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The Baseline
30 Jan 2024
By Bhavani Eswar

In a rare instance, India’s Prime Minister offered a stock market tip during a no-confidence motion in August 2023. Responding to opposition queries about loan write-offs by public sector lenders and LIC investments, PM Narendra Modi said, “There is a guru mantra for those interested in the share market – bet on stocks that the opposition raises concerns about.”

Investors following this advice did pretty well. The Nifty PSE, which has twenty public sector enterprise (PSE) stocks, saw a remarkable performance. By December 2023, the index delivered 40% returns and surged by 79% over the year, based on price appreciation alone. This excludes the hefty dividends typically paid out by PSEs. 

The trend has continued in 2024 so far, with the index rising 10.1% in January, according to Trendlyne’s share price history tool. In this edition of COTW, we look at the performance of the Nifty PSE index in 2023. 

While 2023 was a stellar year for the PSE index, 2022 saw a modest rise of 12.3%. A key driver of 2023’s sharp rally was bullish economic sentiment, thanks to the government’s push for infrastructure capex, defence indigenisation, and Make in India initiatives. The relativeundervaluation of PSE stocks compared to their private counterparts also attracted investors to these fundamentally strong companies, taking the share of PSEs in the country’s overall market capitalisation to afour-year high of 13.3% (42 lakh crore).

Defence and power-financing firms lead PSEs’ 2023 bull run 

In 2023, the best-performing PSE stocks were the two largest power-financing NBFCs, REC and Power Finance Corporation (PFC) – both delivered over 100% returns. They reported an average loan growth of 20% on the back of healthy demand in the infrastructure and power sectors. In Q2FY24, REC achieved its highest-ever quarterly profit, an increase of 38.7% YoY due to improvingasset quality and efficient cost management.

Meanwhile, India’s largest power generation company, NTPC rose by 69.7% in 2023, driven by strong order inflows amid growing power demand. Coal India also rose by 58.2%, helped by a surge in thermal power generation and higher e-auction premiums. According to Union Power Minister Nitin Gadkari, power demand in India is likely to cross 400 GW by 2030. 

Defence stocks like Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) have become investor favourites due to the potential in the Indian defence manufacturing industry, as the government emphasizes domestic procurement and defence exports. In 2023, HAL and BEL delivered returns of 93.8% and 69.7%, respectively. HAL’s strong performance is attributed to its strong order book of over Rs 83,000 crore and UBS expects the firm to benefit from upcoming defence orders worth above Rs 5,00,000 crore in the industry over FY24-28.

Among the state-run oil firms, Indian Oil Corporation (IOC) rallied by 61.4% in 2023. Softer crude oil prices and the expansion of refinery and chemical projects fuelled this surge. Other oil companies like Bharat Petroleum and Oil and Natural Gas Corporation (ONGC) rose by 35.1% and 35.6%, respectively. ONGC aims to increase production to 50 million metric tonnes (mmt) from 40 mmt by FY28, driven by 23 ongoing projects with a total capex of Rs 60,000 crore.

GAIL and Power Grid Corporation are among the top-performing utility (electric and non-electric) stocks, rising by 58.1% and 41.8%, respectively. GAIL benefited from low valuations, improved demand for gas, and pipeline expansion. A stable dividend yield of around 4% and a high dividend payout ratio of 83.3% aided Power Grid’s surge. LIC, despite a modest share price increase of 5.3% in 2023, surpassedSBI to become the most-valued PSE. LIC was listed in 2021.

PSEs to continue paying hefty dividends 

Apart from the stellar price performance in 2023, PSEs are set to pay over Rs 50,000 crore in dividends to the government for the third consecutive year. The index has maintained a dividend yield of 3.1%, thanks to a consistent dividend policy and improved profitability. This resulted in nine out of the twelve companies considered in the analysis maintaining a dividend payout ratio of over 25%. However, power financer REC and insurance firm LIC were among those with lower divided payments, affected by mandatory capital requirements from regulatory bodies.

A key factor driving the prices of PSE stocks is the expectation of the current government’s return in the 2024 elections. Despite recent gains, the government is likely to miss its disinvestment targets for the fifth consecutive year, as it faces issues like procedural delays and political and employee opposition. However, the 2021 public sector enterprise policy, which ensures government majority ownership in strategic sectors, has piqued investor interest in PSE stocks.

Typically, PSE stocks are overlooked by investors due to their underperformance compared to private counterparts. The Nifty PSE index’s P/E is currently trading at a discount of 35.7% to its all-time high P/E of 15.4 recorded in 2017. The recent Offer For Sale (OFS) by the government to sell a 2.5% stake in NHPC received a good response from retail investors (subscribed 1.4x), reflecting the changing perception towards PSE stocks. This, along with the gains of 2023, indicates a  growing appreciation for the potential of PSE stocks.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
30 Jan 2024
Market closes lower, Bharat Electronics bags an order worth Rs 665.8 crore
By Trendlyne Analysis

Nifty 50closed at 21,522.10 (-215.5, -1.0%), BSE Sensexclosed at 71,183.09 (-758.5, -1.1%) while the broader Nifty 500closed at 19,574.20 (-137.5, -0.7%). Market breadth is even. Of the 2,021 stocks traded today, 989 were gainers and 999 were losers.

Indian indices extended the losses from afternoon session and closed in the red. The volatility index, Nifty VIX, rose by 2.7 % and closed at 16.1 points. Tata Investment Corp'snet profit grows by 54.2% YoY to Rs 53.2 crore in Q3FY24, owing to a reduction in employee benefit and finance costs. Revenue grows by 34.2% YoY to Rs 50.5 crore during the quarter.

Nifty Smallcap 100 closed in the green, while Nifty Midcap 100 closed lower following the benchmark index. Nifty Metal and Nifty Media closed higher than Monday’s closing level. According to Trendlyne’s sector dashboard, media emerged as the top-performing sector of the day, with a rise of over 1.2%. 

Most European indices trade in the green. US indices futures trade flat indicating a cautious start. The data released by Eurostat indicated that Eurozone’s GDP in Q4 2023 grew by 0.1% YoY against estimate of zero growth.

  • Relative strength index (RSI) indicates that stocks like Sterling and Wilson Renewable Energy, Rain Industries, Infibeam Avenues and IRB Infrastructure Developers are in the overbought zone.

  • Bharat Electronics bags an order worth Rs 665.8 crore from the Central Board of Indirect Taxes and Customs (CBIC) to install and maintain IT and networking infrastructure, including a five-year maintenance support.

  • Cipla sees five analyst target price upgrades and one recommendation upgrade in the past month. UltraTech Cement, LTIMindtree, and TVS Motor Co see four analyst target price upgrades over the same period.

  • Subros rises to an all-time high of Rs 733.7 as its Q3FY24 net profit grows by 225.2% YoY to Rs 26.9 crore. Its revenue increases by 11.5% YoY and EBITDA margins improve by 300 bps YoY. The company appears in a screener of stocks with high TTM EPS growth.

  • Apar Industries rises to an all-time high of Rs 6,388 as its Q3FY24 net profit grows by 28.1% YoY to Rs 217.6 crore. Its revenue increases by 1.9% YoY, helped by growth in the transformers and conductors segments. EBITDA margin also improves by 137 bps YoY on the back of lower inventory expenses.

  • Muthoot Microfin rises sharply as its net profit surges by 119% YoY to Rs 124.6 crore in Q3FY24. Revenue grows by 52.8% YoY, owing to an improvement in customer base and gross loan portfolio (GLP). The lender's asset quality also improves as its gross and net NPAs decline by 120 bps and 64 bps YoY respectively. It appears in a screener of stocks with increasing net profit for the past four quarters.

  • BLS E-Services' Rs 310.9 crore IPO gets bids for 8.8X the available 1.4 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 30.5X the available 20.7 lakh shares on offer.

  • KPIT Technologies rises as its Q3FY24 net profit grows by 10.3% QoQ to Rs 155.3 crore due to lower raw material expenses. Its revenue increases by 4.8% QoQ, helped by growth in the Americas, UK & Europe and the rest of the world businesses. The company appears in a screener of stocks with improving net cash flow for the past two years

  • Jayant Acharya, Joint MD of JSW Steel, expects India to consume 200-210 million tonnes of steel by the end of this decade. Steel demand is expected to grow by 8-10% in the medium term.

  • EPack Durables’ shares debut on the bourses at a 3.9% discount to the issue price of Rs 230. The Rs 640.1 crore IPO has received bids for 16.4 times the total shares on offer.

  • Tata Investment Corpsurges to its all-time high of Rs 5,549.9 as its net profit grows by 54.2% YoY to Rs 53.2 crore in Q3FY24, owing to a reduction in employee benefit and finance costs. Revenue grows by 34.2% YoY to Rs 50.5 crore during the quarter. It appears in a screenerof Trendlyne's growth stocks with good technical scores.

