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The Baseline
07 Jun 2024
Five Interesting Stocks Today - June 7, 2024

1. Uno Minda:

This auto parts manufacturer hit a new 52-week high of Rs 1,065 on Friday after rising 11.9% in the past week. The rise follows the company’s signing of a licensing agreement with the Chinese firm Suzhou Inovance Automotive, to produce EV powertrain components for passenger vehicles (PV) and commercial vehicles (CV) in India. The Chinese firm is a fixed supplier of powertrains and auto components to major PV & CV manufacturers in China.

Group CFO Sunil Bohra said, “This deal could make us the frontrunner in the four-wheeler EV space, just as we have been in the two-wheeler and three-wheeler EV space.” They have indicated plans to strengthen the partnership by transitioning it into a joint venture.

In Q4FY24, Uno Minda reported an operating revenue growth of 30.8% YoY, surpassing Trendlyne’s Forecaster estimates by 4.1%. Its net profit rose by 58.3% YoY to Rs 289 crore, beating estimates by 22.7%. The profit surge was driven by customers pre-purchasing vehicles on big year-end discounts, ahead of the expiration of the FAME II subsidy on 4W electric vehicles.

Uno Minda’s net debt as of Q4 increased by 22.2% YoY to Rs 1,318 crore, due to expansion capex and land purchases in Pune and Hosur for Rs 220 crore. The company plans to invest Rs 850 crore in capex and Rs 350 crore in maintenance capex in FY25. CFO Sunil Bohra said, “In the long-term, the company is poised to grow 1.5 times the industry growth rate, with even higher growth in the near term.”

Axis Direct maintains a ‘Buy’ rating on Uno Minda as its Q4 financials exceeded their estimates on all fronts. The brokerage expects growth momentum to continue over the medium term, driven by positive signals from 2W rural demand, new launches in the PV segment, and a recovery in the export market, which contributed 14% to total revenue in Q4.

2. Suzlon Energy:

This heavy electrical equipment company touched its all-time high of Rs 52.1 on June 4 after Morgan Stanley initiated coverage with an ‘Overweight’ rating and a target price of Rs 58.5, an upside of 17.2%. The brokerage believes that the company is poised to benefit from India's renewable energy transition. This is the highest target in the consensus – the average target from analysts on Suzlon Energy according to Trendlyne’s Forecaster is Rs. 56. 

Suzlon Energy has risen by 9.9% over the past week, driven by recent order wins in its wind energy business. Due to the rise in share price, it features in a screener of companies with strong momentum. On May 31, it won an order from Oyster Green Hybrid One to develop an 81.9 MW wind energy project. In May, the company received an order to supply 175 wind turbines, totaling 551.3 MW, for Aditya Birla Group's sites in Rajasthan and Gujarat. Suzlon also won an order to supply 134 wind turbines for a 402 MW project by Juniper Green Energy in Rajasthan.

The company is primarily engaged in the wind turbine generator (WTG) business but also provides end-to-end solutions in wind-solar hybrid power projects. In Q4FY24, Suzlon’s net profit declined 9.2% YoY to Rs 254.1 crore due to higher employee benefits and other expenses. However, revenue was up 29.6% YoY, led by growth in the wind turbine generator segment. The WTG segment (which contributes 62% to the revenue) grew by 37.1% YoY during the quarter. 

As of March 31, 2024, Suzlon’s order book stands at 3.3GW, with over 83% of orders from its newly launched 3.xMW S144 series. According to Himanshu Mody, group CFO of Suzlon Energy, “With an order book of 3.3GW, the company has the potential to generate Rs 19,986 crore in revenue over the next two years”. Suzlon’s TTM revenue stands at Rs 6,529.1 crore, up 9.4% YoY.  

After a slowdown from April 2016 to March 2023, India's wind energy sector is seeing a recovery in demand, driven by rising evening power needs, a shift towards wind-focused renewable tenders, and higher industrial demand. This presents significant opportunities for domestic players like Suzlon Energy.

3. Jyothy Labs:

This personal products company rose by 8.4% over the past week. It announced its Q4FY24 results on May 15, and missed Trendlyne Forecaster estimates for revenue by 1.6% and net profit by 8.8% due to increase in competitive intensity and a 10% YoY decline in the household insecticides segment. 

The company’ net profit improved by 32.4% YoY to Rs 78.2 crore on the back of decline in inventory costs. Revenue growth was mainly driven by an improvement in fabric care segment revenue. The stock shows up in a screener for stocks with annual profit growth higher than sector profit growth.

The company's fabric care segment, which accounts for 43% of sales, grew its revenue by 10% in the quarter by addressing detergent product gaps in its economy and premium ranges. It has secured a 20% market share in Kerala with this strategy, and aims to replicate this effort in West Bengal. The company is promoting Henko, its largest premium detergent brand, and Is introducing  Rs 10 low unit packs (LUPs) under the Henko brand.

The company says it is implementing strategic changes to boost its FMCG market share. One initiative was the "moped" model, where salespersons use mopeds to directly service wholesale outlets. This has led to a 6% increase in LUP sales for the Dishwash segment in Q4FY24 and 8.3% in FY24. The overall dishwashing segment saw a revenue rise of 5.9% with EBIT margins rising to 19% from an average of 13-14% in previous quarters.

Sanjay Agarwal, Chief Financial Officer of the company said: ”Commodity prices have been volatile. Our target is to have our EBITDA in the range of 16-17% for the full year. ” He added “We are increasing our advertising spend because we know we have a good product on the liquid side. ” Ad spending (% of sales) by the company has considerably increased from an average of roughly 6.9% of sales between FY21-23 to 8.3% of sales in FY24.

HDFC Securities analysts consider the stock as “Sarva Gunn Sampann” – an all-season winner – and has initiated Jyothy Labs with a “Buy” rating and a target price of Rs 575. The brokerage guides a revenue/EBITDA/PAT CAGR of 12/16/17% over FY25-27, the second highest in its coverage of consumer staple companies. 

4. Vedanta: 

This aluminium & aluminium products company rose by 3.2% in the last two sessions after the State Bank of India reportedly approved its demerger plan  separating its existing businesses into six independent entities. The majority of lenders have agreed, with approval pending from a few.The company’s stock price has increased by 12.2% over the past month, despite the plunge in markets on Tuesday due to the BJP falling short of a single party majority in the Lok Sabha elections. The company features in a screener of stocks outperforming their industries in the last month.

Vedanta had previously approved the demerger of its metals, power, aluminium, and oil and gas businesses in September 2023. The demerger will form  six separate listed entities, Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta. The company’s debt will be distributed across the six companies in the ratio of the assets allocated to each. Analysts at Motilal Oswal said, “The demerger is expected to simplify the corporate structure, enhance risk mitigation, and improve transparency and autonomy.”

Earlier, on April 25, the company posted a 27.4% YoY decrease in net profit to Rs 2,275 crore in Q4FY24. It still beat Trendlyne’s Forecaster profit estimates by 13.8% but revenue fell by 6.1% YoY to Rs 34,937 crore, missing estimates by 5.6%. Revenue declined on the back of a reduction in sales of aluminium and zinc due to a fall in production of zinc due to difficulties in mining, as well as lower zinc and lead grades. 

Post results, Arun Misra, Executive Director of the company, said, “We continue to see an increase in demand in double digits across our portfolio, especially in domestic markets and in aluminium, where the likely growth may cross 15%. We are also planning to focus on cost optimisation and expect to optimise cost across our portfolio by 10-20%.”

Geojit BNP Paribas has upgraded the stock to a ‘Hold’ rating from ‘Sell’. The brokerage rerates Vedanta on the back of its aluminium and zinc’s cost of production (CoP) falling for the seven and five consecutive quarters, respectively, and an improvement in EBITDA margins. It expects the company’s revenue to grow at a CAGR of 4% over FY25-27. 

5. Ashok Leyland:

This commercial vehicles manufacturer rose by 15.2% in the past month and hit an all-time high on Monday after announcing a 12% YoY growth in its May 2024 wholesales to 14,682 units, led by a 14% growth in total domestic medium and heavy commercial vehicles (MHCV).

In Q4FY24, the company’s profit improved by 13.3% YoY to Rs 853.4 crore while revenue grew by 2.9% YoY. It beat Trendlyne Forecaster’s net profit estimate by 25.9%. Revenue growth was marginal due to muted sales in FY24. However, the company’s EBITDA margin expanded 310 bps YoY due to lower raw material costs and softening commodity costs. Speaking about growth, Executive Chairman Dheeraj Hinduja says, “FY24 has been a year of record cost savings for us. Our raw material cost as a percentage of revenue fell by 4.3% YoY. Another factor for profitability was impressive growth in our high-margin business in spare parts, defense and power solutions.” 

He added, “Going forward, our objective is to retain our EBITDA margin in the current range (12-16%).” The company is targeting a 35% market share in the medium term in the MHCV segment (currently 31.5%), and a 25% market share in the small commercial vehicles segment (currently 20%). The management is confident about the company’s financial health due to replacement demand and the government's vehicle scrappage policy. It expects replacement demand to get stronger with time, as 70% of vehicles are BS-IV and will eventually get replaced with the latest technology vehicles.

Ashok Leyland is showcasing a lineup of electric vehicle (EV) vehicles in Q4FY24 including buses, tractors and LCVs, and plans to launch 16 new models in FY25. It has invested around Rs 1,500 crore in its arms Switch Mobility (electric buses and vans manufacture) and OHM Global Mobility (electric mobility solutions provider). Switch India has turned EBITDA positive in Q4 and currently has an order book of 1,300 e-buses, to be supplied to Delhi and Bangalore. For FY25, the company has planned an overall capex of Rs 500-700 crore. 

Bob Capital Markets retains its ‘Buy’ call on Ashok Leyland and estimates its EBITDA and profit to grow at  12.6% and 14.7% CAGR over FY25-FY26. The brokerage believes the firm will beat industry growth in commercial vehicles and maintain its leadership in buses. The company appears in a screener for stocks with increasing shareholding by foreign investors and/or institutions.

