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1. Hero MotoCorp:

This two-wheeler manufacturer rose by 6.9% in the past week and hit an all-time high of Rs 4,954.4 today. The company’s net profit improved by 16.1% YoY to Rs 935 crore and its revenue increased 12.9% YoY in Q4FY24  to Rs 9,794 crore. It beat Trendlyne Forecaster’s net profit estimates by 18.8%. The company recorded its highest-ever quarterly wholesales as it grew by 9.6% YoY to 13.9 lakh units. Growth has continued in April, when wholesales surged by 34.7% YoY.

CEO Niranjan Gupta says, “We expect double-digit revenue growth for the industry in FY25. With our upcoming product launches, we aim to outperform the industry and gain market share. We should  maintain EBITDA margins at 14-16% in the long term.”

Hero Motocorp’s Q4 EBITDA margin grew by 120 bps YoY to 14.3%. However, increased spending in the electric vehicles (EV) and premium motorcycle segments, and marketing expenditure has offset this. Margins are expected to stabilise with upgrades to current stores, premium product launches and a better product mix. The company plans to expand its network of EVs to 100 cities in FY25 and launch new products in the premium, EV and entry-level segments. 

The management has guided for a capex of Rs 1,000-1,500 crore for FY25. It also foresees export contribution to increase to 10% of overall revenue in the medium to long term. The company has received approval to form a subsidiary in Brazil, which will focus on premium products. 

Motilal Oswal maintains a ‘Buy’ call on Hero MotoCorp and expects it to deliver a volume CAGR of 9% over FY25-26, driven by new launches and a ramp-up in exports. The brokerage expects revenue and profit CAGR to be 13.5% and 17%, respectively over FY25-26. The company appears in a screener for stocks with broker prices or recommendation upgrades in the past month.

2. Westlife Foodworld: 

This restaurant chain has fallen by 2.5% in the last two days after announcing its Q4FY24 results. Westlife Foodworld’s net profit plunged 96.2% YoY to Rs 0.8 crore, down from Rs 20.1 crore in Q4FY23. Trendlyne’s Forecaster had estimated net profit at Rs 13.1 crore for the quarter. The sharp decline was due to the rapid addition of new stores amid a muted demand environment, higher marketing spends, finance costs, and depreciation & amortisation expenses.

During the quarter, Westlife’s revenue grew just 1.1% YoY. Its SSSG (same-store sales growth) contracted by 5% YoY. This was led by a decline in dine-in sales (-2% YoY) and bad publicity the company faced around its cheese. 

Earlier this year, allegations surfaced in Maharashtra that McDonald’s used substitutes in place of real cheese in its burgers and nuggets. But it was later confirmed that the company used 100% real cheese. Saurabh Kalra, the Managing Director, said,  “Around 70–80 restaurants were impacted by these challenges, particularly in the western region.” Rumours are hard to kill – the management says that these concerns still persist, even after Westlife’s efforts to address the cheese controversy through targeted campaigns. 

The restaurant major also witnessed pressures as customers reduced their spending on dining out and delivery services, despite attractive discounts. In fact, the QSR industry has been witnessing demand pressures in the past few quarters. According to Prabhudas Lilladher, “QSR demand remains subdued due to inflationary pressures, lower eat-out frequency, and increasing competition from unorganized players/cloud kitchens”. 

Meanwhile, the McDonald’s operator has continued to expand its store network and added 17 restaurants in Q4 FY24. The company aims to add 45-50 stores in FY25 with a focus on South India, smaller towns, and drive-thrus. The company has guided capex of Rs 200-250 crore for FY25.

Post the company’s result announcement, Dolat Capital maintains its ‘Sell’ rating with a target price of Rs 764. The brokerage believes the company has an attractive menu offering and strong brand extensions like Mc Café, but it will have to battle a high SSSG base and subdued demand.

3. Marico:

This FMCG company surged 10% on Tuesday after it reported quarterly and annual results. Marico's revenue for Q4FY24 came in line with Trendlyne’s Forecaster estimates at Rs 2,293 crore, up 1.7% on a YoY basis. Meanwhile, its net profit increased 5.3% YoY to Rs 318 crore, missing estimates by 10.5%. This was due to lukewarm rural demand in the previous quarter. Parachute coconut oil, contributing 34% to its total revenue, witnessed volume and value growth of 2% each in Q4. 

