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1. Info Edge (India):

This internet software & services company has risen by 8% over the past week and touched a 52-week high of Rs 6,545 on Thursday. On May 16, Info Edge (India) reported a net profit of Rs 60.4 crore for Q4FY24, compared to a loss of Rs 272.8 crore in Q4FY23. Its revenue grew 8.7% YoY to Rs 657.4 crore, beating Trendlyne’s Forecaster estimates by 7.2%. EBITDA margins improved by 153 bps YoY to 41% during the quarter. 

Info Edge’s recruitment business and cash cow (Naukri), which accounts for 73% of its revenue, grew by 3.4% YoY in Q4. Billings during the quarter were up 7% YoY. Recruitment business growth was slightly slower compared to the other segments due to a slowdown in IT hiring. Hitesh Oberoi, the Managing Director said, “FY24 was a challenging year for the overall recruitment business largely because of the slowdown in IT hiring”. However, he highlighted that there has been an increase in IT job listings and resumes being viewed by hiring managers over the last 3-4 months. 

Meanwhile, during Q4FY24, the company’s non-recruitment business verticals, namely 99acres.com (real estate), Jeevansathi.com (matrimony), and Shiksha.com (education) grew by 22.5%, 29.2%, and 22.2% respectively. 

In addition to the various lines of online business, the company has invested in several start-up companies. As of March 2024, Info Edge holds 13.6% and 12.7% stakes in Zomato and PB Fintech (PolicyBazaar), respectively. The management reiterated no plans to sell their holdings in these companies, given their growth prospects. Other strategic investments include Nopaperforms Solutions, Ambition Box, and AarogyaAI.  The company highlighted that businesses like Ambition Box and Job Hai have begun monetizing in Q4, and have the potential to grow at a faster pace moving forward.

Post Info Edge’s results announcement, JM Financial upgraded its rating to  'Buy' and raised the target price to Rs 7,000. According to the brokerage, billings growth slowdown in the recruitment segment has bottomed out. It expects EBITDA margins to expand from 40.1% in FY24 to 44.7% in FY27.

2. Balkrishna Industries:

This off-highway tyre manufacturer hit a new 52-week high of Rs 3,174.3 on Tuesday after surging 17.5% in the past week, following the release of its Q4 and FY24 results. In Q4FY24, the company reported revenue growth of 20.2% YoY to Rs 2,852.7 crore, surpassing Trendlyne’s Forecaster estimates by 15.4%. During the same period, its net profit went up by 87.4% YoY to Rs 486.8 crore, beating estimates by 29.1%.

The revenue beat was mainly driven by a 13% volume expansion due to market share gains on a YoY basis, and partially passing higher freight tariffs (due to the Red Sea crisis) onto customers. The increase in net profit was supported by improving EBITDA margins, which grew by 460 basis points YoY to 24.9%.

Geographically, 47.1% of the company’s revenue comes from Europe, 26.8% from India, 16.9% from the Americas, and the rest from other regions. On the global front, the company has a market share of 5-6%. Balkrishna aims to increase it to around 10% in the next five years through diversification and better penetration in the OEM segment, particularly in the non-farm tyre category. Currently, sales from replacements account for 71.1% of revenue, while OEMs contribute 27%.

Joint Managing Director Rajiv Poddar said, “The company is considering price hikes in the coming quarter to counter rising raw material prices, especially in natural rubber, and freight costs.” He also emphasized that India will be a focus market for the firm due to significant growth in the replacement market.

Sharekhan upgrades Balkrishna Industries to ‘Buy’ with a target price of Rs 3,195. Analysts are upbeat as the management is looking for volume growth in FY25 with margins stable at current levels. They also expect a revival in demand and are positive about the company’s market share strategies.

3. HG Infra Engineering:

This construction & engineering stock has risen by 46.5% over the last month due to its strong Q4FY24 results on May 8 and two order wins on Wednesday. Its Q4FY24 net profit grew by 11.2% YoY to Rs 190 crore, while revenue increased by 11.1% YoY to Rs 1,713.9 crore. Its net profit missed Trendlyne’s Forecaster estimates by 10.3%, but revenue beats estimates by 12.4%. The company appears in a screener of stocks outperforming their industries in terms of price change over the past month.

HG Infra’s revenue increased on the back of its order book increasingly diversifying with the addition of solar projects to its existing portfolio of road engineering, procurement and construction (EPC), railways and water projects. Despite a rise in revenue, its order inflow for FY24 stood at Rs 4,350 crore, 45.6% lower than the management’s estimate of Rs 8,000 crore on account of a reduction in orders from the National Highways Authority of India (NHAI) due to elections. 

However, the election effect is waning, as the company bagged two orders worth Rs 4,142.2 crore from Maharashtra State Road Development Corp (MSRDC) from the Maharashtra government on Tuesday. Road EPC projects accounted for 38% of the total order book of Rs 12,434 crore in FY24, while 40% originated from hybrid annuity model (HAM) road projects, 22% from railway projects, and the rest from other projects.

Post results, the company’s Chairman and Managing Director, Harendra Singh, said, “We have five solar projects which are expected to be completed by H1FY25. We expect to add new projects worth Rs 11,000-12,000 crores in road, railway, solar and water segments to sustain and scale our business. We believe that we will achieve 15-20% growth in the top line in the coming years and maintain a steady margin in the range of 15-16%.”

