This oil exploration and production company has risen by 15.3% in the past week, hitting its all-time high of Rs 647 on Wednesday. The surge followed the announcement of a second interim dividend of Rs 8.5 per share for FY24, which will be paid by April 7, 2024.
In the past month, the company also inked a pact with The Fertilisers and Chemicals Travancore to explore opportunities in green hydrogen, including green ammonia/green methanol, and other derivatives.
In July 2020, Oil India announced plans to triple the capacity of its Numaligarh Refinery (NRL) to 9 million tonnes per annum (mtpa). To date, the project has incurred a capex of Rs 15,000 crore, out of the planned Rs 28,000 crore.
According to the management, 55-60% of the project is done, with completion expected by July 2025. After the expansion, analysts expect the company’s EBITDA to exceed Rs 9,000 crore annually, a significant jump from the current annual EBITDA of Rs 5,319 crore.
In Q3FY24, the firm’s revenue increased by 21.8% YoY, while profit grew by 2.8% YoY. Its oil and gas production rose by 6.1% YoY and 2% YoY, respectively. The management has guided oil and gas production to grow at 8% and 26% CAGR respectively over FY24-26, led by increased drilling activities. Managing Director Ranjit Rath said, “Oil India will drill around 60 wells in all its assets in FY25, which is 33.3% higher compared to the 45 wells drilled in FY24.”
Sharekhan has upgraded the stock to ‘Buy’, citing its reasonable valuation. According to analysts, current oil/gas price regulations provide good earnings visibility, while the NRL expansion should create long-term value for the company. Oil India appears in a screener for stocks with analyst rating or target price upgrades in the past month.
This auto manufacturer rose 3.5% on Tuesday to hit an all-time high of Rs 1,065.6, following board approval to demerge its business into two listed companies. According to a regulatory filing on Monday, the commercial vehicle (CV) business will form one entity, while passenger vehicles (PV), electric vehicles (EV), and luxury cars under the Jaguar Land Rover (JLR) brand will be part of the second company.
In Q3FY24, Tata Motors’ consolidated net profit increased by 137.5% YoY to Rs 7,025 crore, beating Trendlyne’s Forecaster estimates by 46.6%. Its revenue also went up by 25.1% YoY to Rs 1,12,076 crore, beating estimates marginally by 2%. Its EBITDA for the quarter on a consolidated basis stood at 14.3%, a 3.2% YoY increase. JLR was able to post the highest EBITDA margin among the three segments, at 16.2%, up 4.1% YoY. The EBITDA margins for Tata’s CV and PV units were 11.1% and 6.6% respectively.
Tata Motors had a net debt of Rs 29,200 crore at the end of Q3FY24. Its domestic business aims to become debt-free by FY24 end. JLR, with a net debt of Rs 16,600 crore, targets to be net cash positive by the end of FY25. In an exchange filing on Thursday, the company also announced a 2% price hike for its commercial vehicles to offset the impact of inflation on input costs. Post demerger, its CV entity can raise capital to support its electric bus segment.
“The demerger is a logical progression of the restructuring of the PV and EV businesses done earlier in 2022,” Tata Motors said in a press release. It expects this move to drive faster growth for each business line.
KR Choksey maintains a ‘Buy’ rating on Tata Motors, assigning the CV business an enterprise value of 14 times its EBITDA, at Rs 373 per share. The brokerage expects the PV business to command a premium of Rs 787 per share. With a target price of Rs 1,178, the stock has a potential upside of 13.4%.
This heavy electrical equipment manufacturer has risen by 13.2% over the past week after announcing a joint venture (JV) with Coal India and an order win from NTPC. This helps the company appear in a screener of stocks outperforming their industry over the past quarter.
The JV, formed on February 29, enters into the coal to chemicals business by setting up a coal to ammonium nitrate plant. The JV agreement outlines plans for an ammonium nitrate plant with a capacity of 2,000 tonnes per day, which uses BHEL’s in-house pressurized fluidized bed gasification (PFBG) technology. Coal India will supply the coal and use at least 75% of the ammonium nitrate produced, making it both a supplier and the main client.
BHEL also won an order from NTPC on Monday to set up two 800 MW thermal power plants for the Singrauli thermal power project (Stage-II) in Uttar Pradesh. The order is reportedly worth more than Rs 9,500 crore.
The company, however, posted a net loss of Rs 148.8 crore for the third consecutive quarter in Q3FY24, compared to a net profit in Q3FY23. The loss was due to increasing raw material costs, as well as finance and employee benefit expenses, combined with a weak product mix and a 32% rise in interest costs YoY to Rs 1,900 crore.