Consumer intelligence firm NielsenIQ has reported a 6.6% growth in the industry's value driven by a 6.5% increase in volumes in the March quarter. Roosevelt D’Souza, head of customer success India at NielsenIQ, stated, “The FMCG industry's growth in rural areas surpassed that of urban growth for the first time in the past five quarters.”

Marico’s Managing Director & CEO Saugata Gupta, said, “We have lost market share in the bottom of the pyramid segment in value-added hair oils, where there has been significant competitive intensity.” To counter this, the company implemented project SETU at the start of the fiscal year to improve direct reach to 1.5 million outlets by FY27, from 1 million outlets currently. The expected outlay for the project is Rs 80-100 crore spread over the next three years, which will be funded through internal accruals.

Gupta expects project SETU to enhance direct reach and weighted distribution, as well as help in market share gains across categories in urban and rural markets. Gupta anticipates Marico’s food business to grow at a compound annual growth rate (CAGR) of more than 20%, reaching 2X the current scale by 2027.

Sharekhan maintains a ‘Buy’ rating on Marico as it expects a revenue CAGR of 12.2% in FY25-26, led by growth in the core portfolio and 20%-plus growth in new business segments. They see the portfolio diversification into premium foods and personal care products improving the company’s revenue trajectory in the long term. With a target price of Rs 620, this FMCG player has a potential upside of 5.6%.

4. Kotak Mahindra Bank:

This bank stock fell by 8.6% over the past month after the Reserve Bank of India (RBI) ordered the bank to stop onboarding new customers through its online and mobile banking channels, and issuing new credit cards on April 25. This follows the RBI's observation of deficiencies in the bank's income tax examination. The company’s joint Managing Director Krishnan Venkat Subramanian resigned a few days after the news, on April 30 to ‘pursue other opportunities’. 

The bank’s management says that the ban will affect the company’s pace of customer additions, and estimates a Rs 300-450 crore decrease in its profit before tax in FY25. Speaking on the RBI directive on the bank’s earnings call, Shanti Ekambaram, Deputy Managing Director of the bank said, “Given the recent RBI directive, the focus on cards will be on servicing and nurturing our existing customers through customer engagement and loyalty programs. Our focus on personal loans and business loans will continue as is.”

The stock, however, recovered to rise by 5% on Monday, after its net profit grew by 18.2% YoY to Rs 4,133.3 crore in Q4FY24. Revenue also increased by 25.3% YoY to Rs 12,307.1 crore, helped by the treasury, corporate and retail banking segments. The growth in net profit and revenue helped it to beat Trendlyne’s Forecaster estimates by 22.8% and 32.8%, respectively. The bank's asset quality also improved as its gross and net NPAs contracted by 39 bps YoY and 3 bps YoY to 1.4% and 0.3%. It appears in ascreener of stocks with increasing revenue for the past eight quarters.

The company’s advances grew by 17.6% YoY to Rs 3.8 lakh crore, with traction across all segments. Its deposits growth (23.6% YoY) outpaced advances growth (17.6% YoY) causing its credit-deposit (CD) ratio to fall by 400 bps YoY to 84%. This will help in improving the liquidity of the bank. 

Post results, ICICI Direct has downgraded the bank to a ‘Hold’ rating with a lower target price of Rs 1,800 per share. This indicates a potential upside of 9.6%. The brokerage believes that while the regulatory ban is expected to impact growth, the company’s fundamentals remain strong with the ability to drive healthy business growth. It expects the bank’s net interest income (NII) to grow at a CAGR of 13% over FY24-26.

5. Mangalore Refinery And Petrochemicals (MRPL):

This Refineries & Petroleum-products company fell by 17.1% over the past week after it announced its results on 3rd May. The firm beat Trendlyne Forecaster estimates for Q4FY24 for revenue by 13.5% and the net profit estimate by 83.6%. 

For Q4FY24 the company’s net profit fell by 40.5% YoY to Rs 1138.5 crore on the back of a rise in raw material costs by 7.8%, while its revenue fell by 0.5% YoY. The stock shows up in a screener for companies having a PE higher than the industry PE.

The firm’s Gross Refinery Margin (GRM) has contracted to $11.35 per bbl  in Q4FY24, compared to $15.12 per bb in Q3. The GRM decline was due to the rise in crude oil prices by an average of 17% QoQ in Q4FY24. When compared to its peers, MRPL’s GRM was still higher than most OMCs this quarter, like Indian Oil Corp.(IOCL) at $8.4 per bb and Hindustan Petroleum (HPCL) at $6.9 per bb. 