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

 
Trendlyne Marketwatch
Trendlyne Marketwatch
07 Jun 2024
Market trades higher, Rail Vikas Nigam bags an order worth Rs 495 crore
By Trendlyne Analysis

Nifty 50 closed at 23,290.15 (468.8, 2.1%), BSE Sensex closed at 76,693.36 (1,618.9, 2.2%) while the broader Nifty 500 closed at 21,764.15 (399.2, 1.9%). Market breadth is highly positive. Of the 2,153 stocks traded today, 1,777 were on the uptick, and 348 were down.

Indian indices extended the gains from the afternoon session and closed in the green. The volatility index, Nifty VIX, rose by 0.5% and closed at 16.9 points. Wipro bagged an order worth $500 million from a US-based communication service provider to supply managed services solutions for the next five years.

Nifty Midcap 100 and Nifty Smallcap 100 closed sharply higher following the benchmark index. All major sectoral indices closed higher than Thursday’s closing level. According to Trendlyne’s sector dashboard, telecom services emerged as the top-performing sector of the day, with a rise of over 4.1%.

Most European indices trade in the red. US indices futures trade flat, indicating a cautious start. Eurozone’s GDP in Q1 2024 expands by 0.4% YoY from 0.2% growth in Q4 2023.

  • Relative strength index (RSI) indicates that stocks like Emami, KNR Constructions, UNO Minda, and Bikaji Foods International are in the overbought zone.

  • Rites bags an order worth Rs 39.6 crore from Tata Steel for loco hiring along with operation and maintenance

  • India Pesticides surges as it commissions an intermediate plant for one of the fungicides, previously imported, as part of backward integration.

  • Energy stocks like Power Grid Corp of India, Adani Energy Solutions, ONGC and Tata Power rise more than 3% in trade. All constituents of the broader Nifty Energy index are also trading in the green, helping it to surge more than 2%.

  • Consumer electronics, specialty retail, construction materials, roads & highways, personal products, and breweries & distilleriesindustries surge more than 7% over the past week.

  • Great Eastern Shipping rises sharply as it announces the purchase of a 49,990 dwt medium-range product tanker built in 2013.

  • Foreign institutional investors divest Rs 10,201.2 crore from the equity market over the past week, according to Trendlyne's FII dashboard. Meanwhile, index options witness the highest inflow of Rs 15,159.9 crore from foreign investors. Mutual funds are net sellers in the equity market, pulling out Rs 147.9 crore during the same period.

  • Tata Consultancy Services launches its GenAI Aggregation Platform, 'WisdomNext'. This platform can provide multiple GenAI services in a single interface and facilitate the adoption of technologies with scale and lower costs.

  • Adani Port receives a letter of intent from Kolkata Port for operations and maintenance of the container facility in the Netaji Subhas Dock at the Syama Prasad Mookerjee Port in Kolkata for five years.

  • Bajaj Finance approves the sale of shares worth Rs 3,000 crore in its arm, Bajaj Housing Finance, through an offer for sale.

  • Axis Direct upgrades HCL Technologies to 'Buy' from 'Hold' with a higher target price of Rs 1,550 per share. This indicates a potential upside of 8.4%. The brokerage believes the company is well-placed for growth in the long term, given its multiple long-term contracts. It expects the company's revenue to grow at a CAGR of 4.4% over FY25-26.

  • Economists believe that the RBI will likely start lowering interest rates from October. According to Gaura Sen Gupta from IDFC First Bank, heatwave conditions have added to the near-term upside risks to food inflation, but monsoon will ease it. He adds that core inflation is also easing, and as a result, sees rate cuts beginning in October.

  • Dixon Technologies (India) rises as it forms a joint venture with HKC Corp to manufacture liquid crystal modules, thin film transistor liquid crystal display modules, assemble end products including smartphones, TVs, monitors, and auto displays, and sell HKC branded end products in India.

  • Mastek surges as it plans to upgrade its icxPro platform with NVIDIA's accelerated computing to provide advanced AI-powered customer experience (CX) solutions. This will improve CX management for the manufacturing, healthcare, banking, financial services, and insurance (BFSI) sectors.

  • Rail Vikas Nigam rises sharply as it bags an order worth Rs 495 crore from National Thermal Power Corp to construct and install a barrage complex and head race tunnel at the Rammam hydroelectric project in West Bengal.

  • The RBI raises its projection for India's GDP growth for FY25 to 7.2% from 7%. RBI's MPC forecasts CPI inflation at 4.5% for FY25 and 4.9% for Q1FY25.

  • IT stocks like Wipro, Mphasis, Coforge, and Persistent Systems are rising in trade. The broader sectoral index, Nifty IT, is also trading in the green.

  • Hindustan Unilever appoints Arun Neelakantan as the new Executive Director (ED), with effect from July 1.

  • Garden Reach Shipbuilders & Engineers surges as it receives an order worth Rs 500 crore from the Defence Research and Development Organisation to construct a research vessel. The contract is yet to be signed.

  • The RBI decides to keep the policy repo rate unchanged at 6.5% during the Monetary Policy Committee meeting.

  • IRB Infrastructure Developers is rising as its total toll collection increases by 30.3% YoY to Rs 535.5 crore in May.

  • Hero MotoCorp rises as it buys an additional 2.2% stake in Ather Energy for Rs 124 crore.

  • Ashish Kacholia buys a 3.9% stake in Aimtron Electronics for approx Rs 19.3 crore in a bulk deal on Thursday.

  • Wipro is rising as it bags an order worth $500 million (approx. Rs 4,175 crore) from a US-based communication service provider to supply managed Services for some products and industry-specific solutions for the next five years.

  • Nifty 50 was trading at 22,822.15 (0.8, 0%) , BSE Sensex was trading at 75,061.53 (-13.0, 0.0%) while the broader Nifty 500 was trading at 21,408.75 (43.8, 0.2%)

  • Of the 1,886 stocks traded today, 1,384 were on the uptrend, and 445 went down.

Riding High:

Largecap and midcap gainers today include One97 Communications Ltd. (381.30, 10%), Vedant Fashions Ltd. (1,114.50, 6%) and Mahindra & Mahindra Ltd. (2,857.45, 5.8%).

Downers:

Largecap and midcap losers today include Schaeffler India Ltd. (4,153.90, -2.7%), Linde India Ltd. (8,512.95, -2.0%) and Indian Bank (534.70, -1.5%).

Volume Rockets

24 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included IIFL Finance Ltd. (470.50, 13.6%), Garware Technical Fibres Ltd. (4,062.80, 10.9%) and Tejas Networks Ltd. (1,284.85, 10.7%).

Top high volume loser on BSE was JBM Auto Ltd. (2,024.75, -5.7%).

Mastek Ltd. (2,790.50, 8.2%) was trading at 22.8 times of weekly average. Avanti Feeds Ltd. (615.40, 8.9%) and Gujarat Ambuja Exports Ltd. (152.70, 8.6%) were trading with volumes 17.3 and 5.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

42 stocks made 52 week highs,

Stocks touching their year highs included - Aegis Logistics Ltd. (777.85, -1.7%), Amara Raja Energy & Mobility Ltd. (1,401.15, 9.7%) and Aurobindo Pharma Ltd. (1,265.15, 1.1%).

55 stocks climbed above their 200 day SMA including Praj Industries Ltd. (590.40, 10.3%) and Mastek Ltd. (2,790.50, 8.2%). 1 stock slipped below their 200 SMA including Tata Chemicals Ltd. (1,056.15, -0.7%).

 
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The Baseline
07 Jun 2024
2024 is set to be a strong year for IPOs | The biggest IPOs of 2024 so far, and their listing gains
By Swapnil Karkare

What a difference a day makes.

Tuesday started with exit polls predicting that the current government would return with a huge majority; on Wednesday we were in the reality of a BJP-led coalition government. But either way, the economy will stay strong, analysts say. “The Indian economy is on course to more than double in size over the next decade,” economist Shilan Shah notes. 

And despite the many challenges in 2024 – the Red Sea crisis, dollar appreciation, FII sell-off etc – India's stock markets have also been remarkably resilient. 374 stocks surpassed analyst estimates of earnings per share in FY24.

The upbeat mood and strong earnings performance have fueled an IPO surge. The optimism comes after a sluggish 2022 and 2023. 

28 companies debuted on the Indian bourses upto May 15 this year, compared to just seven in the same period last year. The trend is likely to continue, with big names like Hyundai, Ola Cabs, FirstCry, NSDL, and Tata Capital coming up. 

So, let's explore the performance of the newly listed companies. Will the momentum continue?

In this week's Analyticks,

  • A bullish season for IPOs: Companies are queuing up to list in Indian markets
  • IPO dashboard: 2024's most successful IPOs (so far)

Let's jump in,

Indian IPOs are gaining momentum after a muted two years

2021 was a landmark year for Indian IPOs. Low interest rates and frothy valuations triggered listings for as many as 65 companies. Their combined issue size crossed Rs. 1.2 trillion. Start-ups like Paytm, Zomato, MapmyIndia and Nykaa went public. One 97 Communications, Paytm’s parent company, became the year's biggest IPO.

The euphoria dampened a bit in 2022 due to the Russia-Ukraine war. The tepid response continued in 2023. While the number of listings increased by 40%, total issue size declined by more than 10%. 

Despite this, Delhivery, Adani Wilmar, Mankind Pharma and Tata Technologies together mobilised more than Rs. 16,000 crore in those two years. The undisputed champion of the Indian IPO market – LIC of India – also hit the exchanges in 2022, with an eye-watering issue size of Rs. 21,000 crore.

2024: the year Indian IPOs are making a comeback

We can sense a change in the mood as we enter 2024. IPO transactions and size have both jumped. The combined issue size has already surpassed half the total amount raised last year. 


IPO issue sizes have zoomed up, as companies sense that stock markets have the appetite for larger listings. 

Among 2024 issues,Bharti Hexacom and Aadhar Housing Finance are the top performers to date. We see healthcare followed by financials dominating this year so far with four and three listings, respectively.

