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1. InterGlobe Aviation (Indigo):

This airline company rose by 1.2% over the past week and 14.6% over the past month, mainly due to a decline in global crude oil prices and increasing demand in domestic passenger air traffic during the festive season. Fuel costs are  40% of total expenses for airline firms. Brent Crude, the global benchmark for crude oil, dropped by more than 3% on December 12 and over 18% from $90 per barrel in September to $73 per barrel in December on concerns of oversupply and low demand. 

With the recent rally in its share price, the firm has now become the sixth-largest airline in the world by market capitalization, surpassing US-based United Airlines. Additionally, the firm, with an order book of 980 aircraft, received approval from IFSC Gift City on Tuesday to set up an aircraft leasing venture. This initiative, with an investment outlay of Rs 11,000 crore over the next five years, will provide operating and financial leasing services.

The management is expanding its international presence through loyalty programs and strategic partnerships like its code-sharing agreement with Turkish Airlines. This allows flights to be operated and marketed by two airlines, streamlining operations. 

According to Motilal Oswal, Indigo plans to increase its fleet size to 350 in FY24, up from 306 in FY23, and add over 10 new destinations. It also expects passenger traffic to rise to 100 million in FY24 from 85 million in FY23. However, analysts predict that the decrease in expenses and the surge in demand for air travel will lead to intense competition in the industry, particularly with Air India’s turnaround and the entry of Akasa Air. This may complicate Indigo’s efforts in expanding its share of the pie.

2. Coforge:  

This software and services company has been in the news as global brokerage agency Jefferies increased its target price by 5.3% to Rs 6,580. Following this report, the company's stock rose by 1.4% on Monday. According to Trendlyne Technicals, the stock touched a 52-week of Rs 6,530 today. Jefferies, after an investor meeting with Coforge’s management, reported a positive outlook for the firm despite current macro challenges.

The management outlined recent deal wins in BFSI (banking, financial services, and insurance) as proof of its resilience in a tough environment. The focus on cost optimization is also expected to improve margins by 150-300 bps over the next three years. However, longer-than-usual furloughs in the third quarter will impact efficiency. Coforge shows up in a screener for stocks with increasing revenue for the past eight quarters.

Its promoter Baring PE sold its entire stake of 26.6% through block deals on August 24. The exit of the promoter will have not much impact as the promoters had little influence on its operations. Coforge plans to increase its revenue to $2 billion through its four new verticals: public sector, healthcare, HiTech and retail.   

Coforge reported deal wins of $331 million in Q2FY24, resulting in a 12-month executable order book of $935 million. The firm has maintained a revenue growth guidance of 13-15% for FY24. Margins are expected to expand by another 50 bps on the back of higher utilisation levels and currency hedging positions.

3. Syrma SGS Technology: 

This electrical equipment/products firm rose by 3.9% on December 6 after incorporating a semiconductor subsidiary, Syrma Semicon. In November 2023, Syrma SGS Technology was one of the participants in Intel’s collaboration with local EMS companies to produce entry-level laptops. According to Trendlyne’s Technicals, the stock has risen by 25.4% in the past month, outperforming the consumer durables sector by 17.9%. 

In Q2FY24, the company’s revenue improved by 52.4% YoY. The auto, consumer, and industrial segments saw significant growth, recording increases of 83.3%, 162.6%, and 27.0% YoY, respectively. However, healthcare, IT, and railways experienced a decline in revenue. The company’s EBITDA margins contracted by 306 bps YoY due to changes in the revenue mix. 

The management expects a decline in revenue from healthcare over the next 1-2 quarters, with a recovery in Q4FY24. It plans a capex growth of 81% YoY to Rs 250 crore in FY24, aiming to expand its Chennai business and rent a space in Noida to meet rising market demand. The firm maintains a 35% revenue growth guidance for both FY24 and FY25.

In Q1, Syrma acquired a 51% stake in Johari Digital Healthcare (JDHL) for Rs 260 crore. With this acquisition now complete, JDHL is expected to generate Rs 100 crore in revenue in H2FY24 and around Rs 250 crore in FY24. 

BOB Capital notes that Syrma is expanding its electronic manufacturing service, targeting the global and domestic markets. The JDHL acquisition helped its entry into medical devices, and it has plans for more acquisitions. However, the brokerage sees margin contractions ahead due to shifts in consumer products and expects challenges in margin recovery until FY25 due to the limited share of original design manufacturer products. It maintains a ‘Hold’ on the stock.

4. Prestige Estates Projects:

This property developer hit its all-time high of Rs 1,231.3 on Thursday, marking a 32.1% increase over the past month. This surge follows the announcement of its new residential project, Prestige Glenbrook, in Bangalore. It has a revenue potential of Rs 550 crore. The development includes 285 apartments, with a developable area of 0.7 million square feet (msf).

