1. Godrej Properties:
This realty company hit its all-time high of Rs 2,791.8 on Tuesday and rose by 11.2% in the past week after it released its Q4 business update. It has risen by 117.5% in the past year, but still underperformed its sector by 18.8% points.
In Q4FY24, the company’s bookings grew 135% YoY to Rs 9,500 crore and sold 5,331 homes. Its bookings grew 84% YoY to over Rs 22,500 crore in FY24 with sales of 14,310 homes on the back of improving project mix as well as strong volume growth. The management said, “This is the highest ever quarterly and annual sales to date by any publicly listed real estate developer in India.” The firm also exceeded its annual bookings guidance of Rs 14,000 crore.
In the past week, Godrej Properties said that it has sold inventory worth Rs 2,690 crore in its Mumbai project, Godrej Reserve. This project has an estimated revenue potential of approx Rs 7,000 crore. Similarly, the firm also sold homes worth over Rs 3,000 crore within three days of the launch of its project Godrej Zenith in Gurugram.
Along with its rising bookings, the company’s debt levels are rising as well. Its net debt stands at Rs 6,900 crore. Its debt-to-equity ratio has consistently increased over four consecutive quarters to 0.7 in Q3FY24 from 0.4 in Q4FY23.
Trendlyne Forecaster estimates a 25% YoY increase in Godrej Properties’ FY24 profit. HDFC Securities maintains its ‘Accumulate’ rating on Godrej Properties on the back of a strong launch pipeline of 18 million square feet over the next 2-3 years. The brokerage estimates a growth of 15% CAGR in net sales over FY24-26. It believes that the firm will add projects on a replacement basis rather than having lumpy transactions. The company appears in a screener for stocks with recommendations or target price upgrades by brokers.
2. IIFL Finance:
This finance company has surged 19.6% in the past week, driven by several positive developments. On April 5, the stock rose 13.2% after its price band limit was revised to 20% from 10%. Additionally, the company received approval from the National Stock Exchange of India (NSE) on April 1 to acquire equity shares worth Rs 284.4 crore in the exchange through a secondary market purchase from FIH Mauritius Investments.
Despite recent gains, Trendlyne’s Technicals indicates that the stock is trading at a discount of 33.7% from its all-time high of Rs 703.4. It fell after the Reserve Bank of India (RBI) imposed restrictions on IIFL Finance on March 4, prohibiting it from sanctioning and disbursing gold loans due to ‘material supervisory concerns’.
This was a significant blow - as of December 31, 2023, gold loans comprised 32% of the total assets under management (AUM) at Rs 24,692 crore for the IIFL Finance Group and 79% of the standalone AUM of IIFL Finance.
Following the RBI ban, the company, to ensure enough liquidity raised Rs 500 crore through a non-convertible bond issue on March 20, as part of a larger fundraising plan worth Rs 2,000 crore.
Managing Director, Nirmal Jain said that, “The Reserve Bank of India’s (RBI) action on the firm’s gold loan business was attributed to ‘operational issues’ and not governance or ethical problems.” Jain said that the company is implementing corrective measures to reduce discrepancies in the assessment of gold value between branches and audit teams.
As of February, Trendlyne’s Forecaster showed a consensus recommendation of 'Buy' on the stock with all six analysts rating it a 'Strong Buy'. However, post the ban, the consensus in April shifted to 'Hold,' with three analysts rating it as 'Strong Buy,' one as 'Hold,' and another as 'Sell.' With an average target price of Rs 581, IIFL Finance has a potential upside of 34.1%.
Motilal Oswal reiterated its 'Buy' rating on March 6, estimating that it could take around six months for the RBI to conduct a special audit and resolve its observations.
3. Bandhan Bank:
This bank has fallen by 7.3% over the past week, following an announcement that Chandra Sekhar Ghosh will retire as the MD & CEO after his current tenure ends on July 9, 2024. Investors were taken by surprise, since in November 2023 the bank’s board had approved his reappointment for three years, effective July 10, 2024. As a result of the fall in share price, the bank features in a screener of companies with weak momentum.
Ghosh has been serving in this position since July 10, 2015. Now, he is expected to take up a strategic role at the group level. According to reports, an external candidate is likely to replace him as CEO.