The company has processed three new crudes during the year, including Siberian Light from Russia, KG-D6 from Reliance's KG-D6 block, and KG-D98 from ONGC's East Coast block. The company’s management notes that their Russian crude usage has been at around 30-40%, which has been similar for the oil industry as a whole.

The company’s management has guided an increase in their number of retail outlets from the present 100 in FY24 to 1000 by FY27. Vivek Tongaonkar, Director Finance at MRPL said “We are excited about our strategic direction for the future. Significant planning is underway for new projects aimed at enhancing our refinery's GRMs by enhancing the PET-CHEM intensity from the current 10% to 12.5%. We anticipate an investment of approximately Rs 8,000 crore over the next five years, primarily funded through internal accruals.“

Motilal Oswal has maintained a "sell" rating with a price target of Rs 175. The brokerage said: “ While MRPL delivered a solid beat vs our estimates, we believe its earnings are set to decline from Q!FY25 amid weaker GRM QoQ. We are estimating a GRM of $8/bbl in FY25/26, leading to an RoE of 18.2%/15.4%. We value the stock at 6.5x FY26E EBITDA of Rs 61 billion, to arrive at our TP of Rs 175.”

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

The US dollar is showing a lot of muscle in 2024.

Every major currency in the world (including the Indian rupee) has depreciated versus the US dollar this year. Emerging markets are the hardest hit, but developed regions like Japan and Europe are also feeling the dollar's heat.

On April 29, the Japanese yen fell below 160 yen to the dollar for the first time since 1990. The main reason for the yen hitting multi-decade lows is the difference in interest rates between the US (5.5%) and Japan (0%). While Japan is among the worst performers, the effects are also visible elsewhere.

High US interest rates are typically not good news for currency values around the world. And right now, the US rate of 5.5% is at its highest since the past two decades, to curb inflation.

The high rate means that American investments such as government bonds are offering better risk-adjusted returns than most of the world. So investors are doing the logical thing: selling their country’s currency and buying US dollars, to invest in higher return US securities. This rising demand for the USD is strengthening the dollar. 

It's no surprise then, that whatever the US Federal Reserve says about possible interest rate cuts is being tracked around the world. Fed Chairman Jerome Powell is probably the most closely watched person globally right now (the media even attempted detailed personal profiles of him - rare for a bureaucrat - but eventually concluded with a compliment that might also be an insult: that he is "likable without being very interesting").

The appreciation of the US dollar caused the Indian rupee to hit its record low of 83.48 against the dollar on March 22. In an unusual move, South Korea warned against depreciating the won, and Indonesia’s Central bank entered the forex market to support the rupiah. 

But despite hitting a record low, the rupee is among the best-performing currencies in 2024. 

How has this happened? And is the dollar rally set to continue?

In this week’s Analyticks,

• The Dollar Crush: How long will the world have to put up with a rising dollar?
• Screener: Exporters outperforming their industries in the past month, with a high number of 'Buy' ratings from analysts

Rising inflation delays Fed’s rate cut plans, strengthens dollar

The recent fall in global currencies came after the US consumer price index (CPI inflation) rose higher than expected in March (up 3.5% YoY). With US inflation hanging around like the guest that doesn't leave, interest rate cuts had to be delayed. 

US and India’s CPI inflation yet to reach their Central Banks’ targets

So on May 2, the US Fed left the benchmark interest rates unchanged at 5.5% for the sixth straight meeting, in line with Wall Street estimates. But all eyes were on Fed Chair Jerome Powell’s comments about future rate cuts. And Powell was decidedly hawkish, saying, ‘We do not expect to reduce the target range until we have greater confidence that inflation is moving sustainably toward 2%.’ 

US Fed holds interest rates at a 23-year high due to stubborn inflation

Higher interest rates are pulling investors back to the US, leading to a strong dollar. In reaction, major currencies have extended their losses against the dollar. 

“It has never been truer that the Fed is the world’s central bank”, Jesse Rogers, an economist at Moody’s Analytics, said. 

Indian rupee: The most resilient among major currencies

The Indian rupee stands out in the pack, as it stayed steady in 2023 and has been resilient against the dollar in 2024 compared to other currencies. 

Major currencies across the globe depreciate against the US dollar in 2024

According to CareEdge Ratings, high FPI inflows, India’s inclusion in the global bond index, a strong growth outlook and favourable current account deficit have supported the value of the Indian rupee. 

Another major factor is the RBI’s intervention in the forex market. RBI can stop the fall of our domestic currency by selling USD from its reserve and buying INR. This increases the supply of USD and reduces the supply of INR, thereby increasing the value of the rupee.