Post results, Axis Direct maintains its ‘Buy’ call on the stock with a target price of Rs 1,320 per share. Since the release of the analyst call on May 13, the stock has risen by 28.5%, achieving the target price. The brokerage believes that the company’s revenue will grow on the bank of a strong order book position, better order intake, diversification into related sectors as well as the government’s infrastructure focus. It expects the company’s revenue to grow at a CAGR of 15% over FY25-26.

4. Cipla:

This pharma company rose by 10.4% in the past month following multiple announcements. In the past week. The firm received final approval from the US FDA for its Lanreotide injection product, used in tumor treatment. The Lanreotide injection is a generic version of the Somatuline Depot injection. According to IQVIA, Somatuline Depot has annual sales of approximately $898 million.

Cipla also announced its Q4FY24 results this month. Its net profit improved by 80.1% YoY to Rs 939 crore, while revenue increased by 9.2% YoY. It beat Trendlyne Forecaster’s net profit estimates by 10%. The company’s EBITDA grew by 12.1% YoY. The profit growth was due to higher non-operating income as the firm received a Rs 309.7 crore dividend from one of its subsidiaries. The company also appears in a screener for stocks with annual profit growth higher than sector profit growth.

The company plans to incur Rs 1500 crore in capex in FY25. Ashish Adukia, Chief Financial Officer, said, “We expect the EBITDA margin for FY25 to increase by 200 basis points to about 24.5-25.5% compared to FY24.” The management expects to spend 6-7% of revenue in FY25 on research and development.

Meanwhile, four promoters of Cipla sold a total of 2.5% stake (aggregating to 2.1 lakh shares) in the company through open markets. Buyers include global and domestic funds such as ICICI Prudential Mutual Fund, Aditya Birla Mutual Fund, Axis Mutual Fund, Societe Generale, and Morgan Stanley Asia.

Axis Direct maintains a ‘Buy’ call on Cipla due to its better-than-expected results from business in the US. The brokerage believes results were driven by more US distributors buying manufactured drugs from India, a shortage of drugs in a few segments and the launch of products like gSynbicort and Peptide with a market size of $300-400 million.

5. PVR INOX:

This movies & entertainment company declined by 1.4% after it announced its results on May 14. The firm missed Trendlyne Forecaster revenue estimates for Q4FY24 by 29.1% and the net profit estimate by 68.3%. The company’s net loss reduced by 61.2% YoY to Rs 219.8 crore on the back of a 4.9% decline in movie exhibition costs. The stock shows up in a screener for stocks with low PE.

The company’s customer footfall declined by 10.7% QoQ to 32.6 million in Q4FY24 on the back of fewer movie releases and promotional offers. Analysts suggest that the upcoming 2024 general elections and T20 Cricket World Cup may exert pressure on the movie pipeline for Q1FY25, potentially resulting in decreased occupancy levels. 

The company’s management anticipates improvements in revenues and costs in FY25. But the effect of streaming platforms on theatre footfalls is a factor that the management does not have a clear answer for. The company plans to reduce losses by cutting annual capital spending, and is exploring options like franchising for its outlets..

The company’s management anticipates a reduction of approximately 25% in total capital expenditure for FY25 compared to the previous year, as it rolls out a new screen portfolio, where its landlord partners will co-invest for most of the screen growth. 

Sanjeev Kumar Bijli, Executive Director of the company, said that in FY24 PVR Inox exited 85 underperforming screens and are going to shut down about 70 underperforming screens in FY25. He adds “We will be very selective in adding new cinemas and plan to open about 120 new streams in FY 25, prioritizing expansion efforts in South India.” 

The company is prioritizing the southern region due to the considerable success of its new program "PVR passport," which offers customers the opportunity to watch four movies per month at PVR INOX theaters for just Rs 87 per ticket. Southern enrollments in PVR passport lead at 35%, followed closely by the North and West regions at approximately 33% each.

Motilal Oswal has retained its "Neutral" rating on PVR INOX with a price target of Rs 1,400. The brokerage says that maintaining occupancy and traction in ad revenues amid an increasing threat from deep-pocketed OTT players is key. The brokerage values PVR INOX at 13x FY26E EV/EBITDA to arrive at a TP of Rs 1,400.

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

The election this year has come with much nail-biting. It’s not just political parties that are having the jitters – investors are also facing sharp market swings and volatility. The Nifty VIX rose to a 15-month high of 22.3 points as of Tuesday, while the Nifty 50 has been range-bound since the start of the polling season.

Foreign institutional investors in particular have grown wary of the volatility. They are at their most pessimistic level since 2012, shorting Indian stocks significantly, and have withdrawn around $3.5 billion from Indian equities in May alone. For now, foreign outflows have not dented valuations much, as inflows from domestic institutions have jumped.

Rising bond yields in the US have also contributed to FII withdrawal. Bond yields are up as the timing of likely rate cuts by the US Fed keeps getting postponed, shifting from June-July to September-October. And despite tensions between the US and China, cheaper valuations of Chinese and Hong Kong equities (currently trading at 10 PE) have been tempting foreign investors.

Mihir Vora, Chief Investment Officer of Trust Mutual Fund, says, “ FII outflows are on account of election uncertainty. India in the longer term will see FII inflows, as it is one of the fastest growing countries among large economies”. 

Historically, FIIs have returned to Indian markets post elections. Will this year be different?