An increase in retail participation has led to a jump in average IPO subscriptions, from 43x in 2023 to 56x in 2024. Mutual funds have also emerged as key investors in these capital issues, reports Bloomberg.


Markets have been picky in rewarding IPOs

Markets have been strong but picky in rewarding new listings. Of 28 IPOs, one-third of companies (nine, to be exact) registered negative listing gains like JG Chemicals (-16%) and Jana Small Finance Bank (-11%). Only two companies, Vibhor Steel Tubes (+196%) and BLS E-Services (+171%) recorded triple-digit bumper listings. 

This trend mirrors the pre-pandemic behaviour of 2019. This suggest that the recent interest in listings with frothy valuations has subsided.

IPO Activity has been muted globally

The global market presents a contrasting picture to India’s. The Russia-Ukraine war hit market sentiment and continues to be a big drag. IPO transactions fell dramatically after the war broke out in Jan-March 2022, as can be seen in the figure below. 

Even two years after the Russia-Ukraine war that began in February 2022, the global IPO market sentiment remains subdued. The number of transactions is down to less than 300 with its value below $25 billion. However, if we compare Q1 2023 with Q1 2024, we can see a slight increase in the average size.

An EY report strikes an optimistic note. It points to stable valuations and pricing levels in the US, ASEAN, and Indian markets compared to the previous year, and an upward trend in Japan, Europe, and the Middle East. “Despite restrained market activity in previous years, there’s new enthusiasm from both IPO issuers and investors," the analysts note.

India's IPO lineup is set to double in FY25

Analysts anticipate a robust IPO market for India this year, with new listings likely to double in FY25 compared to FY24. There is a strong pipeline of companies planning their public debuts in the coming months. 

According to Prime Database, 40 companies have filed their offer documents with SEBI. Their combined issue size is Rs. 53,515 crore (more than $6 billion). As of 10th May, 19 companies have received the green light.

India’s resilience and optimism around IPOs stands out in the current global environment. Experts believe that Hyundai’s listing can prod other MNCs to list their India operations. It has already tickled the top minds in Korean electronics company LG, if reports are to be believed. 

With several high-profile IPOs in the queue, India is a shiny spot in the global IPO market right now.

IPO Dashboard: The biggest IPOs posted listing gains in 2024

Nine out of ten of the biggest IPOs in 2024 saw listing gain

With the Nifty 50 index rising 1.4% in 2024 (accounting for Nifty 50’s 5.9% decline on Tuesday with election results), India’s markets remain conducive to IPOs. This week, we check Trendlyne’s IPO dashboard to see how the Indian market has treated new public offerings in the stock market.

31 mainline IPOs have been released so far in the year. Major IPOs with large issue size that went public in 2024 are Bharti Hexacom, Aadhar Housing Finance, Go Digit General Insurance, Bharat Highways InviT, Indegene, Juniper Hotels, Entero Healthcare Solutions, TBO Tek, Medi Assist Healthcare Services and Jyoti CNC Auto. Out of these major IPOs, only Entero Healthcare Solutions posted an 8.6% listing loss.

Bharti Hexacom, an arm of Bharti Airtel, is the largest IPO with an issue size of Rs 4,275 crore, which went live on April 12. This telecom services company offers consumer mobile services, fixed-line telephone, and broadband services in Rajasthan and North East India. The IPO posted a listing gain of 42.7% and was subscribed for 29.9x of the available shares. The stock rose by 27.5% post listing, taking its current gains since listing to 68.5% on the back of a 7.9% YoY and 10.3% YoY growth in its revenue and net profit in Q4FY24.

TBO Tek also features in the list with the highest listing gains of 52.9% after listing on May 15. This travel support services company is a travel distribution platform in the global travel and tourism industry. It filed for an IPO for investments in technology data solutions, sales, marketing, and infrastructure with an issue size of Rs 1,551 crore and was subscribed for 86.7x of the available shares. The IPO, however, declined by 3.9% since its listing leading to a lower current gain of 48.9%.

The 2024 list of best and worst performing IPOs is here.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
06 Jun 2024
Market closes higher, Zee Entertainment's board approves raising Rs 2,000 crore
By Trendlyne Analysis

Nifty 50 closed at 22,821.40 (201.1, 0.9%), BSE Sensex closed at 75,074.51 (692.3, 0.9%) while the broader Nifty 500 closed at 21,365 (310.6, 1.5%). Market breadth is highly positive. Of the 2,152 stocks traded today, 1,829 showed gains, and 287 showed losses.

Indian indices maintained the gains from the afternoon session and closed in the green. The volatility index, Nifty VIX, dropped by 11.1% and closed at 16.8 points. Zee Entertainment Enterprises board approved raising Rs 2,000 crore through the issue of equity shares.

Nifty Midcap 100 and Nifty Smallcap 100 closed sharply higher following the benchmark index.Nifty Realty and Nifty Media closed higher than Wednesday’s closing level. According to Trendlyne’s sector dashboard, telecommunication equipment emerged as the top-performing sector of the day, with a rise of over 5%.

Most European indices trade in the green. US indices futures trade flat, indicating a cautious start. German factory orders in April contract by 0.2% MoM against estimates of 0.6% growth.

  • Aditya Birla Fashion and Retail sees a short buildup in its June 27 future series as its open interest rises 16.9% with a put-call ratio of 0.8.

  • Indoco Remedies is rising as it receives US FDA approval for an abbreviated new drug application for Canagliflozin and Metformin Hydrochloride tablets. The tablets, a generic equivalent of Ivokamet, are used to treat type 2 diabetes.

  • Realty stocks like Brigade Enterprises, Macrotech Developers, Sobha and Mahindra Lifespace Developers rise more than 4% in trade. All constituents of the the broader Nifty Realty index are also trading in the green, helping it to touch its 52-week high of Rs 1,085.6.

  • Zee Entertainment Enterprises rises as its board approves raising Rs 2,000 crore through the issue of equity shares or any other eligible securities.

  • According to Morgan Stanley, the Indian equity market is experiencing its longest and most robust bull market in history. The brokerage anticipates the S&P BSE Sensex to reach 82,000 by June 2025. It believes the election outcome will likely lead to further structural reforms, supporting its 20% annual earnings growth projection over the next five years.

  • Ventura retains its 'Buy' call on Piramal Pharma with an upgraded target price of Rs 248 per share. This indicates a potential upside of 68.1%. The brokerage believes the company's strategic position across business verticals will drive robust revenue growth and enhance profitability. It expects the company's revenue to grow at a CAGR of 10.2% over FY25-27.

  • Torrent Pharmaceuticals surges to its new all-time high of Rs 2,830.9 per share as it enters a patent licensing agreement with Takeda Pharmaceuticals to commercialize Vonoprazan, a novel gastrointestinal drug, in India.

  • Vedanta surges after the State Bank of India approves its demerger plan, allowing the separation of its existing businesses into six independent entities. The majority of lenders have agreed, with approval pending from a few.

  • According to a poll of economists, the RBI’s monetary policy committee is expected to maintain its status quo on the repo rate at 6.5%, given the recent inflation data and the outlook for food and commodity prices. They believe the central bank will likely start cutting interest rates in the October-December quarter or by H1CY25.

  • Nazara Technologies surges as its arm, Absolute Sports, acquires all assets of SoapCentral for $1.4 million with plans to expand in the entertainment publishing sector in the US.

  • Reports suggest that 33 lakh shares (0.7% equity) of PB Fintech, worth Rs 428.1 crore, change hands in a block deal. The transaction was executed at an average of Rs 1,297 per share.

  • ICIC Securities upgrades Indian Hotels to 'Buy' and sets a higher target price of Rs 640 per share. This indicates a potential upside of 10.6%. The brokerage expects revenue growth driven by an improvement in the new businesses, and an increase in profitability, helped by product premiumisation and cost optimisation. It expects the company's revenue to grow at a CAGR of 10.2% over FY25-27.

  • According to data from Grid India, India's gas-fired power generation experiences a YoY doubling in April and May, reaching 8.9 billion kilowatt-hours (kWh). The data indicates a decline in the share of coal in May to 74% YoY from 75.2%, while the share of gas nearly doubled to 3.1% from 1.6%. Independent Commodity Intelligence Services (ICIS) predicts a 19% increase in LNG demand in India for 2024, with imports projected to surpass 28 million metric tons by 2025.

  • Century Textiles & Industries rises sharply as its subsidiary, Birla Estates, enters into a joint venture with Barmalt India for a luxury residential housing development in Gurugram. The project has a potential development area of 2.4 million sq. ft., with a revenue potential of approx Rs 5,000 crore.

  • Aurionpro Solutions rises as its arm, Integro Technologies, partners with Yoma Bank in Myanmar to explore SME lending operations.

  • Power stocks like NTPC, Adani Power, Power Grid Corp, ABB India, Tata Power, and JSW Energy are surging in trade. All constituents of the broader sectoral index BSE Power are also trading in the green, helping it to rise more than 4%.

  • CK Venkataraman, the Managing Director of Titan Co, notes that the company holds an 8% market share in the jewellery business. However, he anticipates that the margin within this segment will not exceed 12% in the medium term. Venkataraman projects double-digit growth in the wearables segment, with the overall watch portfolio expected to expand by 15-20%. He adds that Titan's emerging businesses will turn EBIT break-even by the end of FY27.

  • UNO Minda surges to its all-time high of Rs 1,016 per share as it signs a technical license agreement (TLA) with China's Suzhou lnovance Automotive. The agreement is to manufacture and supply high-voltage category electric vehicle products for passenger and commercial vehicles in India.

  • Indian Energy Exchange rises as its volumes grow 28.9% YoY to 10,633 MU in May. The company's electricity volumes increase by 21% YoY to 9,568 MU, and the renewable energy certificates surge by 640.3% YoY to 1,055 MU.

  • Rail Vikas Nigam rises sharply as it bags a Rs 391 crore order from the Eastern Railway to construct the Sitarampur bypass line under the Ansol Division.