Prestige plans to launch 63 msf of residential projects in H2FY24 and FY25. The management expects to clock Rs 20,000 crore in gross sales bookings in FY24 and double annual residential sales bookings to Rs 25,000 crore annually over FY24-26. The developer is also expanding into cities beyond its traditional stronghold of Bangalore. Major upcoming launches in H2FY24 include Pallava Gardens in Chennai (Gross developed value (GDV) of Rs 4,500 crore), Prestige City in Hyderabad (GDV of Rs 7,000 crore), and Ocean Towers and Nautilus in Mumbai (GDV of Rs 15,000 crore).

Prestige registered its highest-ever presales in Q2FY24, with bookings worth Rs 7,090 crore, a 102% YoY increase driven by new launches. Despite strong bookings, the company's net debt level is increasing as it continues to incur annual land/stake buyouts. It plans to invest Rs 5,500 crore in commercial capex in FY24 and Rs 6,600 crore in future commercial capex. Its profit increased 6x YoY and beat Trendlyne Forecaster’s estimate by almost 7x. 

HDFC Securities remains positive on Prestige Estates Projects on the back of a strong launch pipeline and robust collections. The company features in the screener for stocks where brokers have upgraded recommendations or target prices.

5. GMR Airports Infrastructure:

This construction and engineering company has risen by 25.6% in the past week, reaching a new 52-week high of Rs 78.9 on Thursday. This jump comes after GQG Partners and Goldman Sachs Trust II bought a 4.7% stake (28.3 crore shares) in the company for Rs 1,671.5 crore on December 8. Nomura India Investment Fund Mother Fund also picked up a 1% stake (6.25 crore equity shares) in the company. The company makes it to a screener of stocks with prices above short, medium and long-term moving averages. 

GMR’s passenger traffic grew 19% YoY to 98.4 lakh in October. According to  CAPA India,  India is expected to be the third-largest aviation market by 2030. Analysts believe that GMR Airports will likely be a key beneficiary. The increase in passenger traffic and the addition of new domestic and international airports are expected to drive earnings growth for the company.   

On December 9, the company’s arm, GMR Visakhapatnam International Airport, signed a Rs 3,215 crore financing agreement with a consortium of five banks. This funding is earmarked for the partial financing of Bhogapuram International Airport.

Kotak Securities remains cautious due to risks such as debt for projects like the Bhogapuram airport.  However, the brokerage is optimistic about increasing passenger traffic and the company’s capabilities to cater to the rising traffic. It has a ‘Reduce’ rating on the company. 

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

'It's the economy, stupid': one of the most famous political slogans in recent history was spoken by Bill Clinton, when he successfully ran for the US Presidency. Clinton had an uncanny political instinct for what worked, and knew that most voters when headed to the ballot box, are thinking about their economic future.

So when the BJP rode to victory in three out of four states this month, the voters were telling us something about the economy. And the markets seem all set for a Santa rally after these wins.

What explains the wins for the BJP? Well, let's go back to Clinton's slogan, and underline it.Over 2023, the Nifty 50 has surged by 14.2%, with sectors like fertilizers, telecommunications equipment and general industrials leading the gains over the past year. Tata Motors, Bajaj Auto and NTPC have risen the most in the Nifty 50 during the same period.

India has also been the fastest growing economy worldwide, boosted by positive signals like slowing inflation and falling crude oil prices. So across key state elections, it appears that the voters have placed their trust in the BJP over the opposition.

Markets celebrated the election wins: the Nifty index closed 2.1% higher on December 4, after the results. The rise took the Nifty to record highs on three consecutive days after election results. As we step into 2024, let’s look at where Indian equity markets are headed in an election year.

In this week’s Analyticks,

• Election results give the market a boost: BJP wins and macro factors fuel stock markets
• Screener: Stocks that soared in 2023, with high 1-year change % and the highest Forecaster estimates surprise % for revenue and net profit in Q2FY24 

Modi magic wins the Hindi heartland, signalling strong show for BJP in 2024 

The BJP won the Chhattisgarh and Rajasthan elections, seizing the states from the Indian National Congress (INC). It also beat anti-incumbency in Madhya Pradesh to secure a record fifth term. These wins come just six months before the general elections in 2024.

The pro-BJP tilt of the voters in these states is good news for the party ahead of the 2024 elections. The electoral success is also expected to boost India’s appeal to foreign investors, on the argument of political stability. 

Matthew Haupt, a portfolio manager at Wilson Asset Management, said, “The BJP’s victory will likely lead to continued capital inflows into India.” Markets are counting on a 2024 win - Chris Wood, the global head of equity strategy at Jefferies, said that an unexpected BJP defeat could cause a 25% correction in the market.

It's not as if analysts don't have any complaints about the BJP goverment. T N Ninan noted last week that "many Indian businessmen fear the BJP", and are afraid to criticize the governement, in case they send agencies to raid their offices or open an investigation. Overall however compared to Congress, the BJP is seen as better for business and the economy.

Stealing the opposition’s thunder: ‘Modi ki guarantee’ draws voters

The Congress had used what they called a 'guarantee card of promises' to win voters in the Karnataka state elections.  This time, the BJP launched a ‘Modi ki guarantee’ campaign to outshine the Congress party.