In this week’s Analyticks:

• FIIs exit stocks: How is the exodus impacting Indian markets?
• Screener: Stocks where FII/FPIs are decreasing shareholding, with falling stock prices over the past month

Let’s get into it.

Election-led volatility, rising US bond yields trigger FII outflows

Volatility – a good measure of risk in the market – has risen significantly over the past month for India. But this is not the first time an election has driven the Nifty VIX up. The volatility index shot up during the 2014 election (a change election), to 38 points. In 2019, when the BJP won reelection, it rose to 29 points. Comparatively, the current rise of the Nifty VIX is on the lower side. 

But foreign investors hate uncertainty, and net outflows are likely to persist until the results are announced. If a single party wins, FIIs might return quickly to Indian equities.

Nifty VIX on the lower side so far, compared to the past two general elections

The strengthening US dollar has also fuelled FII outflows since a depreciating rupee eats into investor gains. Another reason for the outflow has been rising bond yields in the US. 

Sticky inflation and a strong American job market have put the US Fed in a tight spot as far as cutting interest rates is concerned. Rate cuts are now expected only in September, and the expected rate cut size has gone down from 90 bps at the start of 2024 to around 44 bpsnow. As a result, US treasury yields shot up from 3.8% at the start of 2024 to 4.7% by the end of April. The rising yield has attracted foreign investors.

Historically, Indian indices fall with a rise in US treasury bond yields, due to FII outflows. Recent DII inflows have buffered the fall, as domestic institutions invested Rs 2,50,903 crores from April 2023 to April 2024.

Rising US bond yields have triggered FII selling

Largecaps impacted by FII outflow, DIIs protect the fall

Since the start of 2024, FIIs have withdrawn nearly Rs 84,318 crore worth of equity from the Indian market. In the same period, DIIs invested around Rs 1,52,620 crore.

DIIs sustain Indian markets amid FII outflows in the past 12 months

The Nifty 50 has risen 3.3% from the start of 2024, while Nifty Midcap 100 and Nifty Smallcap 100 have gained 11.5% and 11% respectively. FII money has mainly been in largecap and midcap stocks, while DIIs have invested in midcap and smallcap.

As a result, the FII outflow from largecaps has been cushioned only a bit by DIIs. The midcap and smallcap rallies have been backed by DII inflows, despite concerns about their expensive valuations.

Telecommunication and consumer services sectors get maximum inflows, while FMCG and financial services see an exodus.

The telecom services sector saw the highest inflows from FIIs in 2024. The inflows were driven by Vodafone Idea’s FPO. The Vodafone issue saw FIIs buying 65% (Rs 11,700 crore) of the Rs 18,000 crore FPO.  The sector also saw FII investments in Bharti Airtel, which has gained significant market share in the past year, even as it raised overall tariff rates.

The capital goods (general industrial) sector saw investments in the defence industries. The defence industry was aided by large orders from the government – Indian defence firms won orders of more than $7 billion in FY24. Capital goods firms involved in infrastructure and real estate also saw increased volumes, due to higher election spending by the government and an uptick in real estate activity.

The telecommunication sector has led FPI inflows since January 2024

The financial services sector on the other hand, saw the highest selling in 2024. Most of the selling came in private banks and NBFCs, which have faced liquidity concerns and stiff competition from public sector banks. HDFC Bank – usually an FII favourite – saw the biggest exodus. HDFC Bank’s margins are under pressure, while merger woes continue. 

The FMCG sector also saw pressure as rural consumption slowed. The premiumization of products led to lower offtake in price-sensitive rural geography. However, higher consumption in urban areas has offset this a bit.

FIIs may choose India over China in the long run

Chinese stocks are now at at an attractive valuation compared to India. The government stimulus in China (around $138 billion) and the recent pick-up in industrial production have driven foreign inflows up. But the economic woes in the country and the rising threat of a US-China trade war may dent enthusiasm for the Chinese market in the longer term.

The International Monetary Fund (IMF) has guided India’s GDP growth of 6.8% for 2024, which is the highest among emerging economies. In comparison, China is expected to slow down to 4.6% GDP growth in 2024, from 5.2% in 2023. India’s inflation, currently at 4.8%, is also predicted to decline post-monsoons due to an expected fall in vegetable prices. 

While most emerging economies are struggling with price rises, slowdowns and geo-political tensions, India has so far not seen a major dent in growth. Increased tariffs on Chinese goods from the US and EU have impacted its growth prospects, and India is being seen by the world as a good alternative. 

In this scenario, current FII outflows are not a big worry. DIIs have been actively investing without any signs of slowing down. Foreign investors are expected to return in two phases, first, post-election, and then after the Fed starts rate cuts in the second half of 2024. Until then, DIIs will run the show.

Screener: FII/FPI decreasing shareholding QoQ with falling stock prices over the past month

Banking and finance stocks see highest FII outflows in Q4FY24

As the shareholding data for the final quarter of FY24 has come out, we take a look at stocks that saw a decline in their foreign institutional investor (FII) holdings during the quarter. This screener shows stocks where FII decreased their stake QoQ, where share prices declined over the past month.

The screener is dominated by stocks from the banking & finance, software & services, textiles, apparels & accessories and diversified consumer services sectors. Major stocks that appear in the screener are Aster DM Healthcare, Route Mobile, Kalyan Jewellers, PVR INOX, HDFC Bank, Star Health and Allied Insurance, Indus Towers and Indiabulls Housing Finance.