  • Citigroup lists Hindustan Unilever, Godrej Consumer Products, Britannia, and Honasa Consumer as its ‘Top Buys’, and Colgate, Dabur, and United Breweries as ‘Top Sells’ in the consumer staples space. The brokerage expects volume growth for these companies driven by improvement in consumption and self-help initiatives.

  • KPI Green Energy rises as its arm, Sun Drops Energia, wins orders of 26.2 MW for executing solar power projects.

  • NBCC India rises sharply as it wins multiple orders worth Rs 491.5 crore from the government for construction work.

  • Radhakishan Damani buys a 3.5% stake in Bhagiradha Chemicals & Industries for approx Rs 81.2 crore in a bulk deal on Wednesday.

  • Bharat Heavy Electricals rises sharply as it bags an order worth more than Rs 3,500 crore from Mirzapur Thermal Energy (UP) to set up two 800 MW thermal power projects. As per the contract, BHEL will supply equipment, and set up and commission the projects.

  • Upbeat trading today, as Nifty 50 was trading at 22,719.65 (99.3, 0.4%), BSE Sensex was trading at 75,078.70 (696.5, 0.9%) while the broader Nifty 500 was trading at 21,262.90 (208.5, 1.0%).

  • Market breadth is highly positive. Of the 1,878 stocks traded today, 1,672 were gainers and 169 were losers.

Riding High:

Largecap and midcap gainers today include UNO Minda Ltd. (974.20, 13.1%), Biocon Ltd. (332.75, 9.0%) and Bharat Heavy Electricals Ltd. (277.95, 8.9%).

Downers:

Largecap and midcap losers today include Avenue Supermarts Ltd. (4,687.05, -3.6%), Hindalco Industries Ltd. (677.50, -2.6%) and Pidilite Industries Ltd. (3,089.20, -2.4%).

Movers and Shakers

11 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Century Textiles & Industries Ltd. (2,105.70, 14.3%), UNO Minda Ltd. (974.20, 13.1%) and Aegis Logistics Ltd. (791.15, 12.2%).

Top high volume loser on BSE was Anupam Rasayan India Ltd. (771.70, -0.4%).

Elgi Equipments Ltd. (609.90, 3.4%) was trading at 8.4 times of weekly average. Avanti Feeds Ltd. (565.35, 8.1%) and Eris Lifesciences Ltd. (977.85, 6.6%) were trading with volumes 6.6 and 4.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

33 stocks took off, crossing 52 week highs,

Stocks touching their year highs included - Aegis Logistics Ltd. (791.15, 12.2%), Amara Raja Energy & Mobility Ltd. (1,277.50, 4.9%) and Bajaj Auto Ltd. (9,701.45, 1.0%).

65 stocks climbed above their 200 day SMA including CreditAccess Grameen Ltd. (1,500.30, 6.8%) and APL Apollo Tubes Ltd. (1,572.10, 6.8%). 1 stock slipped below their 200 SMA including IndusInd Bank Ltd. (1,481.10, -1.3%).

 
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The Baseline
05 Jun 2024
Chart of the Week: Financial firms witness growth in Q4, while chemical industries suffer
By Satyam Kumar

By Sunday last week, exit polls almost unanimously predicted that the Bharatiya Janata Party (BJP) would win the 2024 Lok Sabha elections with a clear majority. This sent the Nifty 50 up by 3.3% and to an all-time high of 23,338.7 on Monday. 

But the forecasts turned out to be pretty hollow when actual vote counting began, with the BJP losing 63 seats to end up with a total of  240, failing to secure a single-party majority. This led to the most volatile day for Indian equity markets since the pandemic, with indices falling sharply. However, the Nifty and Sensex recovered some of its losses by market close on June 5.

A coalition government can impact some industries as capital allocation can change due to differences in investment preferences between coalition parties. We look at Trendlyne’s Q4FY24 results dashboard to identify industries that have been top performers, as well as those who struggled. We also examine the drivers of positive or negative industry sentiment. 

This edition of Chart of the Week looks at YoY growth in net profit and revenue for Q4FY24 across industries, and the biggest contributors to this industry growth.

Rising investor interest drives revenue growth for exchanges and capital markets

The capital markets industry registered an overall net profit and revenue growth of 123.2% YoY and 75.4% YoY, respectively, in Q4FY24. Companies such as Motilal Oswal Financial Services (MOFSL), ICICI Securities, Angel One, and IIFL Securities contributed significantly to this surge.

MOFSL’s capital markets segment rose 74% YoY, while its asset and wealth management segment grew by 55.3% YoY in Q4FY24. The treasury investments segment witnessed a turnaround amid high interest rates, with the company reporting a net profit of Rs 285.7 crore compared to a loss of Rs 146.4 crore in Q4FY23.

Angel One’s revenue grew 64.4% in Q4. However, this did not fully translate into net profit growth, where there was a moderate gain of 27.4%. This was because the company ventured into the asset management and insurance businesses which led to higher employee costs, coupled with expenses of Rs 22.7 crore for sponsoring IPL in March quarter. Angel One’s CFO Vineet Agarwal in Q4 earnings call said that the company’s committed cost for IPL for the next four years is Rs 82.5 crore annually, excluding advertisement cost. He added that for the IPL season gone by, the company spent around Rs 143 crore, out of which Rs 23 crore was accounted for in Q4, and the remaining Rs 120 crore will be accounted for in the current quarter.

The Bombay Stock Exchange (BSE) and Multi Commodity Exchange of India (MCX) were significant contributors of the exchange industry with average net profit rising by 57.6% YoY and revenue growth of 69.5% YoY in Q4.

MCX India posted a net profit of Rs 87.9 crore in Q4FY24, a 16x increase compared to the same quarter the previous year, driven by the launch of its commodity derivatives platform in October last year. Meanwhile, BSE’s revenue doubled YoY in Q4 to Rs 548.4 crore, following the relaunch of Sensex and Bankex derivative contracts, and increased transaction charges on Sensex near-expiry options.

Realty firms get a boost from luxury real estate, while demand for loans drove banking firms higher

Realty companies saw an average revenue growth of 25.3% YoY in Q4, with net profit growth of 18.6%. Key contributors included DLF, Oberoi Realty, and Brigade Enterprises, with their net profits up 61.5%, 64.1%, and 197.6% YoY respectively. This was fueled by demand for luxury residential properties. For example, DLF announced that its luxury residential project, 'DLF Privana West,' valued at approximately Rs 5,590 crore, was sold out within just three days.

Meanwhile, the banking industry posted revenue growth of 25.9% and net profit growth of 45.2% YoY in Q4FY24. All 41 banks reported positive revenue growth, thanks to rapid growth in loans, stable margins, and lower provisions. According to Trendlyne’s Bank Operations Report, banks in Q4 saw a loan growth of 28.5% YoY, which outpaced deposit growth of 20.6% showing higher spending by Indians which boosted demand.

Two Tata Group firms, Titan and Tata Steel saw revenues moderate in Q4

The gems and jewellery industry saw a net profit decline of 5.5% YoY in Q4, with revenue down 14.7% YoY. Gold and synthetic diamonds player Rajesh Exports was a major laggard, with revenue declining 20.6% YoY to Rs 91,649.3 crore and a net loss of Rs 31.6 crore compared to a profit of Rs 366 crore a year ago. The company has struggled with high operating costs. Meanwhile, Titan’s revenue grew 20.6% in Q4, with a moderate net profit growth of 5.6% YoY. Its jewellery segment, contributing 87% of Q4 revenue, saw margins decline due to higher consumer discounts and an 11% YoY surge in gold prices.

The iron and steel industry on the other hand, saw a sharp decline of 39.3% YoY in net profit, while revenue fell 2.7% YoY. This was driven by Tata Steel and JSW Steel, whose net profits declined 64.1% and 64.5% YoY respectively in Q4 owing to their ongoing expansion plans.

Agrochemicals & commodity chemicals industry suffer due to weak monsoon and Chinese dumping across the globe

In Q4FY24, the agrochemical industry’s revenue declined 12.5% YoY with net profit declining 52.7% YoY. UPL and Bayer CropScience saw their net profit decline 95% and 39.4% respectively in Q4FY24 due to a slump in demand for agrochemicals, as monsoons grew erratic in the past year. Another contributing factor was a sharp decrease in price realisation because of higher supplies from Chinese competitors. 

Meanwhile, the commodity chemicals industry, which was impacted the most, saw its average net profit plunge 96% YoY with an 11.2% YoY fall in revenue during the quarter. Industry leader, Tata Chemicals was hit by  quarterly revenue decline of 21.2% YoY, with a net loss of Rs 850 crore compared to a profit of Rs 709 crore in the same period last year. The company faced challenges due to the weak demand-supply scenario for soda ash in Europe which led to lower realisations. This can be attributed to inventory destocking, coupled with an oversupply situation in the European markets.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
05 Jun 2024
Market closes higher, Indian Oil Corp forms a 50:50 joint venture with Sun Mobility
By Trendlyne Analysis

Nifty 50 closed at 22,620.35 (735.9, 3.4%), BSE Sensex closed at 74,382.24 (2303.2, 3.2%) while the broader Nifty 500 closed at 21,054.40 (730.6, 3.6%). Of the 2,153 stocks traded today, 1,693 were on the uptick, and 431 were down.

Indian indices extended the gains from the afternoon session and closed in the green. The volatility index, Nifty VIX, dropped by 29.4% and closed at 18.9 points. CARE Ratings upgrades Vodafone’s long-term bank facilities to BB+ from B+ and short-term bank facilities to A4+.

Nifty Smallcap 100 and Nifty Midcap 100 closed sharply higher following the benchmark index. All major sectoral indices closed higher than Tuesday’s closing level. According to Trendlyne’s sector dashboard, retailing emerged as the top-performing sector of the day, with a rise of over 7%.

Most European indices trade in the green, except for England’s FTSE 100 trading flat. US indices futures trade higher, indicating a positive start. Eurozone’s composite PMI for May expands to 52.2 against estimates of 52.3.

  • Money flow index (MFI) indicates that stocks like GMM Pfaudler, PCBL, Ipca Laboratories, and Gujarat Ambuja Exports are in the oversold zone.