RBI is likely to have intervened in March to arrest the rupee's fall as it headed towards its all-time lows. Kishore Narne, director of commodities and currency at Motilal Oswal said, “The RBI generally tends to control the volatility, they won’t let it slip beyond 84.”

The inclusion of Indian government bonds in JPMorgan's emerging market debt index is also a bright spot for the rupee, as it is expected to bring in foreign funds. Bloomberg Index Services has also followed suit, announcing it will add Indian government bonds to its Emerging Market Local Currency Government Index from Jan 31, 2025. These inclusions are expected to bring in foreign inflows worth over $25 billion to India over the next year. This is keeping the rupee resilient. 

However a strong dollar has been more difficult to deal with for other countries. 

Indonesia raises interest rates, while Europe's Central Bank reconsiders cutting them

Indonesia’s central bank unexpectedly raised rates on April 24, to support the country’s depreciating currency. Other currencies that have fallen sharply this year include the Egyptian Pound, the Lebanese Pound and Nigerian Naira, where volatile political environments have worsened depreciation.

In Europe, policymakers at the European Central Bank have hinted that they could cut rates at their next meeting in June. But even as inflation has cooled in the EU, officials worry that lowering their interest rates before the US Fed would widen the rate difference between the EU and the United States, weakening the euro further.

Will the US dollar’s dominance continue? This depends on the rate cut path by the US Fed. If US inflation remains high, backed by a resilient US job market and strong economic growth, interest rates won’t go down any time soon. 

The whole world has to worry about US inflation. If the Fed doesn't cut, other Central Banks will think twice about cutting interest rates even with cooling inflation in their countries, as they want to avoid further currency depreciation. So consumers, including in India, are stuck with higher borrowing costs, and are paying more to buy an apartment or purchase a car on loan. The phrase ‘America sneezes and the world catches a cold’ continues to hold.

Economists and analysts will be closely watching the US inflation numbers for April, which will be released on May 14.  Fingers crossed.

Screener: Exporters outperforming their industries in the past month, with a high number of 'Buy' ratings from Forecaster 

Electrical stocks have the highest number of ‘Buy’ calls among exporters

Volatility in Indian markets is up – the Nifty VIX has risen by 52.3% over the past. Currencies have also grown volatile, which can impact those companies that get significant revenue from exports. But some exporters are more resilient than others.

This screener shows exporters outperforming their industries in the last month with a high number of 'Buy' ratings from Trendlyne's Forecaster. 

Major stocks that appear in the screener are Voltas, Deepak Nitrite, Polycab India, Mahindra & Mahindra, Havells India, Torrent Pharmaceuticals, Aarti Industries, and Alkem Laboratories. 

Polycab India rose by 11% over the past month with five analysts giving the stock a ‘Buy’ rating according to Trendlyne’s Forecaster. Motilal Oswal believes that a strong distribution network and higher capex, with a focus on backward integration, will drive growth for the electrical equipment manufacturer. It also expects the company’s exports to improve on the back of capacity expansion and new distribution channels. The brokerage sees the company benefiting from favourable industry trends, and predicts a revenue CAGR of 14.4% over FY24-26.

Torrent Pharmaceuticals’ stock price increased by 4.4% over the past month and has seven ‘Buy’ ratings from analysts according to Trendlyne’s Forecaster. Prabhudas Lilladher believes that the pharmaceuticals company’s strong presence in highly profitable branded business in the domestic, Brazil and ROW markets will help expand its margins on a YoY basis. It expects the company’s net profit to grow at a CAGR of 28% over FY24-26.

You can find more screeners here.

Tracking superstar investors’ portfolio changes provides investors with useful clues about market trends and potential investment strategies. Their stock and sector choices tell us where they are optimistic or cautious, helping other investors decide on their approaches.

Some superstars see their net worth fall after Q4FY24

Previously, we looked at the key superstar buys in Q4FY24. Now, let's analyse their sells. Most superstars went on a selling spree this quarter as markets grew volatile. The chart shows their biggest sells during this period.

Biggest sells by superstars in Q4FY24

RARE Enterprises adjusts holdings in key sectors

Rakesh Jhunjhunwala’s portfolio, currently managed by Rekha Jhunjhunwala and investment firm RARE Enterprises, reduced stakes in multiple companies in Q4FY24. The portfolio’s net worth fell 9.5% to Rs 46,822.89 crore after Q4FY24.