Aster DM Healthcare’s FII holding contracted the most by 7.5 percentage points in Q4FY24, while its stock price also plunged by 30.8% over the past month. The fall in stock price is mainly due to the company giving out a special dividend of Rs 118 per share on April 23.  Olympus Capital Asia Investments was the largest seller in the healthcare stock with a sale of an 8.9% stake in the company. The sold shares were picked up by mutual funds like Nippon Life India Trustee Ltd-A/C Nippon India Small Cap Fund (2.1% stake) and Franklin India Smaller Companies Fund (0.6% stake), and retail investors (1% stake).

FIIs sold a 5% stake in PVR INOX in Q4FY24, the stock has also fallen 5.3% over the past month. Funds like Plenty Private Equity Fund I and Multiples Private Equity Fund II LLP, among others sold a total of 2.3% stake in the movies & entertainment company. The sold stake was picked up by mutual funds like Nippon Life India Trustee Ltd-A/C Nippon India Mul (1.5% stake), HDFC Trustee Company Ltd. A/C Hdfc Capital Builder (3.8% stake and ICICI Prudential Multicap Fund (1.4% stake). 

You can find more screeners here.

A week ago, US President Joe Biden imposed a new tariff hike on Chinese products, which is projected to affect around $18 billion in annual imports from China. He accused China of heavily subsidising products, causing Chinese companies to produce more than what the market can absorb and then dumping the excess at unfairly low prices. He said, “When you follow tactics like this, you’re not competing. It’s not competition, it’s cheating.”

Since the tariff hike on May 14, the Nifty Metal index as of May 22 has posted a sharp rally of 9.1%, as Indian exporters stand to gain from a fairer playing field. However, experts caution about US tariffs diverting the dumping of Chinese goods to India.

In this edition of Chart of the Week, we will be looking at the performance of India’s metal index, Nifty Metal, over the past year. As of May 22, the index has risen 76.6%, outperforming the benchmark Nifty 50, which has increased by 24.1%. This rise is mainly due to quick government intervention against Chinese dumping and surging commodity prices globally.

Hindustan Zinc and Vedanta drove index gains in the past quarter

In the past quarter, the metal index rose 24.4%, with approximately 70% of the gains driven by Vedanta and its subsidiary Hindustan Zinc. Since March 28, 2024, Vedanta and Hindustan Zinc have surged by 81% and 154%, respectively. This rally can be attributed to clarifications on debt distribution post-demerger and rising prices of base metals such as zinc, lead and silver.

On September 29, 2023, Vedanta's Chairman, Anil Agarwal, announced the creation of independent verticals through the demerger of Vedanta and Hindustan Zinc. He expects the demerger to be completed by the end of this year. The company also clarified that debt will be divided among demerged entities based on the ratio of assets allocated. In Q4FY24, the company reduced its debt by 10% QoQ to Rs 56,338 crore.

Hindustan Copper is the best-performing stock in the index, with gains of 299% in the past year. The company's shares have consistently risen in line with increased demand and movements in copper prices. Copper, an essential base metal, plays a pivotal role in the energy transition ecosystem, serving as a key component in manufacturing electric vehicles, power grids, and wind turbines. Recently, speculations of a shortage fueled by talks of output cuts by smelters have led copper prices to surge by over 25% since the start of the year.

Commodity trading company Adani Enterprises also gained 59.4% in the past year. On May 22, the company surged 18.9% as the conglomerate received a clean chit from the Supreme Court of India regarding the Hindenburg case. The apex court appointed a six-member committee following allegations of stock manipulation and accounting fraud by U.S.-based short-seller Hindenburg Research.

Selling by FPIs led index to decline in the Sept-Oct 2023 period

Among all the sectors, the metals and mining sector saw the highest FPI outflow of Rs 8,531 crore in FY24. Companies faced major hurdles due to the dumping of steel at cheaper rates and sub-standard imports from China. Between April and July 2023, steel imports from China to India rose 62% YoY, leading to a significant sell-off by foreign portfolio investors (FPI) of Rs 12,009 crore in August and September last year.

In response, the Indian government imposed a five-year anti-dumping duty on specific types of Chinese steel in September 2023. This tax, levied on imported goods priced below fair market value, aims to curb Chinese imports. The industry is also expected to address production gaps in 2024, supported by policy reforms, incentives, and expansion plans by industry giants such as Tata Steel, Vedanta, and JSW Steel.

Expanding manufacturing PMI boosts outlook for the metal sector

Manufacturing activity, which is indicated by the Purchasing Managers’ Index (PMI), is said to be expanding when it is higher than 50. The PMI for India has been above 50 for all of the past year, signifying robust growth in the manufacturing space. Rising PMI is often directly correlated to the higher demand for metals. On April 1, the metal index rose 3.7% after both the US and China posted expansion in their manufacturing activity in March 2024.

The US saw its manufacturing activity expand in March 2024 as it posted a PMI of 50.3 for the first time since September 2022. Although this figure is just above the threshold of 50, which separates expansion from contraction (PMI below 50), it ended a 16-month streak of shrinking activity. 

Similarly, China's manufacturing activity expanded in March for the first time since September 2023, as its manufacturing PMI rose to 50.8 from 49.1 in February. The data offered some relief to China’s policymakers, even as a crisis in the property sector remains a drag on the economy.