  • Motilal Oswal maintains its 'Neutral' rating on Max Financial Services with a lower target price of Rs 1,020. This indicates a potential upside of 13%. The brokerage expects the surrender charges regulation can adversely impact margins but suggests insurers can adjust product prices and commissions to soften this impact. It expects a revenue CAGR of 10.1% over FY25-26.

  • Bharat Forge is rising as orders for its Class 8 trucks grow by 39% YoY to 18,900 units in North America.

  • Vodafone Idea rises sharply after CARE Ratings upgrades its long-term bank facilities to BB+ from B+ and short-term bank facilities to A4+.

  • Indian Oil Corp rises as it forms a 50:50 joint venture (JV) with Sun Mobility, Singapore, to set up a battery swapping business.

  • Kotak Mahindra Bank rises sharply as the Reserve Bank of India (RBI) approves the acquisition of a 70% stake in Kotak Mahindra General Insurance for Rs 5,560 crore by Zurich Insurance.

  • Kronox Lab Sciences' Rs 130.2 crore IPO gets bids for 59.8X the available 67 lakh shares on offer on the third day of bidding. The retail investor quota gets bids for 39.6X the available 33.5 lakh shares on offer.

  • Tata Motors is rising as its subsidiary, Tata Motors Finance, is set to merge with Tata Capital following approval from the National Company Law Tribunal (NCLT), with completion expected in 9-12 months.

  • The Centre for Aviation (CAPA) projects widening losses for Indian airline companies in FY25 due to increased expenses surpassing growing demand and pricier tickets. CAPA estimates losses between $400-600 million for the year, with overall airline costs expected to rise by 3.8%. CAPA's CEO Kapil Kaul anticipates relief with an addition of 84 aircraft this year, bringing the total fleet, including grounded jets to 812.

  • Lupin rises as its European arm acquires Aarane in Germany and Nalcrom in Canada and the Netherlands from Sanofi.

  • GPT Infraprojects bags an order worth Rs 547 crore from Rail Vikas Nigam to construct a six-lane Kona expressway in West Bengal on an engineering, procurement, and construction (EPC) basis.

  • Shilpa Medicare rises sharply as its subsidiary, Shilpa Biologicals, submits its first drug master file (DMF) for a patented recombinant Human Albumin 20% with the US FDA.

  • Indian Railways' freight loading surges 9% MoM in May to 139.2 million tonnes. The freight revenue also rises significantly, reaching Rs 15,230.9 crore, up 8.2% MoM. Coal and cement loading rose MoM by 9% and 12%, respectively. However, iron ore loading remains flat MoM at 14.6 million tonnes.

  • Auto stocks like Maruti Suzuki India, Mahindra & Mahindra, Bajaj Auto, Eicher Motors, Hero MotoCorp, and TVS Motor surge more than 2% in trade. All constituents of the broader Nifty Auto index are trading in the green, helping it to touch its all-time high of 24,213.6.

  • Container Corp of India rises sharply as it signs a memorandum of understanding (MoU) with Shipping Corp of India to provide end-to-end logistics solutions.

  • Garden Reach Shipbuilders & Engineers inks a contract worth $16.6 million with Bangladesh Inland Water Transport Authority to procure a trailing suction hopper dredger (hopper capacity 1,000 cubic meters).

  • India’s services PMI moderates to a 5-month low of 60.2 in May, from 60.8 in April, due to a slightly slower growth in new domestic orders. The PMI reading, however, stays above the 50 mark for the 34th consecutive month.

  • Heritage Foods surges to touch its 52-week high of Rs 538.7 per share, boosted by Founder Chandrababu Naidu's fourth term as Andhra Pradesh Chief Minister. The stock has risen by 34% in three days and 63% in a month.

  • NLC India falls sharply as it plans to raise a foreign currency loan of $600 million (approx. Rs 5,007.1 crore) through external commercial borrowings (ECB) in its board meeting scheduled for June 10. The loan will fund upcoming renewable power projects.

  • Small Cap World Fund sells a 0.9% stake in NCC for Rs 143.2 crore in a bulk deal on Tuesday.

  • Le Travenues Technology, the parent company of Ixigo, sets the price band for its IPO at Rs 88-93 per share. The issue, valued at Rs 740 crore, consists of a fresh issue worth Rs 120 crore and an offer for sale of around Rs 620 crore. The issue opens on June 10.

  • Angel One's client base rises 63.3% YoY to 2.4 crore in May. The number of orders increase 75.2% YoY to 15.9 crore during the same period.

  • FMCG stocks like Hindustan Unilever, United Spirits, Dabur India and Britannia Industries rise more than 6% in trade. All constituents of the broader Nifty FMCG index are also trading in the green, helping it to surge more than 4%.

  • KEC International rises sharply as it bags multiple orders worth Rs 1,002 crore for residential projects and construction of official residences and facilities for senior defence officials in India.

  • Hindalco Industries falls sharply as its US subsidiary, Novelis, postpones its $945 million (approx. Rs 7,887.1 crore) IPO due to unfavourable market conditions.

Riding High:

Largecap and midcap gainers today include Vodafone Idea Ltd. (14.85, 12.5%), Adani Green Energy Ltd. (1,828.85, 11.1%) and JSW Energy Ltd. (608.55, 10.0%).

Downers:

Largecap and midcap losers today include One97 Communications Ltd. (339.85, -4.9%), Adani Energy Solutions Ltd. (951.70, -2.7%) and Schaeffler India Ltd. (4,144.45, -2.4%).

Crowd Puller Stocks

15 stocks in BSE 500 are trading on high volumes today.

Top high-volume gainers on BSE included Jyothy Labs Ltd. (447, 13.6%), Zydus Wellness Ltd. (1,895.35, 10.3%) and V-Mart Retail Ltd. (2,414.30, 9.8%).

Top high volume losers on BSE were Star Health and Allied Insurance Company Ltd. (499.25, -0.1%) and Nippon Life India Asset Management Ltd. (545.95, -0.1%).

Radico Khaitan Ltd. (1,710.10, 8.8%) was trading at 5.6 times of weekly average. Procter & Gamble Hygiene & Healthcare Ltd. (16425.05, 1.5%) and Godrej Consumer Products Ltd. (1,426.80, 5.8%) were trading with volumes 5.6 and 5.4 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

29 stocks took off, crossing 52-week highs, while 3 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Aurobindo Pharma Ltd. (1,266.40, 5.8%), Bajaj Auto Ltd. (9,602.25, 3.8%) and Britannia Industries Ltd. (5,486.65, 3.0%).

Stocks making new 52-week lows included - GMM Pfaudler Ltd. (1,194.40, 0.0%) and EPL Ltd. (179, 2.6%).

45 stocks climbed above their 200 day SMA including Jyothy Labs Ltd. (447, 13.6%) and Godrej Agrovet Ltd. (540.20, 8.2%). 40 stocks slipped below their 200 SMA including RHI Magnesita India Ltd. (659, -3.1%) and Rites Ltd. (607.45, -2.7%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
04 Jun 2024
Market closes lower, Amber Enterprises reportedly plans a Rs 2,000 crore investment
By Trendlyne Analysis

Nifty 50 closed at 21,884.50 (-1,379.4, -5.9%), BSE Sensex closed at 72,079.05 (-4,389.7, -5.7%) while the broader Nifty 500 closed at 20,323.85 (-1,473.6, -6.8%). Market breadth is overwhelmingly negative. Of the 2,148 stocks traded today, 113 were in the positive territory and 2,022 were negative.

Indian indices closed deep in the red as investors looked ahead to the outcome of the general elections. The Indian volatility index, Nifty VIX, surged by 25.7% and closed at 26.3 points. Defence stocks like Bharat Electronics, Hindustan Aeronautics, Mishra Dhatu Nigam, and Mazagon Dock Shipbuilders fell sharply. The fall in defence stocks is due to the expectation that a coalition government may have less consensus on border issues and the China threat as the BJP falls short of a single party majority in the Lok Sabha elections.

Nifty Smallcap 100 and Nifty Midcap 100 close sharply lower, taking cues from the benchmark index. Nifty FMCG was the only sectoral Nifty index to close in the green. Nifty Infra and Nifty Bank closed sharply lower. According to Trendlyne’s sector dashboard, FMCG emerged as the best-performing sector of the day, with a rise of 3.5% in a weak market.

Major Asian indices trade in the red, except for Hong Kong’s Hang Seng index closing higher. European indices traded in the red, amid weak global cues. US index futures traded lower, indicating a cautious start to the trading session. Brent crude oil futures traded in the red for a fifth trading session.

  • Relative strength index (RSI) indicates that stocks like Rail Vikas Nigam, Adani Power, Bharat Electronics, and KNR Constructions are in the overbought zone.

  • Canara Bank's board approves diluting its 14.5% stake in its subsidiary Canara HSBC Life Insurance Co through an IPO.

  • KR Choksey downgrades Ashok Leyland to 'Accumulate' with a higher target price of Rs 243 per share. This indicates a potential upside of 15.3%. The brokerage revises its rating on the stock due to the recent run-up in the share price and a modest upside from current levels. It expects the company's revenue to grow at a CAGR of 10.5% over FY25-26.

  • Reliance Industries' subsidiaries complete the registration of sub-lease agreements for roughly 3,750 acres of land, including development rights, for 43 years. The deal, valued at Rs 13,400 crore, involves land obtained from Navi Mumbai IIA, in which City and Industrial Development Corporation (CIDCO) holds a 26% stake. The sub-leased land will be used to develop an integrated industrial area.

  • Kalyan Jewellers India is set to acquire the remaining 15% stake in its arm Enovate Lifestyles (Candere) for Rs 42 crore. The company acquired a majority stake in Candere in 2017 to enter the online jewellery market.

  • Defence stocks like Bharat Electronics, Hindustan Aeronautics, Mishra Dhatu Nigam, and Mazagon Dock Shipbuilders are falling in trade. The fall is due to the expectation that a coalition government may have less consensus on border issues and the China threat as the BJP falls short of a single party majority in the Lok Sabha elections.