RARE Enterprises cuts stakes in banking and finance stocks

In the January-March quarter, the late big bull’s portfolio cut a 0.9% stake in capital markets company Geojit Financial Services. Its share price rose by 139.1% in the past year, underperforming its industry by 31.6 percentage points.  RARE now holds a 7.3% stake in the firm. RARE also reduced stakes in bank stocks — Canara Bank, Federal Bank, and Karur Vysya Bank by 0.6%, 0.4%, and 0.3% respectively. 

RARE Enterprises cut a 0.6% stake each in construction company NCC, edible oils maker Agro Tech Foods, and healthcare facilities firm Fortis Healthcare in Q4FY24, reducing its holding to  12.5%, 7.5%, and 4.1% respectively.  It also sold a 0.5% stake in internet software company Nazara Technologies, and 0.3% in cars & utility vehicles maker Tata Motors.

During Q4, Jhunjhunwala’s portfolio also trimmed its stake in Tata Communications by 0.3%. It now holds a 1.6% stake in the telecom services company. It cut a 0.2% stake in pharmaceuticals company Wockhardt, taking the holding to 1.9%. It also reduced its holding in other industrial goods firm Raghav Productivity Enhancers to 5.1% during the quarter. 

Ashish Kacholia cuts stakes in four small-cap companies to below 1%

Ashish Kacholia’s net worth rose by 2.4% to Rs 2,991 crore after Q4FY24. He reduced his stakes in Likhitha Infrastructure to below 1% from 1.8% in Q3FY24. The construction & engineering company’s share price rose by 20.4% in the past year underperforming its industry by 59.6 percentage points. 

In addition, Kacholia cut his stake in La Opala RG (houseware company) and Best Agrolife (agrochemicals company) to below 1% from previous stakes of 1.7% and 1.4% in Q3. La Opala RG and Best Agrolife fell by 14.8% and 46% over the past year. Kacholia also cut stake in packaged foods manufacturer ADF Foods to below 1%. 

Kacholia cuts stakes in four companies to below 1% 

The ace investor also sold 0.9% of his stake in Shankara Building Products, leaving him with a 1.1% holding in the iron and steel company. He reduced his stake in Garware Hi-Tech Films, a containers and packaging company, to 3.4%. He also sold a 0.4% stake in Repro India (publishing) and a 0.3% stake in Genesys International Corp (IT consulting and software), now holding 2.8% and 1.3%. 

Kacholia sold a 0.2% stake each in Universal Autofoundry (auto parts manufacturer), Ador Welding (industrial goods), Xpro India (containers and packaging company), and Safari Industries (apparel and accessories). He now holds 8.3%, 4.2%, 3.7%, and 1.9%, respectively, in them. He reduced his stakes in apparel and accessories company Vaibhav Global to 1.1%, specialty retail company Aditya Vision to 1.9%, and education company NIIT Learning Systems to 2.1%.

In H2FY24, Kacholia sold a 2.8% stake in Virtuoso Optoelectronics. He now holds 2.6% in the consumer durables firm.

Sunil Singhania’s Abakkus Fund goes on a selling spree in Q4

Sunil Singhania’s Abakkus Fund saw its net worth fall -5.3% to Rs 2,680.9 crore after Q4FY24. The fund reduced its stake in Dreamfolks Services to below 1% during the quarter, after holding a 1.5% stake in the travel support services company in Q3FY24. Its share price rose by 20.9% over the past year underperforming its industry by 49.4 percentage points. It also cut its stake in AGI Greenpac and CMS Info Systems to below 1%. It held 1.1% in the containers and packaging firm and 1% in the financial services company in Q3FY24. Their prices increased by 43.8% and 37.7% over the past year.

Singhania trims stakes three companies to below 1%

Singhania’s fund also trimmed its stake in Siyaram Silk Mills by 0.2%, now holding 1.6% of the textile company. It sold a 0.14% stake in Route Mobile and now holds 2.44%in the internet software and services company. 

Abakkus cut 0.1% each in Carysil (household products manufacturer), Mastek (IT consulting firm), and DCM Shriram Industries (sugar producer). It now holds 5.8%, 3.1%, and 2.9%, respectively. It also reduced its stake in Sarda Energy & Minerals and Ion Exchange (India). It now holds 2.1% in the iron and steel products manufacturer and 2% in the utilities company.