  • Orchid Pharma hits a 20% upper circuit as it receives the European Medicines Agency's approval for Exblifep, a drug used to treat urinary tract infections, pneumonia, and bacteremia.

  • Indian pharmaceutical firms expect additional healthcare allocations in the interim budget on February 1, along with improved incentives for research, development, and ingredient manufacturing. The government has already implemented three major schemes for pharmaceutical manufacturing, including a Rs 6,940 crore PLI scheme for bulk drugs and a Rs 3,000 crore scheme for bulk drug park creation.

  • Suzlon Energy secures an order from ABC Cleantech to supply 214 wind turbines, each with a capacity of 3MW, for a project in Andhra Pradesh. The project can provide electricity to five lakh houses and reduce emissions by 20.8 lakh tonnes every year.

  • UTI Asset Management rises sharply to a new 52-week high of Rs 965 as its Q3FY24 net profit surges by 38.4% YoY to Rs 150.3 crore. Its revenue grows by 23.2% YoY. The company appears in a screener of stocks with improving book value per share.

  • L&T wins an EPC contract worth Rs 10,000-15,000 crore to build a 1,800 MW solar photovoltaic plant in UAE. The project, set to be operational in three phases, is expected to cut 2.4 million tonnes of carbon emissions annually.

  • Rajesh Jain, CFO of RR Kabel, projects a 20% YoY volume growth in FY24, surpassing the industry. He adds that margins will be around 8% and foresees an increase in export share to 30% of the company's revenue going forward.

  • SpiceJet rises as NCLT dismisses an insolvency petition filed by aircraft lessor Wilmington Trust against the company. The company appears in a screener of stocks nearing their 52-week high with significant volumes.

  • Shakti Pumps (India) rises sharply to an all-time high of Rs 1,498 as Madhya Pradesh Industrial Development Corp assigns the company 46 acres of land in Pithampur. The company appears in a screener of stocks with low debt.

  • GAIL (India)rises to its all-time high of Rs 175 as it signs a deal to purchase 0.5 MMTPA of liquified natural gas (LNG) from ADNOC Gas. Its delivery will begin in 2026 for a period of 10 years.

  • Sunil Reddy Dodla, MD of Dodla Dairy, forecasts a 12-15% revenue growth for FY24. He anticipates the Value Added Products (VAP) to constitute 28% of the mix, yielding high single to double-digit margins. He also projects the animal feed business to generate Rs 100-120 crore in revenue by FY25.

  • Maricois rising as its net profit grows by 16.8% YoY to Rs 383 crore in Q3FY24. Revenue declines by 1.9% YoY due to reduced sales of Saffola edible oils. Its EBITDA margin expands by 272 bps YoY, owing to the lower cost of raw materials. The company appears in a screenerof stocks with growth in quarterly net profit and profit margin (YoY).

  • Reliance Industriesreportedly inks a non-binding agreement with Walt Disney to form a merged media and entertainment business. Reliance is expected to hold 51%, while Disney will own a 49% stake in the merged entity. However, Reliance Industry says it has no comment on this media speculation.

  • Bajaj Finance's Executive Director Rakesh Bhatt tenders his resignation to pursue career opportunities outside the company. His resignation will take effect from January 31, 2024.

  • Piramal Enterprisesposts a net loss of Rs 2,377.6 crore in Q3FY24 compared to a net profit of Rs 3,545.4 crore in Q3FY23 due to higher provisions for alternate investments fund (AIF). Revenue declines by 3.8% during the quarter. However, the lender's asset quality improves as its gross and net NPAs contract by 160 bps and 60 bps YoY respectively. The company also plans to sell its 20% stake in Shriram Investment for Rs 1,440 crore by the end of FY24.

Riding High:

Largecap and midcap gainers today include Zee Entertainment Enterprises Ltd. (170.90, 5.66%), Syngene International Ltd. (716.85, 4.92%) and Hindustan Petroleum Corporation Ltd. (471.70, 4.29%).

Downers:

Largecap and midcap losers today include Coromandel International Ltd. (1,050.25, -7.67%), Vedant Fashions Ltd. (1,030.40, -6.82%) and Trent Ltd. (3,054.95, -5.90%).

Volume Shockers

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

Top high volume gainers on BSE included Tata Investment Corporation Ltd. (5,794.00, 20.00%), IRB Infrastructure Developers Ltd. (68.00, 13.43%) and Apar Industries Ltd. (6,068.75, 5.50%).

Top high volume losers on BSE were Coromandel International Ltd. (1,050.25, -7.67%), Vedant Fashions Ltd. (1,030.40, -6.82%) and Sundram Fasteners Ltd. (1,219.05, -1.18%).

UTI Asset Management Company Ltd. (896.30, 3.40%) was trading at 40.0 times of weekly average. Jamna Auto Industries Ltd. (116.55, 3.65%) and Gillette India Ltd. (6,689.05, 3.15%) were trading with volumes 7.3 and 5.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

78 stocks took off, crossing 52 week highs, while 1 stock tanked below their 52 week lows.

Stocks touching their year highs included - ACC Ltd. (2,513.15, 0.81%), Amara Raja Energy & Mobility Ltd. (838.20, 0.03%) and Ambuja Cements Ltd. (570.85, -0.57%).

Stock making new 52 weeks lows included - Vedant Fashions Ltd. (1,030.40, -6.82%).

11 stocks climbed above their 200 day SMA including Data Patterns (India) Ltd. (1,953.75, 4.53%) and Indian Energy Exchange Ltd. (145.10, 3.31%). 13 stocks slipped below their 200 SMA including Coromandel International Ltd. (1,050.25, -7.67%) and Jubilant Ingrevia Ltd. (439.45, -4.60%).

 
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The Baseline
29 Jan 2024
5 stocks to buy from analysts this week with net profit growth
By Bhavani Eswar

This week we take a look at the stock picks from analysts with YoY growth in net profit during Q3FY24.

1. Route Mobile:

HDFC Securities maintains its ‘Buy’ rating on this internet software and services company with a target price of Rs 1,950, indicating an upside of 24.2%. In Q3FY24, the company's net profit grew by 28.3% YoY to Rs 105.7 crore, with revenue of Rs 1,043.8 crore. Analyst Amit Chandra says, “Route reported muted revenue growth in a seasonally strong quarter due to a slowdown in ILD (International Long Distance) volumes and a delay in deal ramp-up.” 

Chandra believes that ILD billable transactions were affected for two months in Q3FY24 due to cost-saving initiatives by large e-commerce and OTT players. But according to the analyst, Vodafone Idea’s (VI) SMS firewall deal holds a revenue potential of $100 million. He believes that the management has revised the growth guidance for FY24 down to 15-20% from the initial 20-25% due to the ILD slowdown and a shift in VI’s deal timelines (from Q3FY24 to Q1FY25). 

Chandra also expects a revival in ILD volume, new wins in the domestic market, and contributions from the VI deal to aid growth in FY25. He estimates the company to report a revenue CAGR of 10% over FY24-26.

2. IDFC First Bank:

Axis Direct maintains its ‘Buy’ call on this bank with a target price of Rs 100, indicating an upside of 19.8%. In Q3FY24, the bank’s net profit grew 18.4% YoY to Rs 715.7 crore, while net interest income improved 30% YoY. Analysts Bhavya Shah and Dnyanada Vaidya say, “The bank reported robust loan growth momentum (up 25% YoY) in Q3FY24, driven by consumer and auto loans, and rural finance, with significant growth across segments.” 

They note that IDFC First Bank’s deposits growth of 43% YoY was driven by retail deposits, which supported asset growth and repayment of legacy borrowings. The analysts expect the deposits to remain healthy and continue to outpace the growth in advances. They expect opex to remain high in the near term due to the management’s focus on branch expansion, digitalisation and marketing investments.

Shah and Vaidya forecast stable margins and expect the bank to maintain its growth momentum. They predict a credit and deposit growth of 24% and 33% CAGR respectively, over FY24-26. 

3. ICICI Bank:

KR Choksey maintains its ‘Buy’ call on this bank with a target price of Rs 1,250. This indicates an upside of 23%. The bank’s net profit grew 25.7% YoY to Rs 11,052.6 crore in Q3FY24, while its net interest income increased by 13.4% YoY to Rs 18,678.6 crore in line with the brokerage’s estimates. Analyst Karan Kamdar says, “The bank maintained resilient performance in Q3FY24, with healthy credit offtake across all segments.” 

Kamdar believes that the net interest margins have been contracting and predicts this trend to continue for the next two to three quarters on the back of an increase in the cost of funds, led by the transmission lag impact. ICICI Bank’s management expects the mortgage, corporate, and auto segments to drive growth in the coming quarters. 