  • Kronox Lab Sciences' Rs 130.2 crore IPO gets bids for 19.1X the available 67 lakh shares on offer on the second day of bidding. The retail investor quota gets bids for 20.8X the available 33.5 lakh shares on offer.

  • Amber Enterprises reportedly plans to invest Rs 2,000 crore to set up a printed circuit board manufacturing facility in India.

  • FMCG stocks like Hindustan Unilever, Nestle India, Godrej Consumer Products, Britannia Industries, and Dabur India are rising in trade. The rise is due to an expectation of a more welfare-oriented populist government, which will boost demand for FMCG products in rural areas.

  • Adani group stocks like Adani Enterprises, Adani Ports & SEZ, Adani Energy Solutions, and Adani Green Energy plunge more than 15% in trade as the BJP falls short of a single party majority in the Lok Sabha elections.

  • Porinju Veliyath sells a 0.2% stake in Kaya on Friday. He now holds a 10.9% stake in the company.

  • Punjab National Bank signs an agreement with Indian Infrastructure Finance Co (IIFCL) to provide long-term financial assistance for infrastructure projects.

  • Crude oil prices fall as the market projects a potential rise in global supply towards the end of 2024. July crude oil futures on WTI (West Texas Intermediate) stand at $73.56, down by 0.9%, and August Brent oil futures at $77.75, down by 0.8%. In addition, OPEC+ announces a production output cut of approx 5.8 million barrels per day until 2025.

  • Sasken Technologies' CEO Abhijit Kabra tenders his resignation, effective from June 3. The company appoints CMD Rajiv C. Mody as his successor.

  • Zee Entertainment Enterprises' board is set to meet on June 6 to consider raising funds by issuing equity shares and any other eligible securities through permissible modes like private placement, qualified institution placement, preferential issue, etc.

  • Infosys enters a partnership with Nihon Chouzai, a Japanese dispensing pharmacy chain, to expand healthcare access in Japan with enhanced online medication guidance services and payment solutions.

  • Bajaj Finance’s wholly-owned subsidiary, Bajaj Housing Finance’s board is set to meet on Thursday to approve an initial public offer, consisting of a fresh issue and an offer for sale.

  • MOIL's manganese ore sales rise 41% YoY in May, reaching a record 2.1 lakh tonnes.

  • Prabhudas Lilladher retains its 'Buy' call on Apollo Hospitals Enterprises with a target price of Rs 7,050 per share. This indicates a potential upside of 19.5%. The brokerage believes that the stake sale in HealthCo to Advent and the merger with Keimed will create an integrated pharmacy distribution business, boosted by a fast-growing omni-channel digital health business. It expects the company's revenue to grow at a CAGR of 9.7% over FY25-26.

  • MphasiS is rising as it enters a partnership with Classiq to commercialise industry solutions powered by Quantum. The company aims to speed up the adoption of quantum solutions for enterprises by integrating them into its operations.

  • JM Financial expects telecom companies’ ARPU (average revenue per user) to grow at 10-12% CAGR, and reach Rs 270-300 in the next 3-4 years. The brokerage has a ‘Buy’ rating on Bharti Airtel and Bharti Hexacom, and a 'Sell' rating on Vodafone Idea.

  • PSU bank stocks like Bank of Baroda, Indian Bank, Canara Bank and Central Bank of India fall more than 6% in trade. All constituents of the broader Nifty PSU Bank index are also trading in the red, causing the index to plunge more than 5%.

  • Biocon gets US FDA approval for Micafungin, used as an antifungal medication to treat fungal or yeast infections. The drug has an approximate market size of $330 million annually in the US.

  • Mahindra & Mahindra Financial Services' total disbursements grow 7% YoY to Rs 4,430 crore in May 2024. Business assets improve 23% YoY to Rs 1.1 lakh crore with a coefficient efficiency of 96%.

  • Rail Vikas Nigam bags an order worth Rs 440 crore from South Central Railway for the engineering, procurement, and construction of a doubling track for the Aurangabad-Ankai Doubling Project.

  • Indian markets slumped today. Nifty 50 was trading at 22,851.35 (-412.6, -1.8%), BSE Sensex was trading at 75,026.85 (-1,441.9, -1.9%) while the broader Nifty 500 was trading at 21,434.15 (-363.3, -1.7%).

  • Market breadth is highly negative. Of the 1,933 stocks traded today, 234 were on the uptick, and 1,647 were down.

Riding High:

Largecap and midcap gainers today include Dabur India Ltd. (578.20, 6.1%), Hindustan Unilever Ltd. (2,496.30, 6.0%) and Avenue Supermarts Ltd. (4,548.75, 4.6%).

Downers:

Largecap and midcap losers today include REC Ltd. (452.20, -25.2%), Power Finance Corporation Ltd. (426.75, -23.1%) and Adani Ports & Special Economic Zone Ltd. (1,248.95, -21.2%).

Volume Rockets

48 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Dabur India Ltd. (578.20, 6.1%), Hindustan Unilever Ltd. (2,496.30, 6.0%) and Avenue Supermarts Ltd. (4,548.75, 4.6%).

Top high volume losers on BSE were REC Ltd. (452.20, -25.2%), Power Finance Corporation Ltd. (426.75, -23.1%) and Adani Ports & Special Economic Zone Ltd. (1,248.95, -21.2%).

Gujarat Fluorochemicals Ltd. (2,800, -9.1%) was trading at 7.2 times of weekly average. Vaibhav Global Ltd. (277.90, -15.4%) and Bharat Electronics Ltd. (255.55, -19.8%) were trading with volumes 7.2 and 5.9 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

11 stocks overperformed with 52 week highs, while 46 stocks tanked below their 52 week lows.

Stocks touching their year highs included - Blue Star Ltd. (1,601.65, 0.1%), Britannia Industries Ltd. (5,339.90, 3.3%) and Container Corporation of India Ltd. (948.75, -19.2%).

Stocks making new 52 weeks lows included - Atul Ltd. (5,486.05, -4.6%) and Bajaj Finserv Ltd. (1,489.40, -5.5%).

3 stocks climbed above their 200 day SMA including Hindustan Unilever Ltd. (2,496.30, 6.0%) and Ceat Ltd. (2,352.10, -1.7%). 111 stocks slipped below their 200 SMA including HFCL Ltd. (83.45, -19.4%) and Adani Enterprises Ltd. (2,941.25, -19.3%).

 
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The Baseline
03 Jun 2024
5 stocks to buy from analysts this week - June 3, 2024
By Abhiraj Panchal

1. J Kumar Infraprojects:

Axis Direct maintains a 'Buy' rating on this construction and engineering company with a target price of Rs 845, indicating a potential upside of 9%. The company’s revenue grew 25.4% YoY to Rs 1,433.7 crore in Q4FY24, and its net profit rose 34.9% YoY to Rs 99.7 crore. 

Analyst Uttam K Srimal highlights the company’s order book of Rs 25,711 crore, which is 5X its FY24 revenue. He believes that its order inflow of Rs 11,810 crore will ensure revenue visibility for three to four years across diverse sectors and geographies.

The analyst emphasizes the company's bidding pipeline of Rs 20,000 crore, which targets metros, elevated corridors, road tunnels, and buildings. Srimal is upbeat about the company’s aim to diversify its project profile by bidding for irrigation projects as well. He says, “J Kumar Infraprojects remains one of the most established EPC contractors and will continue to benefit from its healthy order book position, strong execution capabilities, and healthy financial position.” He expects a revenue CAGR of 16.9% in FY25-26, buoyed by order inflows and expanded operational efficiencies in infrastructure projects.

2. NTPC:

ICICI Direct maintains a ‘Buy’ call on this electric utilities company with a target price of Rs 455, indicating an upside of 16.1%. The company’s net profit rose by 26.9% YoY to Rs 6,168.7 crore in Q4FY24, while its revenue increased 9.1% YoY.

Analyst Chirag Shah expects the company’s growth momentum to sustain as he says, “NTPC has been the only company that has added coal-based capacities over the past five years and reached an installed base of 73,000 MW.” He expects an 11% power generation growth, after the commissioning of the under-construction 9,300 MW of coal-based plants in FY26.

Shah is optimistic about NTPC’s aggressive approach to expanding its renewable energy portfolio, including green hydrogen. The company says that it is working to ensure that 45-50% of its capacity comes from non-fossil fuels by 2030. Shah believes that the company will also see growth in the conventional thermal portfolio. He estimates profit to grow at a 26% CAGR over FY25-26.

3. ITD Cementation India:

Edelweiss retains a ‘Buy’ call on this construction and engineering company with a target price of Rs 475. This indicates an upside of 12.7%. ITD’s net profit improved by 136.9% YoY to Rs 89.5 crore (12.5% higher than the brokerage's estimate) in Q4FY24, while its revenue grew 39.1% YoY (10% higher than the brokerage's estimate).

Analyst Mehul Mehta is optimistic about the company’s focus on the expansion of its bridges, marine and tunnel business overseas. It aims to balance its order inflow in the marine segment between overseas and domestic markets. 

The analyst believes that the management’s focus on bidding for higher average ticket size orders across its  projects should accelerate revenue growth and profitability for the company.

The company’s management says that the bid pipeline stood at Rs 28,000 crore at the beginning of FY25. According to Mehta, the current order book translates into revenue visibility of 2.6x of the FY24 revenue.  

4. Ahluwalia Contracts (India):

IDBI Capital gives a ‘Buy’ call to this construction and engineering company with a target price of Rs 1,412, indicating an upside of 15.8%. In Q4FY24, the company’s profit increased 176.9% YoY to Rs 199.8 crore, while revenue grew 34.9% YoY. However, its EBITDA margin fell by 3.8 percentage points to 9%. Analysts Vishal Periwal and Shubham Shelar say, “The company’s EBITDA came in lower than our estimates as it was impacted by an increase in sub-contract expenses, due to a shortage of labour.”