Vijay Kedia cuts stakes in four companies

Vijay Kedia’s net worth has risen 30.5% to Rs 1,622 crore. In Q4, he slashed his stake in Neuland Laboratories by 0.2% and now holds 1.1% in the pharma company. The company's share price rose by 262.9% in the past year outperforming its industry by 199.5 percentage points. He also sold a 0.13% stake in Elecon Engineering during Q4FY24. He now holds a 1.34% stake in the industrial machinery company. 

  Kedia sells stakes in Neuland Labs, Om Infra, Elecon Engineering

Kedia also cut his stake in Om Infra to 2.5% by selling a 0.1% stake in the construction and engineering company. He sold a 0.1% stake in Siyaram Silk Mills and now holds 1% in the textiles firm.

Dolly Khanna cuts stakes in two companies to below 1%

Dolly Khanna reduced her holdings in multiple companies in Q4FY24, including two where her stakes fell below 1%. Her net worth has increased by 10.7% to Rs 543.1 crore since the end of Q4FY24. During the quarter, she reduced her stakes in KCP (a cement & cement products manufacturer) and Simran Farms to below 1%, from the 1.1% and 1% held in Q3. This marks the fifth consecutive quarter where she has reduced her stake in the packaged foods company. Over the past year, KCP has risen by 56.6%, underperforming its industry by 24.3 percentage points. 

Dolly Khanna pares stakes in multiple companies

The ace investor cut a 1.1% stake in Pondy Oxides & Chemicals and now holds 1.3% in the non-ferrous metals company. She had a 2.4% stake in Q3. Khanna also trimmed her stake in plastic products company Prakash Pipes by 0.27% to take her holding to 2.87%. She sold a 0.2% stake in Chennai Petroleum Corp and currently holds 1.1% in the refineries/ petro-products company. 

The investor also reduced her holding in textiles company Deepak Spinners to 1.77% during the quarter. 

Mohnish Pabrai reduces stakes in three mid-cap companies

Mohnish Pabrai’s net worth fell by 54.5% to Rs 483.1 crore after Q4FY24. During the quarter, he reduced his holding in Rain Industries to below 1%, from 4.4% in Q3. The petrochemical company’s share price has risen by 6.3% over the past year but underperformed its industry by 46.3 percentage points.

Pabrai cuts stakes in three companies

Pabrai cut his stake in Sunteck Realty by 4.5% during the quarter. He now holds a 2.2% stake in the realty company. He also reduced his stake in Edelweiss Financial Services to 5.1% by selling a 2.6% stake in the financial services provider.

Porinju Veliyath cuts stakes in three companies

Porinju V Veliyath’s net worth increased by 17.3% to Rs 224.2 crore after Q4FY24. During the quarter, he reduced his stakes in three companies, with holdings in one dropping below 1%. 

Porinju cuts stakes in Arrow Greentech, Duroply, RPSG Ventures

Porinju also cut his stake in Arrow Greentech to below 1%. Porinju had added the company to his portfolio in Q2FY24, buying 1.1%.  The company’s share price has risen by 93.5% over the past year outperforming its industry by 22 percentage points. 

The ace investor also sold a 0.91% stake in forest products company Duroply Industries, taking his holding to 5.54%. During the quarter, he cut a 0.2% stake in RPSG Ventures and now holds 1.4% in the IT consulting & software company. 

The Nifty 500 gained 39.1% in FY24, and 17% since our last analysis of top Nifty500 contributors in October 2023. Higher government spending on infrastructure and railways has made Indian Railways Finance Corp. (IRFC), REC, and Larsen & Toubro the most consistent performers, taking them to the top 15 of highest Nifty500 contributors.

In the past month, the Nifty500 has been trading sideways as Nifty VIX, representing the market volatility, rose sharply by 50% over the same time period. What traders call the ‘fear gauge’ has been rising amid concerns that the ruling party may win fewer seats than initially expected.

In this edition of Chart of the Week, we look at the top 15 stocks that drove the Nifty500’s rise in FY24. These stocks accounted for 26.6% of the Nifty500’s 39.1% gain, which translated to an overall contribution of 10.4 percentage points. 

To understand which were the top stocks that drove the surge in the index, we tracked the change in market capitalization for stocks in the Nifty500 and compared it to the total change in the index market cap.

PSU stocks increase their contribution to the Nifty500 index

Among the 15 stocks on our list, three belong to the public sector, specifically the banking and finance domain. Within this sector, IRFC and REC represent financial institutions, while the Life Insurance Corporation of India is from the life insurance industry. The top performer among the three, IRFC rose 458% in FY24, contributing 3.4% to Nifty500’s gains. Meanwhile, LIC of India and REC registered gains of 70.7% and 295.3% in the past fiscal year driving the Nifty500 higher by 1.7% and 1.4% respectively.