The analyst projects an 18.7% CAGR in profits, 18.1% CAGR in advances, and 16.8% growth in operating profits over FY24-26. He remains optimistic about the company, citing healthy business momentum that is expected to yield healthy earnings growth and superior return ratios.

4. PNB Housing Finance:

Motilal Oswal maintains its ‘Buy’ rating on this housing finance company with a target price of Rs 1,025, implying an upside of 29.5%. In Q3FY24, the firm’s net profit grew by 25.8% YoY to Rs 338.4 crore (15% below the brokerage’s estimate), while net interest income (NII) declined 19% YoY to Rs 595 crore (11% below the brokerage’s estimate). Analysts Abhijit Tibrewal, Gautam Rawtani, and Nitin Aggarwal attribute the NII decrease to a gradual shift towards retail business. The firm’s net interest margin also fell by 45 bps to 3.5% YoY in Q3FY24. The analysts expect borrowing costs to decline and margins to improve after the credit rating upgrade.  

The analysts anticipate recoveries from the written-off pool of loans “in both wholesale as well as retail segments, and expect write-backs to continue for the next three to four quarters starting from Q4FY24.” They expect margins to improve through higher yields and lower borrowing costs and see credit costs remaining flat at 35 bps. The company is projected to deliver a profit CAGR of 28% over FY24-FY26.

5. Rossari Biotech:

Edelweiss maintains its ‘Buy’ rating on this specialty chemicals company with a target price of Rs 926, indicating an upside of 21.5%. In Q3FY24, its net profit grew by 33.9% YoY to Rs 34.4 crore, with revenue of Rs 467.3 crore. Analyst T Ranvir Singh says, “Rossari Biotech’s overall earnings were lower than our estimate due to weaker sales.”

Singh expects the company’s investment to increase Dahej’s capacity by 60.6% to 53,000 mtpa, which will boost revenue from the home, personal care and performance chemicals (HPCC) segment. The HPCC segment contributed 77% to total revenue in Q3FY24. He also sees growth opportunities in Rossari Biotech’s ventures in agrochemicals, oil and gas, chemicals, and silicon oils.

The analyst expects margins to remain stable in Q4FY24 and expand in FY25 and FY26 on the back of softer raw material prices in the near term, and the introduction of high-margin value-added products. He expects a revenue CAGR of 16% over FY24-26.

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

(You can find all analyst picks here)

 
Trendlyne Marketwatch
Trendlyne Marketwatch
29 Jan 2024

Markets closed up today. Nifty 50 closed at 21737.60 (385, 1.8%) , BSE Sensex closed at 71941.57 (1240.9, 1.8%) while the broader Nifty 500 closed at 19711.65 (318.7, 1.6%)

Market breadth is in the green. Of the 2052 stocks traded today, 1184 were in the positive territory and 843 were negative.

Riding High:

Largecap and midcap gainers today include Oil And Natural Gas Corporation Ltd. (252.50, 7.88%), Reliance Industries Ltd. (2896.10, 7.02%) and Power Finance Corporation Ltd. (446.75, 6.62%).

Downers:

Largecap and midcap losers today include Au Small Finance Bank Ltd. (626.35, -11.51%), SBI Cards and Payment Services Ltd. (715.55, -5.83%) and Cipla Ltd. (1336.85, -2.39%).

Volume Rockets

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

Top high volume gainers on BSE included IRB Infrastructure Developers Ltd. (59.95, 18.24%), NMDC Steel Ltd. (67.20, 14.48%) and Welspun Living Ltd. (149.95, 9.13%).

Top high volume losers on BSE were Au Small Finance Bank Ltd. (626.35, -11.51%), SBI Cards and Payment Services Ltd. (715.55, -5.83%) and Anupam Rasayan India Ltd. (930.00, -3.58%).

Eris Lifesciences Ltd. (911.80, 2.52%) was trading at 13.3 times of weekly average. Delhivery Ltd. (427.85, 6.62%) and Latent View Analytics Ltd. (473.95, 4.64%) were trading with volumes 7.6 and 6.4 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

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

Stocks touching their year highs included - ACC Ltd. (2492.90, 1.02%), AIA Engineering Ltd. (4034.95, 3.60%) and Ambuja Cements Ltd. (574.10, 2.49%).

Stock making new 52 weeks lows included - Navin Fluorine International Ltd. (3324.10, -0.61%).

10 stocks climbed above their 200 day SMA including Shoppers Stop Ltd. (739.15, 4.84%) and IDFC First Bank Ltd. (83.50, 4.31%). 10 stocks slipped below their 200 SMA including Au Small Finance Bank Ltd. (626.35, -11.51%) and Fine Organic Industries Ltd. (4595.00, -1.63%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
29 Jan 2024
Market closes higher, BPCL's net profit grows by 82.1% YoY to Rs 3,181.4 crore in Q3FY24
By Trendlyne Analysis

Nifty 50closed at 21,737.60 (385, 1.8%), BSE Sensexclosed at 71,941.57 (1240.9, 1.8%) while the broader Nifty 500closed at 19,711.65 (318.7, 1.6%). Market breadth is in the green. Of the 2,052 stocks traded today, 1,184 were in the positive territory and 843 were negative.

Indian indices extended their gains from the afternoon session and closed in the green. The Indian volatility index, Nifty VIX, rose 13.1% and closed at 15.7 points. Bharat Electronics' closed in the green after its net profit grew by 40.2% YoY to Rs 859.6 crore in Q3FY24 due to a reduction in finance and raw material costs. 

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, taking cues from the benchmark index. Nifty PSU Bank and Nifty Metal closed higher than their Thursday close. According to Trendlyne’s sector dashboard, Oil & Gas emerged as the top-performing sector of the day, with a rise of 6.2%. 

Major Asian indices closed in the green, except for China’s Shanghai Composite index closing in the red. However, European indices traded mixed on a volatile day of trade. US index futures traded flat, indicating a cautious start to the trading session. Brent crude oil futures traded lower after rising for three consecutive trading sessions. Crude oil prices are on the rise after Houthi rebels attacked a Russian fuel ship in Red Sea on Friday.

  • Money flow index (MFI) indicates that stocks like Borosil Renewables, IDBI Bank, Oracle Financial Services Software and PCBL are in the overbought zone.

  • IRB Infrastructure Developers, Ambuja Cements, Great Eastern Shipping Co and Jyothy Labs surge by 28.4%, 9.5%, 7.5 and 4% respectively over the past week, ahead of their Q3FY24 results on Wednesday.

  • BPCL surges to its 52-week high of Rs 501.4 per share as its net profit grows by 82.1% YoY to Rs 3,181.4 crore in Q3FY24. However, revenue declines by 2.5% YoY due to a decrease in the downstream petroleum segment. It shows up in a screener of undervalued growth stocks.

  • GAIL (India) rises to an all-time high of Rs 174.7 as its Q3FY24 net profit grows 6.7x YoY to Rs 3,194.6 crore, helped by lower raw materials and inventory expenses. However, revenue declines 3.3% YoY, impacted by downturns in natural gas marketing and LPG & Liquid hydrocarbons segments.

  • Bharat Electronics' net profit grows by 40.2% YoY to Rs 859.6 crore in Q3FY24 due to a reduction in finance and raw material costs. Revenue increases by 1.9% YoY to Rs 4,142.3 crore during the quarter. It appears in a screener of stocks with increasing net profit and expanding profit margins.

  • The Supreme Court has reportedly asked SpiceJet to pay $4 million (approx. Rs 33.2 crore) to two engine lessors by February 15. The airline currently owes its lessors $12.9 million (approx. Rs 107.2 crore).

  • Azad Engineeringrises to its all-time high of Rs 745.9 per share as it signs a seven-year contract with Rolls-Royce to supply parts for military aircraft engines.

  • Man Infraconstruction rises to an all-time high of Rs 242 as it delivers a five lakh sq ft residential project, Aaradhya OneEarth, in Ghatkopar Mumbai. The project is expected to generate Rs 1,200 crore in the next four years.

  • Umesh Revankar, Executive VC of Shriram Finance, says the company aims for a 20% growth in assets under management(AUM). He expects CV sales to peak in Q4 and a 12-15% growth in this segment in FY24. He adds that the gold and MSME loans segments are growing at 30% YoY.

  • Tata Power Corises to an all-time high of Rs 387.2 as its unit Tata Power Renewable Energy commissions a 1,040 kW solar power project in Chengmari Tea Estate, West Bengal. The company appears in a screenerof stocks with improving book value per share.

  • Energy stocks like Oil and Natural Gas Corp, Reliance Industries, Tata Power and Coal India surge more than 3% in trade. All constituents of the broader Nifty Energy index are also trading in the green, helping it to touch its 52-week high of 36,645.1.

