to 93% in Q3FY22. Collection efficiency ratio indicates the total  loans recovered to total loans to be recovered during the same financial period. Emerging Entrepreneurs Business’ (EEB) collection efficiency was 98% in Q4FY22, close to its pre-covid level of 99%. “Improving trends in collection efficiency should continue to moderate credit cost and support earnings,” said analysts at Motilal Oswal.

Also, the bank's parent company-Bandhan Financial Holdings-led consortium is set to acquire IDFC Asset Management Company (AMC) Rs 4,500 crore. The acquisition brings the group closer to its goal of diversifying its product portfolio to expand its presence in the financial services sector. Through this acquisition, the group will be able to offer financial products such as mutual funds. For the bank though, this is an opportunity to boost its fee income through cross-selling of mutual fund products, as currently the share of non-interest income of the overall income for the bank is less than 25%. The holding company wants to scale up the business (post-acquisition) by strengthening the product portfolio. It plans to add more equity-based funds targeted toward retail investors and enhance the distribution footprint by tying up with banks and small finance banks.

5. Hindustan Aeronautics (HAL): This aerospace company’s stock rose 6.1% in five consecutive sessions, till Thursday, after it announced record high revenues. In FY22, revenue grew 6% YoY to Rs 24,000 crore. This was led by production and delivery of 44 new helicopters, 84 new engines, and the overhaul of 203 aircraft and 478 engines in FY22. Recently, the company bagged a contract to make aircrafts worth Rs 3,887 crore for the Indian Air Force and the Indian Army. Additional orders are expected for helicopters and the LCA (Light-Combat Aircraft) in the coming quarters.

With a robust order pipeline, the company's Chairman and Managing Director R Madhavan said revenues will grow 6-7% in FY23. The order inflow is expected to grow as the Centre pushes for more indigenisation of its defence needs to reduce dependence on imports. The Ministry of Defence has fixed timelines for indigenisation, after which certain products will be procured domestically. The share of domestic procurement in the total defence capital outlay is estimated to rise from less than 60% in FY20 to 68% in FY23. HAL’s order at the end of Q3FY22 stands at Rs 79,230 and the order pipeline for the next two years looks strong at Rs 50,000 crore. A strong order book and healthy business outlook bodes well for HAL.

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

Post-pandemic, there are still grey clouds that are hampering the Indian auto sector's growth. But if you look at commercial vehicle dispatches, there is a silver lining. Companies likeTata Motors,Mahindra & Mahindra,Eicher Motors,Ashok Leyland, andMaruti Suzuki have seen steady growth in CV wholesale volumes from December 2021 to March 2022.

The rise in wholesales of medium and heavy-duty trucks (medium & heavy commercial vehicles, M&HCV) has been the biggest contributor to the volume growth of commercial vehicles.Ashok Leyland’s M&HCV volumes jumped 38.6% YoY to 12,161 units, whileTata Motors saw 33% YoY growth to 14,499 units for March 2022. This is because of a pick-up in construction and mining activities leading to an increase in demand for trucks.  

Eicher Motors' heavy-duty vehicles’ wholesales has also risen 41% YoY to 2,006 units in March 2022. According to a report fromDolat Capital, the demand for medium and heavy-duty trucks will continue to stay strong because of high fleet utilisation and freight availability, as construction and industrial activities will be on an uptrend in FY23.

Demand for light commercial vehicles (LCV) has increased as chip supplies improved.Mahindra & Mahindra’s LCV wholesales jumped 132% YoY to 3,806 units in March 2022. But heavy-duty truck wholesales has grown slowly. The surge in e-commerce sales rubbed off onMaruti Suzuki’s LCV wholesales - it gained 15% YoY to 3,797 units in March 2022. 

According toEmkay Global, the volume momentum for CVs will continue as chip supplies for LCVs and tippers improve.Nirmal Bang expects demand drivers to remain intact in coming months. However, it’ll be interesting to see how long demand sustains. A recentreport suggests that even though the Centre is going full throttle to meet its capital expenditure targets, it will most likely fall short of meeting its revised capital expenditure target of Rs 6 lakh crore for FY22. If this continues into FY23 as well, then the party for commercial vehicle makers might end early.