Hindustan Aeronautics, a defence company, has risen sharply by 153.2% in the past fiscal year, contributing 1.4% to Nifty500’s gains. The company reported revenue growth of 11% YoY to Rs 29,810 crore in FY24 benefiting from the government’s defence outlay in the budget, which rose by 13% YoY to Rs 5.9 lakh crore in FY24. UBS expects the company’s order book to triple to Rs 2.4 lakh crore by FY26, from that of Rs 80,000 crore at the end of FY23.

Meanwhile, construction company Larsen & Toubro witnessed a 76.4% rise in FY24, contributing 1.6 percentage points to Nifty500’s annual gain. This growth was fueled by the government’s increased infra spending, with a 33% higher allocation of Rs 10 lakh crore for capex in the infrastructure sector in the FY24 budget. In addition, order inflow from international markets from the hydrocarbon and infrastructure segment in Saudi Arabia and the Middle East also boosted its growth.

Reliance and Bharti Airtel gain from market consolidation in the telecom space

In FY24, the oil and gas company Reliance Industries’ share price increased 32.2%, contributing 2.6% to the Nifty500’s overall gain. The company’s EBITDA for FY24 increased 16.1% YoY to Rs 1,78,677 crore, driven by significant growth in its retail and telecom divisions.

Similarly, telecom company Bharti Airtel saw its share price rise by 64.2% in FY24, contributing 1.8% to Nifty500’s gains. The company’s consistent market share expansion and organic improvements in average revenue per user have boosted the company’s profit margins. The company also stands to benefit from a probable tariff hike post-election in H1FY24, as indicated by Chairman, Sunil Bharti Mittal.

Meanwhile, IT major Tata Consultancy Services added 1.4% to Nifty500 as its share price surged 24.4% over the past fiscal year. In FY24, the company witnessed a 25.2% YoY increase in deal wins, with a total contract value amounting to USD 42.7 billion.

Top Adani Group companies surge to pre-Hindenburg levels

Three Adani group companies have made it to the top 15 list, as they rise above pre-Hindenburg levels. The three stocks, namely Adani Enterprises, Adani Ports & SEZ, and Adani Power witnessed impressive gains of 99.7%, 126.1%, and 207.1% respectively in FY24.

However, this surge was also due to a lower base after a substantial correction in the share prices of Adani Group stocks, after allegations from Hindenburg Research that accused Gautam Adani of stock manipulation and accounting fraud.

Even though Adani claimed that the accusations were false, the conglomerate is making an effort to address issues highlighted in the report by repaying debt and reducing promoter share pledges. Investments from GQG Partners, and securing projects such as Dharavi redevelopment have also played to their advantage.

Rising consumer demand drives realty and auto stocks higher

DLF, a realty company, gained 157% in FY24, helping drive Nifty500 higher by 1.4% in the fiscal. This was led by a demand surge for residential properties across top cities in India. The company sold 1,113 luxury apartments priced above Rs 7 crore in Gurugram, generating Rs 7,200 crore in just three days after launch.

In the automobile space, high demand drove Bajaj Auto and Tata Motors' share prices higher by 141% and 147% contributing 1.5% and 2% respectively to Nifty500’s gains in FY24.  Meanwhile, rising discretionary spending and the introduction of platform fees fueled Zomato’s share price growth of 262% in FY24. This resulted in the company’s contribution of 1.7% to Nifty500’s gains in the past fiscal year.

1. UltraTech Cement:

ICICI Direct maintains a ‘Buy’ rating on this cement manufacturer with a target price of Rs 12,430. This indicates a potential upside of 27.1%. In Q4FY24, the company’s revenue went up by 9.4% YoY to Rs 20,554.6 crore, and its net profit increased 35.6% YoY to Rs 2,258.1 crore. This surge in profit was on the back of improved EBITDA per ton at Rs 1,089 in FY24 from Rs 1,005 a year ago. The company reported volume growth of 13% YoY in FY24.