Higher steel prices & anti-dumping duty help steel makers

In November 2023, the metal index posted a monthly gain of 8.8%. This rise came after steel-producing constituents witnessed a significant uptick in their share prices as they benefitted from the surging steel prices. This rise in steel prices was due to a rapid decline in inventories and a recovery in end-consumer demand. Since November 2023, companies like Steel Authority of India (SAIL), Tata Steel and JSW Steel have risen 110.3%, 49.5% and 27.5% respectively.

Another factor that is playing in their favour is the higher tariff imposed by governments across the globe to curb Chinese dumping. India saw a 62% rise in steel imports from China to India between April and July 2023, compared to the same period last year. The Indian government imposed an anti-dumping duty of $613 per tonne on flat base steel wheels from China for five years. Similarly, the US government on May 14 raised tariffs on some steel and aluminium products to 25%, citing China's "unfair" policies that were harming workers and businesses in the US. The rising anti-China mood in the commodity market has boosted Indian metal stocks, a trend that is likely to continue in the coming quarters.

Today we take a look at five stock picks from analysts with high upside potential.

1. DLF:

Edelweiss maintains a ‘Buy’ rating on this realty developer with a target price of Rs 1,081, indicating a potential upside of 27%. In Q4FY24, the company reported revenue growth of 47% YoY to Rs 2,316.7 crore, with net profit rising 61.5% YoY to Rs 920.7 crore. Analysts Amit Agarwal and Rishith Shah say, “We are upbeat on the company’s growth story given its robust launch pipeline, brand recall, favourable dynamics in its home turf, improving annuity income, and market consolidation.” DLF’s recent luxury projects in North India have sold out within a few days. 

Analysts are optimistic about the company’s steady presales of Rs 14,777 crore, down 2% YoY primarily due to a higher base in the previous year. New launches of around 6 million square feet (msf) constituted 82% of presales, while the remaining 18% came from existing projects. 

Agarwal and Shah are positive about the company’s outlook as the management forecasted a launch pipeline of Rs 36,000 crore for FY25. They also forecast a revenue CAGR of 11% for FY25-26 owing to the launch pipeline of Rs 94,000 crore with an additional land bank of 132 msf, for which development plans are yet to be finalised.

2. Safari Industries (India):

IDBI Capital maintains a ‘Buy’ call on this luggage maker with a target price of Rs 2,535, indicating an upside of 20%. The company’s net profit grew by 13.4% YoY to Rs 43.2 crore in Q4FY24, while its revenue improved by 21.3% YoY to Rs 370.5 crore. 

Analyst Ajit Sahu says, “Safari Industries Q4FY24 sales were in line with our expectations.” He believes that the growth occurred due to improvements in tourism activities. He also notes, “Over the past two years, Safari has gained market share from its peers”. The analyst states that Safari Industries' sales grew by 21% YoY outperforming VIP Industries’ sales growth of 15% YoY in FY24.

Sahu is optimistic about the company as it sets up a greenfield manufacturing unit in Jaipur. He believes that future growth will come from its initiative to sell premium products like Urban Jungle (the premium luggage collection). He applauds the management’s ability to outperform industry sales growth and also expand operating margins to higher levels. He estimates profit and revenue to grow at a 26.5% and 19% CAGR, respectively, over FY25-26.

3. CreditAccess Grameen:

KR Choksey maintains its ‘Buy’ call on this finance company with a target price of Rs 1,850, indicating an upside of 29.9%. In Q4FY24, the company’s net profit grew by 33.9% YoY to Rs 397.1 crore (1.1% above the brokerage’s estimates), while total revenue improved by 36.9% YoY to Rs 1,459.1 crore. Analyst Unnati Jadhav says, “CreditAccess Grameen reported stellar operating performance during the quarter, but saw deterioration in asset quality led by higher slippages.”

The analyst is optimistic about the company's expansion strategy and expects it to be key to business momentum going forward. The company added 194 branches during FY24, bringing its total infrastructure strength to 1,967 branches. The analyst also says that the NBFC succeeded in controlling its borrowing costs through a cost-effective borrowing mix, and expects it to remain stable and bring predictability to its overall margins in FY25.

Jadhav continues to be positive about CreditAccess Grameen due to its leadership, improving geographical footprint, superior return ratios, consistent operating performance, and industry tailwinds.

4. Sansera Engineering:

Axis Direct maintains a ‘Buy’ rating on this auto parts and equipment manufacturer with a target price of Rs 1,270. This indicates a potential upside of 19.8%. In Q4FY24, the firm reported revenue growth of 19.7% YoY to Rs 745.6 crore, with net profit rising 31.1% YoY to Rs 46.1 crore. 

Analysts Shridhar Kallani and Aditya Welekar note, “For FY24, the share of auto components has reduced to 75%, while non-auto & tech and aerospace segment has increased to 20% and 5%, respectively.”

Kallani and Welekar are upbeat on the company’s capex plan of Rs 400 crore in FY25 and Rs 350 crore in FY26, mainly towards electric vehicle components and non-auto products. They expect the company to post a CAGR of around 20.8% for EBITDA and 29.4% for net profit over FY25-26. They attribute this growth to the sales mix tilting towards non-auto components, growth in the export business, and recovery in its its Sweden operations led by improved operational efficiency.

5. NCC:

ICICI Direct maintains its ‘Buy’ call on this construction and engineering company with a target price of Rs 320. This indicates a potential upside of 15.2%. In Q4FY24, the firm’s net profit increased by 25.3% YoY to Rs 239.2 crore, while revenue grew by 31.1% YoY. 