Periwal and Shelar are upbeat about Ahluwalia Contracts’ order book, which currently stands at Rs 11,200 crore as it won orders worth Rs 5,500 crore in FY24. The management has guided to close FY25 with an order inflow of more than Rs 7,000 crore. The analysts expect revenue and profit to grow at a CAGR of 44.7% and 18.8%, respectively over FY25-26.

The company's current order book is divided in a ratio of 65:35 between the government and private sectors. The analysts are optimistic about the company’s plan to further improve private orders and maintain the ratio at 50:50.

5. ITC:

KR Choksey maintains a ‘Buy’ rating on this food and tobacco products company with a target price of Rs 517, indicating a potential upside of 20.1%. In Q4FY24, the company’s revenue increased 10.3% YoY to Rs 20,130.3 crore, while its net profit fell 1.1% YoY to Rs 5,120.6 crore. Analyst Unnati Jadhav notes that the decline in net profit was due to higher tax expenses and depreciation costs. She says, “ITC reported an in-line performance in terms of overall earnings.”

Jadhav says that the growth was led by improved volumes from cigarettes and strong performance in its hotel business. However, she is cautious as the paperboard and agribusiness continued to slacken during the quarter. 

Going forward, the analyst believes that the FMCG business will see stable growth due to the company’s focus on new and innovative launches and will see further improvement as consumption sees an uptick. She also expects the pipeline of upcoming properties in the hotel segment to drive growth. Jadhav sees ITC’s profit and revenue growing at a CAGR of 8.6% and 7.3%, respectively, over FY25-26.

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

(You can find all analyst picks here)

 
Trendlyne Marketwatch
Trendlyne Marketwatch
03 Jun 2024
Market closes higher, NMDC's total sales fall by 22% YoY to 2.8 million tonnes in May
By Trendlyne Analysis

Nifty 50 closed at 23,263.90 (733.2, 3.3%), BSE Sensex closed at 76,468.78 (2507.5, 3.4%) while the broader Nifty 500 closed at 21,797.40 (694.1, 3.3%). Market breadth is in the green. Of the 2,180 stocks traded today, 1,397 showed gains, and 744 showed losses.

Indian indices maintained the gains from the afternoon session and closed in the green. The volatility index, Nifty VIX, dropped by 14.9% and closed at 20.9 points. Welspun Corp’s associate, East Pipes Integrated Company for Industry (EPIC), bagged orders worth Rs 3,670 crore from Saudi Arabian Oil Company. The order is to manufacture and supply steel pipes in the next 19 months. 

Nifty Midcap 100 and Nifty Smallcap 100 closed higher following the benchmark index. All major sectoral indices closed higher than Friday’s closing level. According to Trendlyne’s sector dashboard, utilities emerged as the top-performing sector of the day, with a rise of over 7.9%.

Most European indices trade in the green. US indices futures trade higher, indicating a positive start. China’s manufacturing PMI for May expands to 51.7 against estimates of 51.6.

  • PI Industries sees a short buildup in its June 27 future series as its open interest rises 15.1% with a put-call ratio of 0.8.

  • Navin Fluorine International appoints Nitin G Kulkarni as Managing Director of the company for five years, effective from June 24, 2024.

  • IRB Infrastructure Developers rises more than 9% as the National Highways Authority of India (NHAI) announces a hike in toll prices by 5% starting today. The hike is part of the yearly revision based on changes in wholesale price index inflation.

  • NMDC's total sales fall by 22% YoY to 2.8 million tonnes in May as its production declines 37% YoY to 2.3 million tonnes.

  • According to ICRA, domestic steel consumption grows by 11.3% between February and April 2024. The firm revises its FY25 steel demand growth target to 9-10% YoY compared to the earlier estimate of 7-8%, as it expects better realizations and higher deliveries in FY25.

  • Axis Direct downgrades Ahluwalia Contracts to 'Hold' from 'Buy' with a higher target price of Rs 1,160 per share. This indicates a potential downside of 4.1%. The brokerage notes the company’s quarterly performance was backed by robust execution but anticipates a softer Q1FY25 due to election-related disruptions. It expects the company's revenue to grow at a CAGR of 12.9% over FY25-26.

  • Kronox Lab Sciences' Rs 130.2 crore IPO gets bids for 5.9X the available 67 lakh shares on offer on the first day of bidding. The retail investor quota gets bids for 8X the available 33.5 lakh shares on offer.

  • Foreign investor CMDB II sells 18.8 lakh shares (4% stake) of CarTrade Tech, amounting to Rs 168.8 crore, in a bulk deal on Friday. Meanwhile, TT Emerging Markets picks a 1.2% stake in the company.

  • India’s manufacturing PMI moderates to a three-month low of 57.5 in May, from 58.8 in April, due to a slightly slower growth in new orders and output. The PMI missed estimates of 58.4 as some companies reduced working hours due to intense heatwaves, impacting volumes.

  • Shriram Finance rises sharply as it secures $425 million (approx. Rs 3,530.9 crore) and EUR 40 million (approx. Rs 360.7 crore) through a syndicated term loan transaction.

  • PSU bank stocks like Bank of Baroda, State Bank of India, Central Bank of India, and Canara Bank are rising in trade. The broader sectoral index, Nifty PSU Bank, is also trading in the green.

  • JSW Steel launches JSW Magsure, a new patented zinc, magnesium, and aluminium alloy-coated steel product, designed for use in highly corrosive environments.

  • According to data from the National Payments Corp of India, UPI (unified payments interface) transactions rise 49% YoY to a record 14 billion in May, up from 13.3 billion in April.

  • Ashoka Buildcon hits an all-time high of Rs 200 per share as it bags orders worth Rs 2,153 crore from MSRDC for bridge construction projects in Maharashtra.

  • Bajaj Auto’s wholesales rise marginally around 0.1% to 3.5 lakh units in May. Two-wheeler wholesales decline by 0.7% YoY, while commercial vehicle wholesales improved by 5%.

  • REC surges as its board approves raising the foreign borrowing limit to $24 billion. However, the overall borrowing limit in Indian rupees remains at Rs 6 lakh crore. The board also approves raising up to Rs 1.5 lakh crore through the private placement of non-convertible bonds.

  • According to data from the Finance Ministry, India's GST collections rise by 10% YoY to Rs 1.7 lakh crore in May, driven by an increase in revenues from domestic transactions and lower imports. The net GST revenue stands at Rs 1.4 lakh crore.

  • PNC Infratech rises sharply as its subsidiary, PNC Kanpur Highways, receives a Rs 398.6 crore settlement from the National Highways Authority of India (NHAI) under the Vivad Se Vishlvas Il (Contractual Disputes) scheme.

  • General Atlantic Singapore Fund, promoter of KFIN Technologies, sells a 5.8% stake in the company on Friday.

  • Suzlon Energy rises sharply as Morgan Stanley initiates coverage with an 'Overweight' rating and a target price of Rs 58.5 per share, indicating a potential upside of 17%. The brokerage believes the stock is stronger post-deleveraging and well-positioned to benefit from improving macro conditions.

  • India’s GDP grows by 7.8% in Q4FY24, surpassing the estimated 6.9%. For FY24, GDP growth rate stood at 8.2%, up from 7% in FY23.

  • Adani Ports & Special Economic Zone surges as its arm, Adani International Ports Holdings (AIPH), inks a concession agreement with the Tanzania Ports Authority to operate and manage a terminal at Dar es Salaam Port, Tanzania. AIPH has also entered into a share purchase agreement to acquire a 95% stake in Tanzania International Container Terminal Services for $39.5 million.

  • Inox Wind is rising as its board of directors approves the issuance of preference shares worth up to Rs 1,000 crore in multiple tranches on a private placement basis.

  • Welspun Corp rises as its associate, East Pipes Integrated Company for Industry (EPIC), bags orders worth SAR 1.7 billion (approx. Rs 3,670 crore) from Saudi Arabian Oil Co. The order is to manufacture and supply steel pipes in the next 19 months.

  • Aurobindo Pharma's subsidiary, TheraNym Biologics, enters a master service agreement (MSA) with Merck Sharp & Dohme Singapore Trading Pte (MSD) to expand its biologics manufacturing facilities. The company plans to invest Rs 1,000 crore for the expansion, which will help the company venture into the contract manufacturing operations (CMO) business.

  • Markets opened high. Nifty 50 was trading at 23,147.20 (616.5, 2.7%), BSE Sensex was trading at 76,583.29 (2,622.0, 3.6%) while the broader Nifty 500 was trading at 21,706.20 (602.9, 2.9%).

  • Market breadth is ticking up strongly. Of the 1994 stocks traded today, 1,866 were in the positive territory and 99 were negative.

Riding High:

Largecap and midcap gainers today include Adani Power Ltd. (874.50, 15.7%), GAIL (India) Ltd. (230.80, 13.0%) and Power Finance Corporation Ltd. (554.80, 12.7%).

Downers:

Largecap and midcap losers today include GlaxoSmithKline Pharmaceuticals Ltd. (2,494.70, -4.8%), Ipca Laboratories Ltd. (1,127.30, -2.2%) and Zomato Ltd. (175.45, -2.1%).

Movers and Shakers

32 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Adani Power Ltd. (874.50, 15.7%), GAIL (India) Ltd. (230.80, 13.0%) and Bank of Baroda (296.95, 12.1%).

Top high volume losers on BSE were Jyothy Labs Ltd. (393.90, -1.7%), GMM Pfaudler Ltd. (1,214.90, -1.5%) and Ratnamani Metals & Tubes Ltd. (3,359.55, -1.3%).

AIA Engineering Ltd. (3,684, 0.2%) was trading at 9.5 times of weekly average. RBL Bank Ltd. (261.25, 6.3%) and Cera Sanitaryware Ltd. (7,159.90, 2.2%) were trading with volumes 5.8 and 5.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

73 stocks hit their 52 week highs, while 1 stock were underachiever and hit their 52 week lows.

Stocks touching their year highs included - Adani Ports & Special Economic Zone Ltd. (1,583.95, 10.2%), Adani Power Ltd. (874.50, 15.7%) and Ambuja Cements Ltd. (670.80, 5.8%).