The retirement comes amid ongoing challenges for the bank, including Covid-related stress in asset quality and a slower recovery than its peers. In addition, Bandhan Bank is currently undergoing a forensic audit by the National Credit Guarantee Trustee Company (NCGTC) for loans worth Rs 23,000 crore (constituting roughly 18% of the total loan book as of Q3FY24), with conclusions expected in 1-2 months.
Meanwhile, in Q4FY24, Bandhan Bank’s deposits have grown by 25.1% YoY to Rs 1.4 lakh crore, while its advances rose by 17.8% YoY. Trendlyne’s Forecaster estimates the bank’s net profit to grow by 27.5% YoY in Q4FY24. However, analysts are concerned about the uncertainty around management succession and the potential challenges in terms of growth strategy for the bank. The new CEO's transition would take at least six months.
According to Nomura, “With leadership now in flux, we see more uncertainties for the franchise”. It has downgraded its rating on the bank to ‘Reduce’ and slashed the target price to Rs 175.
4. Mazagon Dock Shipbuilders:
This defence stock rose 4% on Monday after it reported a year-on-year annual revenue growth of 20% to almost Rs. 9,400 crore for FY24 (this is an unaudited figure). The stock has gained over 222% in share price over one year.
China in the news tends to be good for defence companies like Mazagon Dock Shipbuilders. The rising naval threat from China in the Indian Ocean, especially around Sri Lanka and the Maldives, and its sales of submarines to Pakistan and Bangladesh, have drawn the Indian government’s attention.
Consequently, the Indian defence industry has seen a big boost in government orders over the past year, and has risen 141% overall. The industry is likely to remain bullish in the coming quarters – the government is considering spending $130 billion over the next six years for fleet modernisation across its armed services. The sector received over $70 billion in the interim budget for 2024-25.
A substantial amount of India’s spending in this sector is likely to be allocated to submarine and ship manufacturers like Mazagon Dock, as India looks to aggressively boost its naval capabilities. The Indian navy currently has about 140 ships, which is expected to expand to 170-175 ships by 2035. Mazagon Dock has the only shipyard in the country that has built naval destroyers and conventional submarines for the Indian Navy. Its order book is currently 5x its revenue, and Nirmal Bang expects a revenue CAGR of 25% over FY24-26E.
The company is however, not exactly a value buy at this point. It is trading at relatively high PE compared to historical trends, and has traded below its current PE 80% of the time. Trendlyne’s Forecaster share price target is relatively bearish on Mazagon Dock due to the run up in its share price over the past year. The consensus is Hold, with a target price of Rs. 1857, a downside of 16.7%.
5. Exide Industries:
This auto parts & equipment manufacturer touched a new 52-week high today of Rs 403. Exide Energy Solutions, its wholly owned subsidiary, signed an MOU with Hyundai Motors and Kia, where they plan to collaborate on battery cell development and supply for Hyundai’s Indian EVs. The company also recently acquired a 26% equity stake in “Clean Max Arcadia”, a Special Purpose Vehicle (SPV) incorporated by Clean Max Enviro Energy Solutions, a renewable energy firm based out of Mumbai, to promote renewable energy on a long term basis.
Trendlyne’s Forecaster estimates the company's net profit to grow by 40.2% to Rs 291.3 crore in Q4FY24 while revenue is expected to improve by 15.6% YoY. The firm however missed estimates for Q3FY24 for net profit by 9.4% and revenue by 2.7% due to higher raw material prices during the quarter.
Factors such as rising demand for personal mobility, a shift in global supply chains and increasing demand for more efficient batteries are acting as long term drivers for the company. Exide is also venturing into manufacturing of Li-On cells in technical collaboration with SVOLT (Chinese collaboration) with a capex outlay of around Rs 6,000 crore for a 12 GWH capacity. The first phase of 6 GWH is slated to be operational in 2025 with a capex outlay of around Rs 4,000 crore, and the complete plant in the next 3-4 years.
Subir Chakraborty, MD & CEO, said: “We are optimistic about the future and are witnessing signs of demand pick-up. Our Lithium-ion cell production is on schedule. We plan to regain our pre-Covid EBITDA margin levels of 13-14% in the next 1-2 years.”
ICICI Direct recommends a ‘Buy’ for Exide with a target price of Rs 400, which it hit today. The brokerage notes that with stable raw material prices (lead at ~US$ 2,100/tonne) and operational efficiencies, margins should inch up to 12.5% by FY26.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