Analysts Bhupendra Tiwary and Hammaad Ahmed Ulde are optimistic about NCC’s order book. Its order book stands at Rs 57,536 crore, largely driven by Rs 18,439 crore worth of orders secured in FY24, a growth of 37% YoY. The management has guided for an order book inflow of Rs 20,000-22,000 crore, with ordering likely to be impacted owing to elections in the first half. Considering the order book, the analysts expect a revenue CAGR of 15% over FY25-26. With healthy execution, the analysts estimate EBITDA margins at 10% and 10.5% in FY25 and FY26, respectively, and expect a 26% earnings CAGR over FY25-26.

The analysts say, “NCC is a key beneficiary of the tailwinds in the buildings, roads, water, mining and electrical segments. Given strong order book visibility and improving balance sheet strength, it is poised for healthy growth ahead.”

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

(You can find all analyst picks here)

The recent Ambani wedding - of their youngest son Anant - was a media event that seemed impossible to avoid. It wasn't just the tabloids and the TV channels that were doing what felt like round the clock coverage. Even the business dailies couldn't stay away. There were so many questions: did the bride plagiarize her speech? What shoes did Nita wear to the sangeet? Etc. 

 One eye-catching moment was completely unchoreographed. It was Meta CEO Mark Zuckerberg and his wife admiring the bridegroom's $1M Richard Mille watch.  The tweets and articles this moment alone generated, is a symptom of our current billionaire obsession.

My mother used to say that it is unseemly to count other people's money. Here however, I have a good reason for doing it. Recently, some economists like Adam Tooze have made the argument that billionaires shouldn't exist. The inequality that results from the oversized share billionaires have over a country's resources, they argue, damages the economy, and results in much fewer resources for the rest of us.

In this week's Analyticks:

How big - and damaging - is India's wealth divide?

Screener: The highest and most consistent dividend stocks

Let's do some counting.

How big is India's wealth divide, really?

Those of us who live in urban India are used to seeing slum towns in one area of the city, and fancy gated communities with several swimming pools on the very next road. It is also something that visitors to India love to talk about as evidence of our high inequality levels. 

But in reality, India is not as unequal as some other countries in share of wealth. 

A troubling sign however, is when we look at annual incomes rather than wealth. Here, the share of India's richest is far higher than countries like the US and China. The top 10% of Indians are cornering a big share of national income every year.

The average annual income in India is just around Rs. 2.34 lakh -- a pretty small number. But the divide between the top 1% and everyone else is pretty large. And the top .001% of the population eclipses even them.   

India’s richest 1% people have 22.6% of our national income, the highest in over a century .  

Indians tend to invest most of the money that they make in land -- land and buildings together are 90% of Indian household wealth. This percentage hasn't changed much in 60 years. The share of financial assets for Indian households has increased from 4% in 1981 to around 10% today. When we look at total accumulated household wealth, the class divide is large. 

The wealthiest 10,000 individuals in India own on average, assets of Rs. 2,260 crore each (Rs 22.6 billion), or 16,763 times the wealth of the average Indian. These are the people wearing Mielle watches, Lora Piana sweaters and taking chartered flights. For this group, queuing up for a first class seat on a commercial airline means failure, not success. 

India's wealth divide didn't start with any one government

The vast accumulation of resources by a small group of people did not happen with one government, or in a few years. The problem of the Indian middle class steadily losing out, and the top 10% getting richer has been happening since the early 1990s. No Indian government from any political party has so far, been able to pause this.

Some of the wealth gains for the top 10% and top 1% of the population, has been driven by the stock markets -- the Sensex for instance, has grown by 7300% between 1990 and 2023.

But a group cornering more resources is a self-fulfilling problem, since they use these resources and influence to get even more. This means that over time, the influence of the top 1% on policies, governments and even elections become disproportionately high.

In India, we see this skew everywhere. In the stock market, just 32% of listed companies -- 1,700 companies -- have a market cap of over Rs. 500 crore. Both market capitalization and profits are skewed towards the largest conglomerates in India. 

The rise of these billionaire entrepreneurs means they are busy influencing policy in every aspect of the government, and attempting to push out competition in entire sectors - telecom, power, gas, retail etc. Tariffs that benefit companies and promoters but hurt consumers have been on the rise. Subsidy policies disproportionately favour large corporations over SMEs, like PLI schemes. 

To tackle the problem we must first acknowledge it. For example, economists have pointed out that a wealth tax of just 2% on the total net wealth of the 162 wealthiest Indian families in 2022 "would have provided revenue equal to  0.5% of the national income -- more than twice the central government’s budget expenditures on the NREGA".

A wealth tax is nothing new and has been implemented even in Ancient Greece, when the 'eisphora' wealth tax was levied on the richest 4% of the Athens population. A practical wealth tax would tax liquid assets above a certain threshold, the enormous amount of wealth that is idle and "trapped" in bank accounts. But this is just a beginning. For these curves to really shift, we must start the conversation.

Screener: High and consistent dividend yield stocks

PSUs lead in 3-yr dividend yield %

This screener shows stocks with high and consistent dividend yields over one, two and five years. It features the top 10 stocks with the highest dividend yield in the last three years. These companies have also outperformed the Nifty 50 in the past year. 

The screener excludes stocks that have given a very high one-time/special dividend in the past two years. A high one-time dividend can inflate historical dividend yield, and such stocks may not be consistent high dividend stocks. 