Stock making new 52 weeks lows included - Eureka Forbes Ltd. (425, -2.0%).

36 stocks climbed above their 200 day SMA including Esab India Ltd. (5,830, 9.7%) and Ramkrishna Forgings Ltd. (709.30, 6.5%). 6 stocks slipped below their 200 SMA including Vinati Organics Ltd. (1,707.95, -1.8%) and Mahindra Holidays & Resorts India Ltd. (399.25, -0.9%).

 
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The Baseline
31 May 2024
Five Interesting Stocks Today - May 31, 2024

1. InterGlobe Aviation (IndiGo): 

This airlines company fell by 3.3% on May 24 after announcing its Q4FY24 results. InterGlobe Aviation's (IndiGo) net profit missed Trendlyne’s Forecaster estimates by 25.9%, despite growing by 106.1% YoY to Rs 1,894.8 crore. The rise in profit was due to healthy demand for air travel, and also due to a deferred tax return of Rs 124.2 crore. However, the company highlighted that FY24 saw headwinds in the form of aircraft groundings. IndiGo currently has 70-80 aircraft grounded due to engine issues. 

During the quarter, revenue grew by 26.7% YoY to Rs 18,505.1 crore, thanks to improvements in passengers carried and higher capacity.IndiGo’s passengers carried grew by 14% YoY to 2.7 crore people over the quarter, while the seating capacity increased by 14.4% YoY. 

The company’s share price declined following its results announcement. Over the past year, however, its share price has risen 76.7%. During Indigo’s earnings call, Petrus Elbers, the CEO said,  “New travel trends are emerging, such as experiential travel, growth in the spirit of tourism, and increasing demand for international travel”. To keep up with these changing trends, the company announced plans to unveil business-class services by the end of the year. Currently, IndiGo offers only economy class, with a fleet size of 367 as of FY24. 

The airline, which has a dominant 60% market share in the domestic market, is now focusing on expanding its long-haul international operations. In April, it announced plans to foray into the wide-body aircraft space, and placed an order for 30 Firm Airbus A350-900 aircraft. Currently IndiGo has a pending order book of around 1,000 aircraft to be delivered up to 2035, offering long-term visibility. IndiGo has also planned partnerships and loyalty programs to boost its international presence. With this expansion and its move towards becoming a full-service airline, it will compete both with Air India and Vistara (whose merger is in progress) and with international carriers. 

Morgan Stanley has an ‘Overweight’ rating on IndiGo with an upgraded target price of Rs 5,142. The brokerage believes the company is set to change over the next few years, with loyalty programs, business class, and long-haul international plans. However, it expects near-term cost pressures but says the company has the right strategy, as travel trends are changing. 

2. Samvardhana Motherson International (Motherson Sumi):

This auto parts maker hit a new 52-week high of Rs 157 on Friday after surging 10.3% over the past week following its Q4 and FY24 results announcement. The company reported operating revenue growth of 20.4% YoY to Rs 27,058.2 crore for the quarter, beating Trendlyne’s Forecaster estimates by 3%. Its net profit rose 109.8% YoY to Rs 1,371.8 crore, beating estimates by an astonishing 70%.

The surge in net profit is mainly due to the compensation the company received for hyperinflation in Argentina. The finance cost also decreased by 16.3% YoY to Rs 63.8 crore. Motherson received board approval to raise Rs 5,000 crore through NCDs.

The company has announced six new greenfield projects in India, China, and Poland, adding to the 12 announced previously. It plans to invest Rs 2,000 crore in FY25 for these greenfield projects, with 70% allocated to non-automotive businesses such as aerospace, consumer electronics, as well as health and medical. Samvardhana’s aerospace subsidiary, AD Industries, has become a key supplier of structure and engine components to Boeing and Airbus.

Chairman Vivek Sehgal said, “The majority of growth capex is in emerging markets, and our 18 greenfields are on track to come onstream in FY25 and FY26.” He noted that the company is investing in future growth while still reducing its debt. In the past quarter, the company reduced its debt by Rs 1,800 crore, bringing the current total to Rs 17,351 crore.

Morgan Stanley maintains an ‘Overweight’ rating on Samvardhana Motherson with a higher target price of Rs 176, indicating a potential upside of 16.4%. The brokerage highlights that earnings support is likely to come from its acquisitions, sharp non-auto growth, and improvement in the balance sheet.

3. Torrent Pharmaceuticals: 

This pharma stock surged for three consecutive sessions to touch its all-time high of Rs 2,795 per share on Monday after its net profit grew by 56.4% YoY to Rs 449 crore in Q4FY24 on the back of price hikes. Revenue increased by 11% YoY to Rs 2,776 crore, helped by improvements in the Indian, Germany, and Brazil markets. But net profit missed Trendlyne’s Forecaster estimates by 3%. The company’s board of directors approved raising Rs 5,000 crore by issuing equity shares through a qualified institutional placement (QIP). It features in a screener of stocks with increasing return on equity (RoE) over the last two years.

Growth in the Indian market (50% of total revenue) was driven by new launches in chronic therapies, an expanded field team, and increased sales from brands on the prescription side (Shelcal 500, Unienzyme and Tedibar) and over the counter segments. The Brazil market (16% of total revenue) witnessed growth on the back of price hikes, higher sales volume and new drug launches. Lastly, the German market (10% of total revenue) grew on account of higher tender wins and new product launches. 

Speaking after the results, the company’s CFO and Executive Director, Sudhir Menon, said, “We expect EBITDA margins to improve by 50-100 bps in FY25, on the back of higher traction in the branded generics segment and better operating leverage. We are also planning eight launches in the next year for the US market and are aiming to hit a revenue target of $250-300 million (approx. Rs 2,000-2,500 crore) in the next 3-4 years.” For context, the US market generated a revenue of Rs 1,078 crore in FY24, so this implies a two-fold increase in the next 3-4 years.

Post results, ICICI Direct retains its ‘Buy’ call on the stock with an upgraded target price of Rs 3,080 per share. This indicates a potential upside of 15.9%. The brokerage believes that the company’s ability to market drugs of acquired business brands (Elder, Unichem and Curatio) will drive growth. It expects the company’s revenue to grow at a CAGR of 11.3% over FY25-26.

4. Hindalco Industries:

This aluminium products manufacturer rose 6.1% in the past month and hit its all-time high of Rs 713.5 on Wednesday. Its net profit grew by 31.7% YoY to Rs 3,174 crore in Q4FY24, in line with estimates, while revenue increased marginally. The profit growth was due to decreased inventory costs and raw material expenses, as global aluminum prices in Q4 remained flat and copper prices fell 5.4% YoY. 

The company’s India aluminium volumes (downstream and upstream) rose 17% YoY and 4% YoY, respectively, on the back of higher beverage packaging shipments to the Americas. The copper segment reported an all-time high sales volume, rising 15% YoY. 

Analysts expect domestic demand for aluminium to double to 9 million tonnes (MT) in the next 10 years, on the back of the infrastructure, packaging, electric vehicle and renewable energy spaces. The management hopes to ride this growth, with plans to spend Rs 6,000 crore in capex in FY25. Most of the allocation will be towards aluminium downstream capacity and specialty alumina domain, focusing on value-added products.

In Q4FY24, Hindalco’s debt to EBITDA reduced to 1.2x from 1.5x. The management expects to maintain a low debt ratio despite the high capex. MD Satish Pai says, “All our strategic capex in India is mapped to the cash flow generation in the businesses, and are in line with our capital allocation policy.” 

Management highlights increased competition in specialty products such as container foils due to higher exports from China. However, this may be mitigated with the government sanctions on imports of low grade aluminium, copper, and nickel from December 2023.

In other news, the company’s promoter Birla Group Holdings acquired a 1.2% stake in the company and now holds an 11.4% stake. The company also appears in a screener for stocks where mutual funds have increased their shareholding over the past two months.

Axis Direct maintains a ‘Buy’ call on Hindalco Industries due to its expansion plans such as the Bay Minette, Copper Inner Grooved Tubes and Aluminium downstream projects. The brokerage is optimistic as these expansions will increase EBITDA per tonne after commissioning in FY27.

5. RITES:

This construction & engineering company declined by 6.9% over the past week and announced its results on May 29. The firm missed Trendlyne Forecaster estimates for Q4FY24 for revenue by 16.4% and net profit by 9.2%. The Q4FY24 numbers were disappointing – the company’ net profit declined by 9.2% YoY to Rs 126.1 crore, while its revenue declined by 5.4% YoY due to a fall in domestic leasing and export revenue. The stock shows up in a screener for stocks in the sell zone.

RITES is mainly into infra projects consultancy, turnkey construction, and export of railway vehicles. The company caters to a diverse range of clients across various sectors, including government agencies like Indian Railways, private companies, and international organizations. The company’s order book stands at Rs 5,690 crore as of Q4FY24, out of which a large part worth Rs 2,600 crore is from the consultancy vertical and Rs 2,050 crore worth of orders are from turnkey construction projects. 

Analysts predict that the company’s export segment will pick up by H2FY25. After a prolonged period without export activity, the company recently won two export orders amounting to Rs 1,200 crore. These orders were secured through agreements for the provision of 10 locomotives to CFM Mozambique and 200 locomotives to Bangladesh Railways. Analysts expect the company to grow its revenue at a CAGR of 23% over FY25-FY26E.

Rahul Mithal, Chairman and Managing Director, RITES said: ”From getting export orders of Rs 1,200+ crore after a gap of more than 4 years, and diversifying our Quality Assurance business portfolio, we are on the right track and we will capitalize aggressively on this momentum in the coming FY.” He also guided a capex target of Rs 100-140 crore for FY25 and expects to maintain at least 40% of the order book from the consultancy business.

Axis Direct has given a "Hold" rating on Rites with a price target of Rs 715. The brokerage values the company at 24x FY26 EPS to arrive at a TP of Rs 715/share, implying no upside from the CMP. The brokerage awaits for a better entry point as it notes that higher competitive intensity may impact margins.

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