Analysts Vijay Goel and Ankit Shah expect EBITDA per ton to further improve to Rs 1,255 by FY26. They expect further cost reduction of Rs 200-300 per ton leading to improvement in EBITDA over the next three years. They attribute this development to be led by higher usage of low-cost energy from renewable sources and optimising freight costs. They forecast that volumes will grow from 119.1 million tonnes per annum (mtpa) in FY24 to 144 mtpa by FY26 due to capacity expansion of 21.5 mtpa. Analyst Goel and Shah say, “UltraTech is strongly placed to benefit from its aggressive capacity addition plans and its focus on further reducing its cost structure.” Goel and Shah also estimate revenue to grow at 10.8% CAGR over the same period.

2. Maruti Suzuki India:

KR Choksey maintains its ‘Buy’ call on this car manufacturer with a target price of Rs 14,975, indicating an upside of 20.4%. In Q4FY24, Maruti Suzuki reported a 48% YoY growth in its net profit to Rs 3,952.3 crore, while its revenue grew by 20.9% YoY. It sold 5.8 lakh units during the quarter, up by 13.4% YoY. Analyst Unnati Jadhav says, “Maruti Suzuki’s volume growth in terms of domestic business and exports was better than the industry’s.”

Jadhav says that the sequential decline in average realizations led to slightly lower revenue, 1.5% lower than estimated, while sequential gross margin pressure led to lower-than-estimated EBITDA and margin. 

However, the analyst continues to be positive about the firm’s growth due to its capex plans in the medium term, focus on high-demand spaces (SUVs, CNG, and hybrids) along with penetration in electric vehicles, and strength in export markets. She expects margins to be largely steady on the back of better realization and cost reduction. She estimates a revenue and profit CAGR of 12.6% each over FY25-FY26.

3. Ajanta Pharma:

BOB Capital Markets maintains a ‘Buy’ call on this pharma company with a target price of Rs 2,585, indicating an upside of 7.1%. In Q4FY24, the company’s profit rose 65.8% YoY to Rs 202.7 crore while revenue increased by 18.6% YoY. The analyst Saad Shaikh says that the growth was led by a reduction in API prices, logistics costs and tailwinds from increased product shortages in the US.

Shaikh is optimistic about the firm because it has 22 products awaiting US FDA approval, and expects to launch six to eight products in FY25. He believes this will lead to an overall growth of 5-8% in the US business. In India, the analyst expects the company to maintain a 200-300 basis points outperformance over the Indian pharma market for FY25.

Although Ajanta’s management expects logistics costs to escalate due to the ongoing Red Sea crisis, Shaikh says that the EBITDA margin should hold at its current level in FY25. He anticipates Ajanta Pharma achieving a 13% revenue CAGR over FY25-FY26, driven by its continued outperformance over the Indian Pharma Market (IPM), recovery in the US, strong growth in recent quarters, and a good outlook due to the launch of new products.

4. KPIT Technologies:

Axis Direct maintains a ‘Buy’ rating on this IT consulting firm with a target price of Rs 1,750. This indicates a potential upside of 15.6%. In Q4FY24, the company’s revenue increased 30.4% YoY to Rs 1,334.4 crore, while its net profit rose by 47.3% YoY to Rs 164.4 crore. Analyst Omkar Tanksale says, “Strong revenue growth momentum will continue backed by robust deal wins and strong addition of capabilities.”

Tanksale is upbeat as the company outperformed its estimates on all fronts. He attributes this quarter’s 10 bps rise in profit margin  to strong volume growth and a favourable currency mix. He is also positive about future revenue visibility as the company has multiple long-term contracts with the world’s leading automotive players. Tanksale expects KPIT to be one of the fastest-growing companies in Indian IT services moving forward. 

5. Poonawalla Fincorp:

Motilal Oswal reiterates a ‘Buy’ call on this finance company with a target price of Rs 570. This indicates an upside of 19.2%. In Q4FY24, the company’s net profit rose 83.6% YoY to Rs 331.7 crore (beating the brokerage’s estimate) and its net interest income increased by 48% YoY (in-line with the brokerage’s estimates). 

Analysts Abhijit Tibrewal, Gautam Rawtani and Nitin Aggarwal say, “Poonawalla Fincorp is committed to boosting its productivity through digitization and is preparing for growth by introducing new products such as co-branded credit cards (to be launched in the next 2-3 weeks).” The analysts say that the company has laid down a robust foundation for sustainable profitability through initiatives that will lead to lower operating costs, higher business volumes, and robust asset quality. 

The analysts estimate AUM and profit growth of 37% and 39% CAGR over FY25-FY26. They believe that the segments focused by the firm, namely consumer and small business finance, have a huge market opportunity and expect the firm to maintain its NIM of more than 9% over FY25-FY26.

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

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