  • SBI Cards and Payment Services falls sharply as its Q3FY24 net profit misses estimates by 7.2%. However, its net profit grows by 7.8% YoY to Rs 549.1 crore and revenue rises by 29.7% YoY. The company appears in a screener of stocks with declining cash flow from operations.

  • Reports suggest that 10.3 lakh shares (01.% equity) of Godrej Consumer Products, amounting to approximately Rs 120.1 crore, change hands in a large trade.

  • Va Tech Wabag rises sharply as it signs a memorandum of understanding (MoU) with Peak Sustainability Ventures to set up 100 bio-CNG plants. The plants will be set up at sewage treatment facilities across India and other locations in the Gulf Cooperation Council (GCC), Africa and Europe.

  • Power Mech Projects rises to an all-time high of Rs 5,122.2 as it receives orders worth Rs 644.9 crore from RVNL and Neyveli Uttar Pradesh Power. The orders involve construction works and thermal power plant maintenance.

  • Shakti Pumps (India)rises sharply to an all-time high of Rs 1,271.1 as its Q3FY24 net profit grows 3x YoY to Rs 45.4 crore due to lower inventory expenses. Its revenue increases by 57.7% YoY on the back of India and overseas businesses.

  • Arul Selvan, CFO & President of Cholamandalam Investment and Finance, projects revenue growth of 30-32% for FY24 and over 20% for FY25. He also highlights the company's target to reduce the gross non-performing assets (GNPA) ratio to 3.5%.

  • Dodla Dairysurges to its all-time high of Rs 1,048 per share as its net profit grows by 16.8% YoY to Rs 41.3 crore in Q3FY24. Revenue increases by 10.6% YoY, owing to gains in the domestic market. It appears in a screenerof the highest-gaining stocks from open.

  • Utkarsh Small Finance Bank's Q3FY24 net profit improves by 24.1% YoY to Rs 116.1 crore. Its net interest income also grows by 22.6% YoY, helped by retail, treasury and wholesale segments. The bank's asset quality improves as its gross and net NPAs fall by 54 bps YoY and 58 bps YoY, respectively.

  • SJVN surges to its all-time high of Rs 134 per share as it bags an order to build and operate a 100 MW solar project at an auction held by Gujarat Urja Vikas Nigam. The company's subsidiary, SJVN Green Energy, will undertake the project at an expected capex of Rs 550 crore.

  • Jayant Acharya, CEO & Joint Managing Director of JSW Steel, expects Budget 2024 to focus on public capex and a manufacturing push. He expresses optimism for protective measures against low-cost steel imports and predicts improved Q4 volumes, driven by increased exports.

  • Rising Sun Holdings, promoter of Poonawalla Fincorp, buys a 0.5% stake in the company on Thursday. It now holds a 62.5% stake.

  • Au Small Finance Bank falls sharply as its Q3FY24 net profit declines by 4.5% YoY to Rs 375.3 crore. However, its net interest income rises by 15.3% YoY, helped by the treasury, retail banking, and wholesale banking segments. The bank's asset quality declines as gross and net NPA margins grow by 17 bps YoY and 17 bps YoY, respectively.

  • Adani Powerrises sharply as it signs a memorandum of understanding (MoU) with AdaniConnex to sell its 100% stake in subsidiaries, Aviceda Infra Park and Innovant Buildwell, for Rs 540 crore.

  • Cyientfalls as its net profit declines by 17.4% QoQ to Rs 147.2 crore in Q3FY24 due to increasing employee benefit and inventory expenses. Its revenue grows by 2.4% QoQ, helped by gains in digital engineering & technology and design-led manufacturing. The company features in a screenerof stocks with declining cash flow from operations over the past two years.

Riding High:

Largecap and midcap gainers today include Oil And Natural Gas Corporation Ltd. (252.50, 7.88%), Reliance Industries Ltd. (2,896.10, 7.02%) and Power Finance Corporation Ltd. (446.75, 6.62%).

Downers:

Largecap and midcap losers today include Au Small Finance Bank Ltd. (626.35, -11.51%), SBI Cards and Payment Services Ltd. (715.55, -5.83%) and Cipla Ltd. (1,336.85, -2.39%).

Volume Rockets

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

Top high volume gainers on BSE included IRB Infrastructure Developers Ltd. (59.95, 18.24%), NMDC Steel Ltd. (67.20, 14.48%) and Welspun Living Ltd. (149.95, 9.13%).

Top high volume losers on BSE were Au Small Finance Bank Ltd. (626.35, -11.51%), SBI Cards and Payment Services Ltd. (715.55, -5.83%) and Anupam Rasayan India Ltd. (930.00, -3.58%).

Eris Lifesciences Ltd. (911.80, 2.52%) was trading at 13.3 times of weekly average. Delhivery Ltd. (427.85, 6.62%) and Latent View Analytics Ltd. (473.95, 4.64%) were trading with volumes 7.6 and 6.4 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

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

Stocks touching their year highs included - ACC Ltd. (2,492.90, 1.02%), AIA Engineering Ltd. (4,034.95, 3.60%) and Ambuja Cements Ltd. (574.10, 2.49%).

Stock making new 52 weeks lows included - Navin Fluorine International Ltd. (3,324.10, -0.61%).

10 stocks climbed above their 200 day SMA including Shoppers Stop Ltd. (739.15, 4.84%) and IDFC First Bank Ltd. (83.50, 4.31%). 10 stocks slipped below their 200 SMA including Au Small Finance Bank Ltd. (626.35, -11.51%) and Fine Organic Industries Ltd. (4,595.00, -1.63%).

 
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The Baseline
25 Jan 2024
Five Interesting Stocks Today

1. South Indian Bank:

This banking stock surged by 8.3% on January 18, as its net profit grew by 197.2% YoY to Rs 305.4 crore in Q3FY24. Its revenue also increased by 15% YoY to Rs 2,184.1 crore during the quarter, helping the company appear in a screener of stocks with rising revenue for the past four quarters (QoQ). This led to net profit and revenue beating Trendlyne’s Forecaster estimates by 7.6% and 24%, respectively. The stock has also risen by 18.8% over the past week, featuring in a screener of stocks with high volume and high gain.

The revenue boost was on the back of improvement in the treasury, corporate and retail banking segments. However, the bank’s net interest margin (NIM) declined by 33 bps YoY due to higher cost of funds. This rise in cost was driven by loan growth (up 11% YoY) outpacing the 9% increase in deposits. The bank was also hit by a 201 bps YoY decline in the CASA ratio. 

The company’s Director and CEO, PR Seshadri, said, “Our cost of funds continues to rise as deposits are repricing, bringing cost of deposits to 5.2%, up from 4.3% in Q3FY23.” 

Post results, Anand Rathi maintains its ‘Buy’ rating on the stock with a target price of Rs 39 per share. This indicates a potential upside of 12.2%. The brokerage is optimistic about the bank’s profitability prospects, citing reduced stress from the legacy book. It expects the company’s net profit to grow at a CAGR of 18.9% over FY23-26.

2. Steel Strips Wheels:

This auto parts and equipment firm rose 5.8% on Friday following its Q3FY24 results announcement. Its net profit has increased by 35.8% YoY to Rs 60 crore and revenue grew by 18.3% YoY. The net profit beat estimates by 25%, aided by lower taxes. The company appears in a screener of stocks with increasing quarterly profits for the past four quarters. According to Trendlyne’s Technicals, the stock has risen by 5.8% in the past month.

The firm’s revenue growth was driven by higher volumes and realizations, with strong domestic automotive sales contributing to this increase. Currently SSWL has a 45% market share in passenger vehicles and 30% in the two-wheeler segment, 

Steel Strips Wheels has a big capacity boost coming. It expects a capacity increase of 64.1% by Q4FY25, following its recent acquisition of AMW Autocomponent, an auto-component manufacturer. With rising domestic demand, growing exports, and a shift towards premium alloy wheels, the company forecasts a 10% CAGR in wheel sales in FY24-26.

The management maintains its FY24 sales volume growth guidance at 15% YoY, with revenue projected to grow by 23.4% YoY, driven by increased volumes. EBITDA margins are expected to increase, owing to the increasing share of premium alloy wheels. Aluminum knuckles launched in September 2023 are expected to contribute 6% of revenue by Q4FY24. Demand from the US and Europe contributed 15% of revenue in 9MFY24, as existing customers are shifting away from China. Exports are predicted to generate around Rs 600 crore in revenue in FY24. 

Axis Direct notes that the AMW plant acquisition, a growing alloy wheels order book, product diversification, and 2W motor hub-wheels expansion position the company well to meet increasing demand, especially from the US and Europe. The brokerage maintains a ‘Buy’ rating on the stock.