On the other hand, revenue increased by 4.6% YoY to Rs 5,273.5 crore during the quarter, owing to improvements in the power and industry segments. But BHEL’s net loss and revenue missed Trendlyne’s Forecaster estimates by 240.8% and 6.2% respectively.
Post-results, Prabhudas Lilladher maintains its ‘Reduce’ rating on the stock, with a target price of Rs 200 per share. This indicates a potential downside of 22.3%. The brokerage expects the company’s revenue to improve in the long term due to segment diversification, growth in thermal power orders, and expansion in the spares & services business.
However, profitability is likely to be affected in the near term by its poor order completion rate, high raw material costs, and poor operational efficiency. It expects the company’s revenue to grow at a CAGR of 21.8% over FY23-26.
This pharma company rose by 9% on March 1 after announcing its merger with Cohance Lifesciences, to strengthen its position in the CDMO (contract development and manufacturing organisation) space. Like Suven, Cohance is a CDMO and API (active pharmaceutical ingredient) manufacturer. The merger is expected to be finalised in the next 12-15 months.
The merger aims to enhance Suven’s overall capacity to approximately 2,650 kL(kilo litre) and expand product offerings to customers. This move aligns with the company’s goal to set up a billion-dollar CDMO platform. According to Annaswamy Vaidheesh, Executive Chairman, “Together, Cohance and Suven are about 50-60% of our $1 billion goal.”
The merged entity will be a diversified CDMO platform with three business units – Pharma CDMO, Specialty Chem CDMO, and API+ (including formulations). The CDMO segment will make up 56.2% of the business mix, and the API segment will account for 43.8%.
However, Suven’s share price had fallen over 5% post Q3FY24 results. Its net profit dropped by 56.6% YoY due to lower revenue and higher inventory costs. Revenue declined by 36.2% YoY to Rs 234.2 crore as both the specialty chemicals and pharma segments were impacted. According to the management, performance will remain muted for the next few quarters, owing to industry-wide destocking, especially in the specialty chemicals space.
This is an industry-wide challenge. Specialty chemicals companies have been facing destocking challenges for several quarters, impacting margins and profits. Analysts expect a gradual recovery in demand as destocking runs its course. On the other hand, API manufacturers have seen improvements in recent quarters, thanks to the US generics market’s recovery, moderation in raw material costs, and new product launches. Analysts foresee a 15-17% YoY revenue growth for these companies in 2024, driven by new launches. They also predict volume growth and higher demand for generics and branded products.
Geojit BNP Paribas highlights Suven Pharma’s focus on long-term growth through R&D, capacity expansions, and inorganic growth through mergers & acquisitions. However, it has a ‘Sell’ rating, citing higher valuations and ongoing cyclical headwinds.
This construction & engineering company has risen by 6.7% over the past week, as it announced a couple of major order wins. It recently won an order worth Rs 1,000-2,500 crore from Oil & Natural Gas Corporation (ONGC) to develop Process Gas Compressor (PGC) modules. Additionally, it has also signed a deal worth Rs 5,000-10,000 crore with the Ministry of Defence to supply High Power Radars (HPR).
In Q3FY24, L&T’s net profit grew by 15.5% YoY to Rs 2,947.4 crore and revenue increased by 18.7% YoY on the back of a 27.3% YoY increase in the infrastructure projects segment, and a 24% YoY growth in the energy segment. While the firm beat Trendlyne Forecaster’s revenue estimate by 2.5%, it missed net profit estimate by 14.7% due to cost pressures in legacy projects that are now nearing completion. The company appears in a screener of stocks with strong momentum.
The company had reported a 25% YoY growth in order inflows to Rs 75,990 crore in the quarter, with international orders making up 67% of the total. L&T's management expects to outperform its order inflow guidance of 12% for FY24. Due to robust order prospects, the management has revised its order inflow guidance for the year to 20%.
S.N. Subrahmanyan, Chairman & Managing Director of the firm, said, “Despite global volatility and supply chain constraints, our nine-month order inflow has exceeded the FY23 level, indicating strong performance. Our capex spends are improving in India and the Middle East, despite global macroeconomic and geopolitical volatility.”
ICICI Direct recommends a ‘Buy’ for L&T with a target price of Rs 4,150. They say “We value L&T at an SOTP-based target price of Rs 4,160 (base business at 30x FY26E EPS) and consider it as the best capex play in the large-cap capital goods space.”
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