The screener is optimised to show 10 stocks with high 3-year dividend yield %. Seven of the 10 stocks currently in the screener are from the public sector. Major stocks that appear in the screener are Vedanta, Coal India, ICICI Securities, Power Grid Corp of India, Oil & Natural Gas Corp and Power Finance Corp. 

FY24 has seen an increase in government budgets, contributing to growth in stock prices for these public sector companies. These public companies also have to give out a certain percentage of dividends every year – according to government guidelines, all public sector companies must give out at least 30% of their net profit or 5% of net worth (whichever is higher) for annual dividends. As a result, they tend to dominate the screener. Non-PSU stocks in the screener are ICICI Securities (capital markets), Tech Mahindra (IT consulting & software) and Gujarat Pipavav (marine port & services).

This screener also appears in Starfolio’s free featured baskets. This basket is great for long-term investors looking for high dividend-paying companies to generate passive income. This particular basket was created on March 10, 2023, with an annual rebalancing frequency. Its latest rebalance was on May 3, 2024, and the next scheduled one is on May 1, 2025. Each stock in the basket holds an equal weight of 10%, with seven being large-cap and three mid-cap stocks. 

Since its creation, the basket has given pretty impressive returns of 249.1% (not including dividends) over the past 14 months. The basket outperformed the Nifty 50 index by 221.3 percentage points in the same period. 

You can find more screenershere.

1. Oberoi Realty:

This Mumbai-based realty developer hit a new 52-week high of Rs 1771.5 on Friday after surging 19.5% over the week, following the release of its Q4 and FY24 results. In Q4FY24, the company reported operating revenue growth of 36.8% YoY to Rs 1,314.8 crore, surpassing Trendlyne’s Forecaster estimate by 2.8%. Its net profit rose 64.1% YoY to Rs 788 crore, beating forecaster estimates by 136%. The company got a boost from strong demand for its luxury projects and was able to reduce inventory significantly, leading to lower operating costs.

Oberoi Realty’s rental portfolio, which contributed around 12% of Q4 revenue, grew 68% YoY to Rs 155 crore. Occupancy levels at Commerz I and II have increased by 8% and 6% respectively on an annual basis. A new entrant to their leasing portfolio, Commerz III, has already reached an occupancy of 50% with Morgan Stanley occupying most of it. The management aims to expand occupancy levels to 80-85% in the next two quarters.

The company’s board has approved a fundraising of up to Rs 4,000 crore by issuing non-convertible debentures and a qualified institutional placement of equity shares. The funds will be used for ongoing and upcoming projects.

Chairman and Managing Director, Vikas Oberoi says, “The company will be able to achieve the Rs 1,000 crore mark from its rental portfolio from its current levels of 450 crore by the end of FY25.” He also highlighted that most of its realty peers have already sold their properties, leaving them with little to no competition. As a result, the company expects to sell its inventory of Rs 5,000 crore, mostly ready-to-move properties, in the next 24-30 months. 

Zee Business reports that HDFC Securities maintains a ‘Buy’ rating on Oberoi Realty. Analysts are optimistic due to the cash flow visibility from ready-to-move-in inventory in the 360 West and Mulund projects, along with other new projects. With a target price of Rs 1,833, this real estate developer has a potential upside of 5.2%.

2. Polycab India: 

This consumer durables company surged by 11.8% over the past week and hit a new 52-week high of Rs 6,542.9 on Friday. This comes after its net profit rose 29.1% YoY to Rs 553.5 crore in Q4FY24, beating Trendlyne’s Forecaster estimates by 13.5%. Its revenue also rose by 29% YoY during the quarter, driven by the wires and cables segment. As a result of the rise in share price, Polycab India features in a screener of stocks with prices above short, medium, and long-term moving averages.

The company’s wires and cables (W&C) segment, which constitutes around 85% of the revenue, grew by 19.3% YoY during the quarter. In comparison, its peers Havells India and KEI Industries saw W&C segment growth of 14.1% and 17.9%, respectively YoY. In FY24, Polycab’s market share in the W&C industry improved to 25-26% (compared to 22-24% in FY23). 

Cables and wires manufacturers have gained overall, from the increased demand in the real estate and infrastructure sectors, as well as increased government capex. Polycab’s FMEG segment also witnessed healthy growth at 17.3% YoY due to higher demand.

According to Gandharv Tongia, the CFO, “Rural market is growing, and with consumer goods players witnessing a good run, more investments are likely. In addition to domestic markets, we see a lot of demand coming in from Europe, Australia, and other countries. All this is expected to help sustain the demand momentum in the cables and wire segment.” The consumer durables maker expects to achieve its target of Rs 20,000 crore in revenue, as per its Project Leap by the end of FY26. It has also guided a capex of Rs 10,000-11,000 crore over the next two years.

Earlier this year, the Income Tax Department allegedly detected unaccounted cash sales by the company and conducted raids at various premises. The management highlighted that it was instructed to provide explanations for certain queries. Polycab has not been charged any penalty so far.

Post the company’s results, Prabhudas Lilladher maintains its ‘Buy’ rating on Polycab with an upgraded target price of Rs 7,086. The brokerage sees revenue and PAT CAGR of 17.9% and 16.6%, respectively, over FY25-26, led by a strong domestic demand environment and expected improvement in international business.