3. UltraTech Cement:

This cement and cement products company has risen by 19.7% in the past quarter. In Q3FY24, it reported an 8% YoY increase in revenue to Rs 16,740 crore and a 68% YoY increase in net profit to Rs 1,777 crore, marginally surpassing Trendlyne Forecaster estimates. UltraTech posted a moderate volume growth of 6% YoY at 237.3 million tonnes per annum (MTPA), impacted by elections in four major states and fiscal challenges in Bihar and West Bengal. 

The volume growth in Q3FY24 was supported by a 2% QoQ hike in cement prices.  According to Crisil, cement prices are expected to increase by 1-3% in FY25 to Rs 400-405 per bag on the back of government initiatives in the affordable housing segment. During the earnings call, the management guided capacity utilization to increase to 80-85% in Q4FY24 from 77% in Q3FY24 due to an uptick in cement demand.

In Q3, UltraTech’s fuel cost declined by 19% YoY on a tonne basis, owing to an 8.4% drop in Brent crude prices in 2023 and a 25% reduction in the consumption price of petcoke. With fuel costs accounting for around 25-30% of total expenses for cement firms, UltraTech expects a further 7-8% decrease in fuel costs over the next six months. The firm also appears in a screener of companies benefiting from low crude oil prices.

The firm expanded into the Jharkhand market in Q3 by acquiring the 0.5 MTPA grinding assets of Burnpur Cement. Its current capacity stands at around 130 MTPA and the management aims to increase this to 200 MTPA by 2028 through an investment of 13,000 crore. It also revised its capex guidance to Rs 9,000 crore per annum each for FY24 and FY25, up from Rs 7,000 crore. Axis Securities maintains its ‘buy’ rating on the stock and expects the firm’s profit to grow at a CAGR of 31% over FY23-26.

4. Mahanagar Gas:

This utilities company hit its all-time high of Rs 1,387 on Tuesday and has risen by 9.4% in the past week, after announcing its Q3FY24 results. Its net profit for the quarter has increased by 84.3% YoY to Rs 317.2 crore, despite a 5.3% YoY fall in revenue to Rs 1,771.8 crore. It beat Trendlyne Forecaster’s net profit estimate by 8.4%. Profit and EBITDA increased due to a 25.6% YoY drop in raw materials cost.

The company’s EBITDA margins improved by 13.1% points YoY, despite reducing the selling price of CNG by Rs 3/kg during the quarter. The increase in price realisation was helped by a 22.5% decrease in input CNG prices, while the selling price saw only a marginal decline. 

Going forward, a fall in cheap government-administered (APM) gas supply will lead to increased use of HPHT gas (which has low margins), potentially moderating margins. The company appears in a screener for stocks with improving cash flow for the past two years.

Mahanagar Gas announced an interim dividend of Rs 12 per equity share for FY24 and set the record date as February 5, 2024.

Vahan data from December 2023 shows a 25% YoY increase in CNG vehicle registrations. The company is poised to benefit from the government's aim to raise the share of natural gas in the energy mix from 6% to 15% by 2030. The firm’s offer of free fuel cards worth Rs 20,000-5,00,000 for new or retrofitted CNG vehicles may have helped drive Q3 conversions. An uptick in CNG vehicle registrations is also expected to benefit the company in the coming quarters.

HDFC Securities reiterates its ‘Buy’ call on Mahanagar Gas on the back of its attractive valuation. The analysts estimate volumes at 3.6 million metric standard cubic meters per day for FY24 and expect volume growth of 8.9% CAGR over FY24-26.

5. Tata Elxsi:

This IT software & services company fell 5.2% on January 24 as its Q3FY24 net profit missed Trendlyne’s Forecaster estimates by 1.1%. In addition, its EBITDA margin contracted by 40 bps QoQ to 29.5% during the quarter due to increased employee benefit expenses and other costs.  However, Tata Elxsi’s Q3FY24 net profit grew by 3.2% QoQ to Rs 206.4 crore on account of a deferred tax credit of Rs 4.4 crore. 

The company’s revenue has increased by 3.7% QoQ due to growth in the EPD (Embedded Product Design) segment, which accounts for 85% of total revenue). This segment consists of transportation, media & communication, and healthcare verticals. 

During the quarter, the revenue of Tata Elxsi’s transportation vertical (which contributes around 37% of total revenue) grew 2.7% QoQ due to deal wins. The healthcare vertical (which accounts for around 14% of total revenue) increased by 4.6% QoQ. According to  Manoj Raghavan, CEO and MD, “Our healthcare business is on track to achieve about 20% of the overall revenues of the company by 2026.” Meanwhile, the media & communication vertical’s revenue growth remained muted at 0.6% QoQ. 

Morgan Stanley maintains its ‘Underweight’ rating on Tata Elxsi with a target price of Rs 7,500. According to the brokerage, the company’s Q3 performance fell short of its expectations, particularly in the EPD segment. The EPD segment’s media & communication vertical faces challenges due to lower discretionary spending from clients, and cost pressures. 

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
25 Jan 2024
Market closes lower, Hindustan Petroleum misses its net profit estimates by 31.9% in Q3
By Trendlyne Analysis

Nifty 50 closed at 21,352.60 (-101.4, -0.5%), BSE Sensex closed at 70,700.67 (-359.6, -0.5%) while the broader Nifty 500 closed at 19,393.00 (-58, -0.3%), of the 2,010 stocks traded today, 1,164 were gainers and 817 were losers.

Indian indices recovered from the day’s low and closed in the red, with the Nifty 50 closing at 21,353. The volatility index, Nifty VIX, dropped by 3.5% and closed at 13.9 points. Hindustan Petroleum Corp’s net profit grew by 60.4% YoY to Rs 712.8 crore in Q3FY24. Revenue increased marginally by 1.9 % YoY due to improvement in its downstream petroleum segment.

Nifty Smallcap 100 closed in the green, while Nifty Midcap 100 closed lower following the benchmark index. Nifty Energy and Nifty Realty closed higher than Wednesday’s closing level. According to Trendlyne’s sector dashboard, fertilizers emerged as the top-performing sector of the day, with a rise of over 3%.

Most European indices trade in the red, except for England’s FTSE 100 trading higher. US indices futures trade higher indicating a positive start. The data released by Hamburg Commercial Bank indicated that Germany’s manufacturing PMI for January declined to 45.4 against estimates of 43.7.

  • Relative strength index (RSI) indicates that stocks like Persistent Systems, Gujarat Gas, Alembic Pharmaceuticals and Bharti Airtel are in the overbought zone.

  • Bajaj Finance, NTPC,Tata Investment Corp, and Petronet LNG's weekly average delivery volumes rise ahead of their Q3FY24 results on Monday.

  • Hindustan Petroleum Corp falls sharply as its net profit misses Forecaster estimates by 31.9%, despite growing by 60.4% YoY to Rs 712.8 crore in Q3FY24. Revenue increases marginally by 1.9 % YoY due to improvement in its downstream petroleum segment. It shows up in a screener of stocks where mutual funds have decreased their shareholding in the past month.

  • Sterlite Technologies plunges as it reports a net loss of Rs 57 crore in Q3FY24, compared to a net profit of Rs 51 crore in Q3FY23. Revenue declines by 29.8% YoY due to challenges in the optical networking business. It features in a screener of stocks with declining net profit and profit margin YoY.

  • Foreign institutional investors withdraw Rs 15,455.7 crore from the equity market over the past week, according to Trendlyne's FII dashboard. Index options witness the highest outflow of Rs 72,423.1 crore from foreign investors. Meanwhile, mutual funds are net buyers in the equity market, injecting Rs 8,037.1 crore during the same period.

  • DLF's Q3FY24 net profit rises by 26.5% YoY to Rs 656.6 crore due to lower employee benefits and finance expenses. Its revenue improves by 5.4% YoY and EBITDA margin expands by 167 bps YoY.

  • Nova Agritech's Rs 143.8 crore IPO gets bids for 66X the available 2.5 crore shares on offer on the third day of bidding. The retail investor quota gets bids for 60.3X the available 1.3 crore shares on offer.

  • Kamlesh Gandhi, Chairman and MD of Mas Financial Services, says the company targets to achieve an AUM growth of 20-25% in FY24. He adds that the MSME segment will contribute 60% to the overall AUM mix.

  • DCB Bankfalls sharply as its net profit misses Forecaster estimates by 3.5% in Q3FY24 despite its net profit rising by 11.2% YoY to Rs 126.6 crore. Revenue grows by 28.2% YoY, helped by an increase in revenue from the treasury, corporate and retail banking segments. The bank's asset quality improves as its gross and net NPAs decline by 19 bps and 15 bps YoY.