1. Tata Consumer Products: ICICI Securities maintains a ‘Buy’ call on this packaged foods company with a target price of Rs 925. This indicates an upside of 17.4%. The company in a conference call said that it is in the process of creating a simplified corporate structure for its consumer businesses. “Post acquiring 100% stake in the international tea business and Tata Coffee, Tata Consumer Products has created a simplified structure to sell commodity/ low-growth/ low-profit businesses,” say analysts Manoj Menon, Aniruddha Joshi, and Karan Bhuwania. 

The brokerage expects some revenue synergies, especially in the coffee extraction business. The analysts believe there is further scope to reduce the complexity of the company’s structure and are positive on the stock hoping for further restructuring of the corporate structure in FY23.

2. Emami: Motilal Oswal maintains a ‘Buy’ rating on this FMCG company, but cut its target price to Rs 540 from Rs 650. This indicates an upside of 19.3%. The brokerage reduced its target price as FY22 sales of Rs 3,200 crore were lesser than its domestic peers like Marico, Britannia, and Dabur. However, its revenues grew at a CAGR of 9.3% over FY20-22, compared to 3.7% in the preceding 5 years.

The brokerage is bullish on the company’s new acquisition of the Dermicool brand from Reckitt Benckiser India. It expects the acquisition to make the company a market leader in the category. “The acquisition of Dermicool, the third-largest player in the ‘Prickly Heat and Cool Talc’ category, gives Emami market leadership in this category,” say analysts Krishnan Sambamoorthy, Dhairya Dhruv, and Kaiwan Jal Olia. The acquisition will give the company a combined market share of 45%, making it the largest player in the category. The company’s Navratna Cool Talc is the second-largest brand in the market. Through this acquisition, the company expects its geographical reach to expand as both businesses have common distribution channels.

3. Aptus Value Housing Finance India: Axis Securities has initiated coverage on this housing finance company with a ‘Buy’ rating and a target price of Rs 400. This indicates an upside of 14.4%. The brokerage believes the company is well placed to benefit from the rapidly growing affordable housing finance segment, with its deep rural penetration in South India and improving asset quality trends. Although the company operates in a ‘high-risk’ self-employed segment, where repayments are not regular during times of disruptions, it managed to maintain robust asset quality. 

The company has maintained its asset quality due to its focus on risk management. “Over the years, Aptus has successfully developed expertise in serving self-employed and new-to-credit customers alongside maintaining robust asset quality,” says analyst Dnyanada Vaidya. Deep penetration and a strong customer connection have given the company pricing power that enables it to generate superior RoA (Return on Assets). The company is already operating at its pre-covid levels, and with improving traction in collections the brokerage expects the loan book to report healthy growth of 27% CAGR over FY22-24.

4. Balaji Amines: Edelweiss maintains a ‘Buy’ call on this specialty chemicals maker and has increased its target price to Rs 4,150, indicating an upside of 29.7%. Analysts from Edelweiss visited the plant in Solapur to meet the management to discuss the company’s business operations, pricing trends, and capital expenditure plans. The company’s management said they are hiking prices, to offset sharp increases in raw material costs, which continued to rise in 4QFY22. The company plans to commercialise captive coal-based power plants to reduce reliance on purchasing high-cost electricity. The management expects healthy top line growth, driven by the ramp-up of ethyl amines,  dimethyl carbonate, and dimethylformamide plants.

The management took a cautious approach in announcing capex and prioritising capital deployment in import substitution projects. The analyst Anshul Verdia says, “Our estimate suggests over Rs 600 crore of capital expenditure in the next two to three years.” After the recent plant visit, the brokerage remains confident on the company’s prospects on the back of execution quality and the company’s product mix.

5. PVR: Prabhudas Lilladhar has given a ‘Buy’ rating to this multiplex chain with a target price of Rs 2,224, indicating an upside of 16.4%. “The PVR and Inox merger will create a multiplex behemoth with a network of 1,500+ screens across India,” say analysts  Jinesh Joshi and Shweta Shekhawat. The company plans to add an additional 200 screens each year. The merger would not require Competition Commission of India’s approval as revenues of the combined entity will be below the threshold of Rs 1,000 crore for scrutiny by the competition watchdog. The analysts add that the merger will give the company an ‘invincible’ size advantage. They expect the merger to result in material revenue and cost synergies by improving bargaining power with film distributors, real estate developers, advertising networks, and ticket aggregators. For the merged entity, the analysts expect profit, revenue and EBITDA of Rs 660 crore, Rs 7,260 crore and Rs 1,460 crore in FY24, respectively. 

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.