3. Siemens: 

This heavy electrical equipment company surged 17.2% over the past week and hit its all-time high of Rs 7,249.1 per share on Thursday as its net profit rose 70.2% YoY to Rs 802.5 crore in Q4FY24. Revenue increased by 18.6% YoY to Rs 5,681 crore, driven by improvements in the energy, smart infrastructure, mobility, and digital segments. 

The company’s net profit beat Trendlyne’s Forecaster estimates by 36.3%. However, revenue missed estimates by 0.6%. The revenue miss was due to a decline in order booking to Rs 5,180 crore in Q4FY24 compared to an order inflow of Rs 25,400 crore in Q3FY24 which, according to the management, was due to delays in deal finalisation. It shows up in a screener of stocks with negative to positive growth in sales and net profit with strong price momentum.

Siemens also approved a capex of Rs 550 crore for capacity expansion. It also plans the demerger of its energy business into a separate listed entity, Siemens Energy. The company’s board of directors approved issuing one share of Siemens Energy for one share held in Siemens. In FY24, the company’s energy business recorded a revenue of Rs 6,080.3 crore, contributing to 33.2% of its total revenue. 

Speaking on the company’s capex plans, Sunil Mathur, MD and CEO, said, “Siemens is focused on expanding its operations, with the expansion of the gas insulated switchgear (GIS) factory in Goa (approx. Rs 330 crore) and a new metro train manufacturing facility in Aurangabad (approx. Rs 190 crore), which is set to serve multiple international markets.”

Post results, Motilal Oswal maintains its ‘Buy’ call on the stock with an upgraded target price of Rs 7,800 per share. This indicates a potential upside of 8.6%. The brokerage remains positive on the company due to its spending in the transmission and business and its strong positioning to win orders in the railway segment. It expects the company’s revenue to grow at a CAGR of 13.1% over FY25-26.

4. Zomato:

This internet software and services company fell 3.5% on Monday after announcing its results. In the past year, the firm's share price has risen by 209.3%, outperforming its industry by 91.6 percentage points. In Q4FY24, the company reported a net profit of Rs 175 crore, compared to a loss of Rs 188.2 crore in Q4FY23. The company’s revenue grew 70.5% YoY. It appears in a screener for stocks with increasing revenue every quarter for the past eight quarters. However, the company missed Trendlyne Forecaster’s net profit estimate by 13%. The estimates miss was due to a higher employee stock option plan (ESOP) cost. The total ESOP charge for Q4FY24 was Rs 161 crore.

Zomato’s revenue from the food delivery business grew 48.4% YoY, while Hyperpure (its B2B business) increased by 99% YoY. Blinkit, its quick commerce segment, grew by 111.9% YoY and turned EBITDA positive in March 2024. It added 75 stores in Q4, taking its total store count to 526. 

The company expects to add another 100 stores in the next quarter and reach 1,000 stores by the end of FY25. CEO Deepinder Goyal said, “With the aggressive store expansion plans, the EBITDA is likely to be lower for the next few quarters.” In steady state, he expects it to be 4-5% as a percentage of gross order value.

Among other news, in the past week, Zomato surrendered its payment aggregator license and its application for the mobile wallet license. The management believes that it doesn't have a significant competitive advantage in the payments space and hence does not foresee the payments business as commercially viable.

CLSA upgraded its rating to a 'Buy' due to Zomato's strong guidance for Blinkit and steady performance in food delivery, despite ESOP costs impacting profits in Q4. Analysts are optimistic about the company’s achievement of breakeven for Blinkit and plan to prioritize its growth. They also believe that the expansion will impact the short-term profitability of the company but say that it will help the business become a quick-commerce leader.

5. JK Cement:

This cement & cement products company rose by 2.4% on Monday after it announced its result on May 12. The firm beat Trendlyne’s Forecaster estimates for Q4FY24 for revenue by 0.8%, but missed the net profit estimate by 20.8%. For Q4FY24, the company’s net profit rose by 95.7% YoY to Rs 219.8 crore on the back of 29% decline in power and fuel costs, while revenue rose by 11.9% YoY. The stock shows up in a screener for companies with strong annual EPS growth.

The company saw a 19% increase in volumes in FY24, thanks to the recent expansion of cement capacity in central India, where utilization rates reached 85%. Additionally, its new expansion plan aims to boost total Grey Cement capacity from 22 mtpa to 30 mtpa, at a capital cost of Rs 2,850 crore.

The company expects demand to pick up in Q3FY25 post the elections and monsoon in Q1 & Q2. With the government's increased attention on infrastructure development in states like UP and Maharashtra, there's anticipation of accelerated per-capita cement consumption in the future. The company’s upcoming Prayagraj unit is expected to commence in Q2FY25.

The company’s management expects volume growth of ~10% vs. industry growth of ~7% in FY25 along with further cost reduction of Rs 150-200/tn by FY26. For its paint business, the management expects the sales to reach Rs 300 crore in FY25 and Rs 500 crore in FY26. In Q1FY25, the company anticipates a slight decrease in power and fuel expenses. 

Axis Direct has retained its "Buy" rating on JK Cement with a price target of Rs 4,340. The brokerage expects the company’s revenue to reach a CAGR of 14% over FY25-26 and expects the company to report an EBITDA margin in the range of 18-20% with EBITDA/tonne of Rs 1,140/1215 in FY25E/FY26E, driven by higher volumes, stable realizations, and lower costs.

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