  • Glenmark Pharmaceutical’s subsidiary, Glenmark Specialty SA, signs a licensing deal with Jiangsu Alphamab Biopharmaceuticals and 3D Medicines to develop and commercialize Envafolimab in India and other regions. The drug is used for treating cancer and chronic Hepatitis B in adults.

  • Coal India and Bharat Heavy Electricals rise as reports suggest that they will invest Rs 11,782 crore in a coal-to-ammonium nitrate project in Odisha.

  • Reports suggest that around 2.6 crore shares (9.9% equity) of PNB Housing Finance, amounting to Rs 2,141.3 crore, change hands in a large trade.

  • Mohnish Pabrai sells a 2.2% stake in Sunteck Realty on Wednesday. He now holds a 4.4% stake in the company.

  • Laurus Labs falls sharply as its Q3FY24 net profit decreases by 88.6% YoY to Rs 23.1 crore due to increasing raw material and finance expenses. Its revenue drops by 22.6% YoY due to falling contract development and antiretroviral segments.

  • Birlasoftreports a net profit of Rs 161.1 crore in Q3FY24, as against a loss of Rs 16.4 crore in Q3FY23. Its revenue rises 11.1% YoY to Rs 1,371.1 crore on the back of growth in the manufacturing and energy & utilities segements. The stock appears in a screener for companies with low debt.

  • Reports suggest that 15.4 lakh shares (0.1% equity) of CG Power and Industrial Solutions, amounting to approximately Rs 68.6 crore, change hands in a large trade.

  • Titagarh Rail Wagonsforms a joint venture (JV) with Amber Enterprises' subsidiary, Sidwal Refrigeration Industries, marking its entry into the railway component and subsystem business. Both companies plan to invest Rs 120 crore each in the JV, ensuring equal control.

  • TVS Motor falls as it misses its Q3FY24 net profit estimates by 11.3%. However, its net profit rises 59.1% YoY to Rs 478.8 crore. Its revenue also increases by 25.4% YoY, helped by improving automotive vehicles & parts and financial services segments.

  • Railtel Corp rises sharply as its net profit surges by 94.5% YoY to Rs 62.1 crore in Q3FY24. Revenue grows by 47.1% YoY, helped by improvement in the telecom services and project work segments. The company also bags an order worth Rs 162.7 crore from Navodaya Vidyalaya Samiti to supply and implement integrated infrastructure and IT solutions for Jawahar Navodaya Vidyalayas (JNV) schools.

  • Bajaj Auto's Q3FY24 net profit rises by 38% YoY to Rs 2,032.6 crore. Its revenue also grows by 30.6% YoY due to improving automotive and investment segments. The company's EBITDA margins expand by 98 bps YoY, helped by lower inventory expenses.

  • Arnab Banerjee, CEO & MD of Ceat, notes a 12.5% YoY volume growth, driven by increased exports, and expects Q4 growth to mirror Q3. He also highlights a QoQ decline in margin due to rising raw material prices. The company's Q3FY24 net profit jumps by 412.8% YoY to Rs 181.5 crore, while its revenue rises by 8.7% YoY.

  • Mazagon Dock Shipbuilders wins an order worth Rs 1,070 crore from the Ministry of Defence to design, build and deliver vessels for the Indian Coast Guard.

  • Tech Mahindra falls as its net profit misses Forecaster estimates by 15.5% in Q3FY24. However, it has improved by 3.3% QoQ to Rs 510.4 crore due to reduced subcontracting expenses. Meanwhile, its revenue increases by 1.8% QoQ on the back of the IT segment. It appears in a screener of stocks with declining net cash flow.

  • Tata Steel's Q3FY24 net profit rises to Rs 513.4 crore from a net loss of Rs 2,223.8 crore in Q3FY23 due to lower inventory and raw material expenses. However, its revenue falls by 3.6% YoY, impacted by declines in Tata Steel Europe and South Asian Operations. The company appears in a screener of stocks with growing net profit and margins.

Riding High:

Largecap and midcap gainers today include ACC Ltd. (2,467.65, 10.13%), Ambuja Cements Ltd. (560.15, 6.20%) and Bajaj Auto Ltd. (7,597.50, 5.33%).

Downers:

Largecap and midcap losers today include Balkrishna Industries Ltd. (2,527.00, -6.91%), Indraprastha Gas Ltd. (405.15, -6.84%) and Tech Mahindra Ltd. (1,322.05, -6.10%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Rites Ltd. (684.75, 18.55%), ACC Ltd. (2,467.65, 10.13%) and Metro Brands Ltd. (1,179.90, 10.09%).

Top high volume losers on BSE were Indraprastha Gas Ltd. (405.15, -6.84%), KPIT Technologies Ltd. (1,415.45, -6.05%) and Laurus Labs Ltd. (378.80, -5.51%).

Grindwell Norton Ltd. (2,385.00, 3.98%) was trading at 16.8 times of weekly average. Kansai Nerolac Paints Ltd. (333.15, -2.06%) and JK Lakshmi Cement Ltd. (930.90, 5.42%) were trading with volumes 8.3 and 7.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

37 stocks overperformed with 52 week highs, while 2 stocks hit their 52 week lows.

Stocks touching their year highs included - ACC Ltd. (2,467.65, 10.13%), AIA Engineering Ltd. (3,896.75, 2.24%) and Ambuja Cements Ltd. (560.15, 6.20%).

Stocks making new 52 weeks lows included - Vinati Organics Ltd. (1,684.45, -1.12%) and Navin Fluorine International Ltd. (3,344.55, -2.21%).

12 stocks climbed above their 200 day SMA including Metro Brands Ltd. (1,179.90, 10.09%) and Fine Organic Industries Ltd. (4,655.15, 3.40%). 8 stocks slipped below their 200 SMA including Laurus Labs Ltd. (378.80, -5.51%) and Au Small Finance Bank Ltd. (707.85, -3.99%).

 
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The Baseline
24 Jan 2024
5 stocks to buy from analysts this week with high upsides
By Abhiraj Panchal

1. Federal Bank:

HDFC Securities maintains its ‘Buy’ rating on this bank with a target price of Rs 190. This implies an upside of 32.6%. In Q3FY24, the bank’s net profit grew by 25.3% YoY to Rs 1,006.7 crore. Analysts Krishnan ASV, Deepak Shinde, and Akshay Badlani attribute its highest-ever quarterly earnings in Q3FY24 to healthy loan growth (18% YoY) and non-core earnings from a stake sale in its subsidiary. 

The analysts note a decline in the Federal Bank’s CASA ratio due to intense competition for low-cost deposits. They believe that the bank’s differentiated fintech ecosystem partnerships will gain market share in relatively high-yield segments and drive business productivity. They think the bank is highly likely to achieve the targeted RoA of 1.4% over FY24-25.

The bank’s Gross Non-Performing Assets (GNPA) ratio has been stable at 2.3%, with a healthy Provision Coverage Ratio of 70% in Q3FY24. As a result, the analysts have lowered their credit cost forecasts. They note, however, that ongoing investments in technology and branch expansion will increase operating costs in the medium term.

2. IIFL Finance:

Motilal Oswal gives a ‘Buy’ rating to this financial services company with a target price of Rs 800, indicating an upside of 24.7%. In Q3FY24, the company’s net profit grew by 29.6% YoY to Rs 490.4 crore, while its revenue increased by 23% YoY to Rs 2,694.4 crore. Analysts Abhijit Tibrewal, Gautam Rawtani and Nitin Aggarwal believe that the company’s net interest income improved by 45% YoY due to lower assignment and fee income. They say, “IIFL has morphed into a franchise with a robust distribution network, strong co-lending presence, and superior digital loan origination and underwriting capabilities.” 

The analysts note that urban affordable housing growth in metro and tier-1 cities has been slow, but the management expects demand improvement over the next few quarters. Currently, IIFL Finance’s AUM stands at Rs 77,400 crore, up 34% YoY. The analysts believe that the company can effectively leverage fintech partnerships to deliver a 25% AUM CAGR over FY24-FY26. It is also projected to deliver RoE of over 20% in the medium term.

3. HDFC Bank:

KR Choskey maintains its ‘Buy’ rating on this bank with a target price of Rs 1,950, implying an upside of 35.1%. Post announcement of Q3FY24 earnings, the stock fell 8.4% on Wednesday. The bank's slower deposit growth (1.9% QoQ) and contraction in net interest margins (which dropped by 70 bps YoY) were major reasons.  Analyst Unnati Jadhav says, “HDFC reported mixed performance growth in Q3FY24, with healthy operating performance and stable margins but moderation in deposit growth.” She notes that credit growth has outpaced deposits, leading to increased borrowings. She attributes the 60.9% YoY loan book growth to Rs 24 lakh crore to the retail and commercial & rural banking (CRB) segments. 

There is some silver lining in the results, according to the analyst. Jadhav states that the strong performance in the CRB segment has been led by its deep rural penetration, as the bank now has a presence in 2,10,000 villages, as against 60,000 last year. HDFC Bank’s operating income grew by 25.8% YoY in Q3FY24, led by a 31% YoY increase in non-interest income. This growth, according to the analyst, contributed to an improved cost-to-income ratio. She expects a CAGR of 22.5% in net interest income and 25.3% in profit over FY24-26.

4. Ethos:

Axis Securities initiates a ‘Buy’ coverage on this specialty retail company with a target price of Rs 3,050, indicating an upside of 30.6%. Analysts Preeyam Tolia and Suhanee Shome say, “Our confidence in Ethos' future is grounded in the company's robust and consistent performance over the past several quarters.”

The analysts are optimistic about Ethos as it is foraying into the fast-growing certified pre-owned (CPO) segment due to the shortage of new luxury watches, with the Indian CPO market expected to reach Rs 900 crore by CY25. They view the asset-light CPO model with lower capex as a step in the right direction. They also believe Ethos' expansion into other fast-growing luxury segments such as luggage and jewellery could be its next growth driver.

Tolia and Shome expect the company’s EBITDA margin to improve on the back of a better product mix, store expansions, and operating leverage. They predict a robust CAGR of 35% in revenue and 42% in profit over FY24-26. They also note that the recent fundraising of Rs 175 crore through qualified institutional placement and a cash balance of Rs 180 crore as of H1FY24 provide a financial foundation for Ethos' expansion.

5. Biocon:

Sharekhan upgrades its rating on this biotech company to 'Buy' with a target price of Rs 332, indicating an upside of 22.9%. Analysts at Sharekhan say, "Biocon Biologics is improving its performance, led by the acquisition of Viatris and its successful integration into Biocon Biologics for 120 countries." However, they expect this operational performance to be offset by higher finance costs due to the debt incurred during the $1 billion Viatris deal. 

The analysts see Biocon as well-placed to commercialise and realise the entire gains of its multiple products in the launch pipeline and the transition of Viatris. They foresee new customer additions driving volume growth, boosting the company's performance in European markets and increasing its global market share. With Biocon's debt having risen post the Viatris acquisition, analysts anticipate the company to divest its non-core assets to reduce these liabilities. 

The analysts also express optimism regarding the robust opportunities in the biosimilars segment as some key global brands are set to lose patent exclusivity soon.

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

(You can find all analyst picks here)

 
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The Baseline
24 Jan 2024
5 stocks to buy from analysts this week with high upsides

1. Federal Bank:

HDFC Securities maintains its ‘Buy’ rating on this bank with a target price of Rs 190. This implies an upside of 32.6%. In Q3FY24, the bank’s net profit grew by 25.3% YoY to Rs 1,006.7 crore. Analysts Krishnan ASV, Deepak Shinde, and Akshay Badlani attribute its highest-ever quarterly earnings in Q3FY24 to healthy loan growth (18% YoY) and non-core earnings from a stake sale in its subsidiary. 

The analysts note a decline in the Federal Bank’s CASA ratio due to intense competition for low-cost deposits. They believe that the bank’s differentiated fintech ecosystem partnerships will gain market share in relatively high-yield segments and drive business productivity. They think the bank is highly likely to achieve the targeted RoA of 1.4% over FY24-25.

The bank’s Gross Non-Performing Assets (GNPA) ratio has been stable at 2.3%, with a healthy Provision Coverage Ratio of 70% in Q3FY24. As a result, the analysts have lowered their credit cost forecasts. They note, however, that ongoing investments in technology and branch expansion will increase operating costs in the medium term.

2. IIFL Finance:

Motilal Oswal gives a ‘Buy’ rating to this financial services company with a target price of Rs 800, indicating an upside of 24.7%. In Q3FY24, the company’s net profit grew by 29.6% YoY to Rs 490.4 crore, while its revenue increased by 23% YoY to Rs 2,694.4 crore. Analysts Abhijit Tibrewal, Gautam Rawtani and Nitin Aggarwal believe that the company’s net interest income improved by 45% YoY due to lower assignment and fee income. They say, “IIFL has morphed into a franchise with a robust distribution network, strong co-lending presence, and superior digital loan origination and underwriting capabilities.” 

The analysts note that urban affordable housing growth in metro and tier-1 cities has been slow, but the management expects demand improvement over the next few quarters. Currently, IIFL Finance’s AUM stands at Rs 77,400 crore, up 34% YoY. The analysts believe that the company can effectively leverage fintech partnerships to deliver a 25% AUM CAGR over FY24-FY26. It is also projected to deliver RoE of over 20% in the medium term.

3. HDFC Bank:

KR Choskey maintains its ‘Buy’ rating on this bank with a target price of Rs 1,950, implying an upside of 35.1%. Post announcement of Q3FY24 earnings, the stock fell 8.4% on Wednesday. The bank's slower deposit growth (1.9% QoQ) and contraction in net interest margins (which dropped by 70 bps YoY) were major reasons.  Analyst Unnati Jadhav says, “HDFC reported mixed performance growth in Q3FY24, with healthy operating performance and stable margins but moderation in deposit growth.” She notes that credit growth has outpaced deposits, leading to increased borrowings. She attributes the 60.9% YoY loan book growth to Rs 24 lakh crore to the retail and commercial & rural banking (CRB) segments. 

There is some silver lining in the results, according to the analyst. Jadhav states that the strong performance in the CRB segment has been led by its deep rural penetration, as the bank now has a presence in 2,10,000 villages, as against 60,000 last year. HDFC Bank’s operating income grew by 25.8% YoY in Q3FY24, led by a 31% YoY increase in non-interest income. This growth, according to the analyst, contributed to an improved cost-to-income ratio. She expects a CAGR of 22.5% in net interest income and 25.3% in profit over FY24-26.

4. Ethos:

Axis Securities initiates a ‘Buy’ coverage on this specialty retail company with a target price of Rs 3,050, indicating an upside of 30.6%. Analysts Preeyam Tolia and Suhanee Shome say, “Our confidence in Ethos' future is grounded in the company's robust and consistent performance over the past several quarters.”

The analysts are optimistic about Ethos as it is foraying into the fast-growing certified pre-owned (CPO) segment due to the shortage of new luxury watches, with the Indian CPO market expected to reach Rs 900 crore by CY25. They view the asset-light CPO model with lower capex as a step in the right direction. They also believe Ethos' expansion into other fast-growing luxury segments such as luggage and jewellery could be its next growth driver.

Tolia and Shome expect the company’s EBITDA margin to improve on the back of a better product mix, store expansions, and operating leverage. They predict a robust CAGR of 35% in revenue and 42% in profit over FY24-26. They also note that the recent fundraising of Rs 175 crore through qualified institutional placement and a cash balance of Rs 180 crore as of H1FY24 provide a financial foundation for Ethos' expansion.

5. Biocon:

Sharekhan upgrades its rating on this biotech company to 'Buy' with a target price of Rs 332, indicating an upside of 22.9%. Analysts at Sharekhan say, "Biocon Biologics is improving its performance, led by the acquisition of Viatris and its successful integration into Biocon Biologics for 120 countries." However, they expect this operational performance to be offset by higher finance costs due to the debt incurred during the $1 billion Viatris deal. 

The analysts see Biocon as well-placed to commercialise and realise the entire gains of its multiple products in the launch pipeline and the transition of Viatris. They foresee new customer additions driving volume growth, boosting the company's performance in European markets and increasing its global market share. With Biocon's debt having risen post the Viatris acquisition, analysts anticipate the company to divest its non-core assets to reduce these liabilities. 

The analysts also express optimism regarding the robust opportunities in the biosimilars segment as some key global brands are set to lose patent exclusivity soon.

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

(You can find all analyst picks here)

 
Trendlyne Marketwatch
Trendlyne Marketwatch
24 Jan 2024
Market closes higher, Motilal Oswal's net profit rises by 149.6% YoY to Rs 378.9 crore in Q3
By Trendlyne Analysis

Nifty 50 closed at 21,453.95 (215.2, 1.0%), BSE Sensex closed at 71,060.31 (689.8, 1.0%) while the broader Nifty 500 closed at 19,451.00 (244.6, 1.3%), of the 2,018 stocks traded today, 1,411 were on the uptick, and 569 were down.

Indian indices recovered from their day lows and closed in the green, with the Nifty 50 closing at 21,454 points. The Indian volatility index, Nifty VIX, closed around 14.4 points. Bharat Dynamics rose 1.9% after its Q3FY24 net profit increased 61.2% YoY to Rs 135 crore, while its revenue grew by 38.4% to Rs 689.2 crore.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, outperforming the benchmark index. Nifty Metal and Nifty Media closed higher than their Tuesday close. According to Trendlyne’s sector dashboard, Telecommunications Equipment emerged as the top-performing sector of the day, with a rise of 4.9%.

Major Asian indices closed higher, except for Japan’s Nikkei 225 closing in the red. European indices traded higher, taking cues from the Asian stocks. US index futures traded in the green, indicating a positive start to the trading session. Brent crude oil futures traded marginally higher after closing in the red on Tuesday.

  • Aurobindo Pharma sees a long buildup in its January 25 future series as its open interest rises 30.5% with a put-call ratio of 0.6.

  • Motilal Oswal Financial Services rises sharply to an all-time high of Rs 1,860.6 as its Q3FY24 net profit increases by 149.6% YoY to Rs 378.9 crore. Its revenue grows by 59.6% YoY. The company appears in a screener of stocks with increasing quarterly revenue for the past two quarters.

  • Intellect Design Arena, Punjab National Bank and KFin Technologies rise by 7.2%, 4.2% and 1.3% respectively, ahead of their Q3FY24 results tomorrow.

  • Indian Oil Corporation rises as its Q3FY24 net profit grows 9.4x YoY to Rs 9,224.8 crore due to lower raw material, inventory and finance expenses. However, its revenue improves by 2.3% YoY due to a fall in its petroleum products segment. The company appears in a screener of stocks nearing their 52-week high with significant volumes.

  • Indian Overseas Bank rises as its Q3FY24 net profit grows 30.2% YoY to Rs 722.6 crore. Its net interest income also increases by 5.5% YoY. The bank's asset quality improves as its gross and net NPAs fall by 429 bps YoY and 181 bps YoY, respectively.

  • Bharat Dynamics' Q3FY24 net profit rises 61.2% YoY to Rs 135 crore, while its revenue grows by 38.4% to Rs 689.2 crore. EBITDA also improves by 33.6% YoY to Rs 118.8 crore. It appears in a screener for stocks with improving book value per share over the past two years.

  • Sharda Cropchem falls sharply as its net profit plunges by 95.7% YoY to Rs 4.6 crore in Q3FY24. Revenue declines by 37.8% YoY due the agrochemicals and non-agrochemicals segments. It appears in a screener of stocks with a decline in their revenue and net profit (YoY).

  • KR Choksey maintains its 'Accumulate' rating on Hindustan Unilever with a target price of Rs 2,716 per share. This indicates a potential upside of 11.9%. The brokerage expects the company to take advantage of softening inflation and rising demand. It projects the company's net profit to grow at a CAGR of 8.8% over FY23-26.

  • Exide Industries' Q3FY24 net profit rises by 0.8% YoY to Rs 200.2 crore. Its revenue improves by 12.5% YoY due to the rising industrial segment. However, EBITDA margins decline by 40 bps YoY on the back of rising raw material and inventory expenses.

  • HSBC's Flash India Composite PMI rises to 61.0 In January from 58.5 in December 2023, driven by strong manufacturing output. Manufacturing PMI increases to 56.9, while services PMI rises to 61.2.

  • Nova Agritech's Rs 143.8 crore IPO gets bids for 23.1X the available 2.5 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 27.5X the available 1.3 crore shares on offer.

  • EPack Durables' Rs 640.1 crore IPO gets bids for 8.4X the available 2 crore shares on offer on the third day of bidding. The retail investor quota gets bids for 5.2X the available 1 crore shares on offer.

  • NMDCincreases the prices of lump ore and fines by Rs 400 per tonne each, setting them at Rs 6,000 and Rs 5,310 per tonne, respectively. This marks the second price revision in January and is effective immediately.

  • Natarajan Srinivasan, CEO & MD of CG Power and Industrial Solutions, forecasts the company's revenue to hit Rs 7,750 crore by FY24 end with about 15% margins. He mentions plans to direct 20% of motor sales towards exports over the next 2-3 years. The firm's Q3FY24 net profit jumps by 228.1% YoY to Rs 747.5 crore, and revenue grows 10.9% YoY.

  • Nazara Technologiesacquires a 100% stake in Comic Con India for Rs 55 crore through a cash and share swap deal, with Comic Con India's promoters exchanging 27.5 crore of their shares for Nazara Technologies' shares.

  • Man Industriesfalls over 10% as its net profit declines by 17.7% YoY to Rs 30.6 crore in Q3FY24 due to higher raw material, employee benefit and finance costs. Revenue grows by 26.6% YoY, driven by gains in the manufacturing segment.

  • Sona BLW Precision Forgings' Q3FY24 net profit rises 23.9% YoY to Rs 132.7 crore, while its revenue increases 13.6% YoY. Its EBITDA margin also improves by 200 bps YoY to 29.2%. The battery electric vehicle segment, contributing 30% to revenue, grows by 28% YoY. It appears in a screenerfor companies with low debt.

  • Max Healthcare Institute is falling as 88.4 lakh shares (0.9% equity), amounting to approximately Rs 680 crore, reportedly change hands in a large trade.

  • Religare Enterprisesrises following the Competition Commission of India's reported approval for the Burman family, owners of Dabur India, to acquire a 5.3% stake in the company.

  • Karnataka Bank falls over 5% as its gross NPA ratio expands by 36 bps YoY to 3.6%, and its net interest income decreases by 0.8% YoY in Q3FY24. The bank reports a 10.1% YoY increase in its net profit during the quarter. The company appears in a screener for affordable stocks with high return on equity and momentum.

  • SVF India Holdings (Cayman) sells a 2% stake in One97 Communications (Paytm), reducing its holding to 5% in the company post-transaction.

  • CLSA maintains its 'Outperform' rating on Hero MotoCorp with a target price of Rs 4,964. The brokerage cites its competitive pricing and new 'Mavrick 440' launch as key to gaining market share in the premium segment.

  • Promoter of NHPC, President of India, sells a 3.5% stake in the company through an offer for sale and now holds 67.5%.

  • Axis Bank falls as it misses Bloomberg's net profit estimates by 0.8% in Q3FY24. However, the bank's net profit has grown by 3.7% YoY to Rs 6,071.1 crore. Net interest income also shows growth. The bank's asset quality is improving, with gross and net NPAs falling by 80 bps YoY and 11 bps YoY, respectively.

  • REC rises as its Q3FY24 net profit increases by 13.5% YoY to Rs 3,308.4 and total income improves by 23.2% YoY to Rs 12,071.54 crore. Net interest margin also grows by 16 basis points YoY to 3.6%. The company appears in a screener for affordable stocks with high return on equity.

  • L&T Finance Holdings' Q3FY24 net profit grows by 50% YoY to Rs 635.7 crore. Its revenue increases by 2.2% YoY. The company appears in a screener of stocks with growing net profit and margins.

Riding High:

Largecap and midcap gainers today include IDBI Bank Ltd. (84.20, 10.21%), General Insurance Corporation of India (362.60, 8.51%) and REC Ltd. (467.50, 7.53%).

Downers:

Largecap and midcap losers today include Tata Elxsi Ltd. (7,768.45, -5.21%), Max Healthcare Institute Ltd. (737.05, -5.03%) and Oberoi Realty Ltd. (1304.00, -4.80%).

Volume Rockets

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

Top high volume gainers on BSE included Motilal Oswal Financial Services Ltd. (1,712.35, 10.44%), KEI Industries Ltd. (3,314.75, 9.97%) and Borosil Renewables Ltd. (608.75, 7.45%).

Top high volume losers on BSE were Tata Elxsi Ltd. (7,768.45, -5.21%), Oberoi Realty Ltd. (1,304.00, -4.80%) and Welspun Living Ltd. (135.95, -4.50%).

Adani Power Ltd. (519.95, 0.46%) was trading at 18.2 times of weekly average. Carborundum Universal Ltd. (1,177.20, 4.59%) and Vardhman Textiles Ltd. (394.25, 0.55%) were trading with volumes 14.2 and 8.7 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

25 stocks hit their 52 week highs, while 5 stocks hit their 52 week lows.

Stocks touching their year highs included - AIA Engineering Ltd. (3,900.00, 7.26%), Alembic Pharmaceuticals Ltd. (981.40, 4.07%) and Bharti Airtel Ltd. (1,189.95, 2.76%).

Stocks making new 52 weeks lows included - HDFC Bank Ltd. (1,455.90, 2.00%) and Navin Fluorine International Ltd. (3,420.30, 1.72%).

15 stocks climbed above their 200 day SMA including Carborundum Universal Ltd. (1,177.20, 4.59%) and Vedanta Ltd. (262.55, 4.12%). 14 stocks slipped below their 200 SMA including Crisil Ltd. (3,876.45, -1.56%) and Rossari Biotech Ltd. (780.55, -1.28%).