The BJP, once called the Brahmin-Bania-Zamindar party for its pro-business stance, has under Modi, focused more on welfare schemes. This was especially effective in Madhya Pradesh, where the BJP promised voters LPG cylinders at Rs 450 (a significant discount from the market price of around Rs 910) and free education to disadvantaged families. It also pledged additional benefits to farmers and the tribal community, at an estimated cost of around Rs 24,000 crore. 

A welfare scheme introduced by the BJP in Madhya Pradesh in June, the Ladli Behna Yojna, provides Rs 1,000 to over one crore women. The party promised to increase this to Rs 3,000 if re-elected. 

PM Modi's campaigning in these states was also a factor. At a 76% approval rating, Modi remains a popular figure, with the highest approval among global leaders, according to a survey by Morning Consult Political Intelligence. 

Ahead of the general elections, the BJP plans to continue focusing on welfare schemes. But rising food inflation could play spoilsport.

BJP’s tenure saw moderate GDP growth. But the future may be brighter

When we pull the curtain back and compare different Indian governments, the BJP's track record is not very shiny. Under BJP rule, India’s GDP growth has averaged 5.7% over the past nine years, below the average growth rate of 6.3% from 2000 to 2013. But this is partly on account of structural changes before Covid-19, and the impact of the pandemic itself. 

Pandemic and structural reforms drag average GDP growth during  BJP tenure

Structural reforms and policy changes, especially the implementation of the real estate Act RERA in 2016 and the GST in 2017, contributed to the growth slowdown. Demonetization also had an effect.

And while the government increased the capex budget significantly in the past nine years, private sector capex investment has been slow to pick up. 

History suggests markets are poised for a pre-election rally

Historically, the Nifty 50goes up in the six months leading to the Lok Sabha election - it has risen in seven out of eight instances. The average gain during this period is 15.3%. The only exception is a 2% fall in 1998 when the BJP was re-elected. 

Indian markets have mostly risen leading up to the general elections

However, the six months after elections are volatile, even if largely positive. The two times markets fell during this period were in 1996 and 1998. 

Of course, past performance doesn’t always predict future results. The ruling party is riding high right now, and led by a popular leader. However, voter mood can quickly shift if prices rise or the economy worsens. The next few months will be an interesting watch. 

Screener: Stocks with high 1-year change % and the highest positive surprise for revenue and net profit

Jindal Saw gains the most in the past year

As we end 2023, let’s take a look at stocks that have surprised analysts positively in revenue estimates while posting gains over the past year. This screener shows stocks with a high 1-year change %, which also have the highest Forecaster estimates surprise % for revenue and net profit in Q2FY24.

The screener is dominated by sectors like realty, general industrials, cement & construction, banking & finance and utilities. Major stocks that appear in the screener are Jindal Saw, Ircon International, Prestige Estate Projects, Cochin Shipyard, Trent, Brigade Enterprises, Oberoi Realty and Oil & Natural Gas Corp.

Jindal Saw has risen the most, by 371.5% over the past year. At the same time, the company surprised Trendlyne Forecaster’s revenue and net profit estimates in Q2FY24 by 30.7% and 42.2% respectively. Its revenue improved by 35.2% YoY to Rs 5,466.1 crore during the quarter, owing to increased sales in the iron & steel segment. 

The screener also consists of three stocks from the realty sector: Prestige Estates Projects, Brigade Enterprises and Oberoi Realty. Prestige Estates rose the most among realty stocks, by 145.1% over the past year, followed by Brigade Enterprises (71.6%) and Oberoi Realty (60.5%). Brigade Enterprises beat Forecaster estimates for revenue and net profit by 40.8% and 49.7% respectively in Q2FY24. Its revenue grew by 54.3% YoY to Rs 1,407.9 crore in Q2FY24 on the back of improvement in the real estate and hospitality sectors.

You can find more popular screenershere.

The Indian financial sector has been on the rise in the past two years, with high loan growth amid soaring domestic consumption. As a developing economy, the demand for credit growth in India is on a sustained rise. This has boosted the health of the banking sector, which has seen a turnaround in the past two years, thanks to healthy balance sheets and decade low gross non-performing assets (NPA) ratios. However, one aspect of high loan growth has worried the Reserve Bank of India (RBI) - unsecured loans significantly outpacing overall loan growth. 

In this edition of Chart of the Week, we analyze the RBI’s recent directive on unsecured loans,  the first major regulation since 2014-15 that is aimed at reducing risks in unsecured lending.

Bad loans can have spillover effects across economies. The unprecedented rise in India’s unsecured loans – loans which lack collateral – is a major risk. While credit growth in unsecured lending stood at 23% in the past year, the overall credit growth in the banking system was just 13%.

On November 16, the RBI directed banks to increase risk weights for unsecured consumer loans like personal loans (below Rs 50,000) and credit card receivables from 100% to 125%. This means that banks must now show Rs 125 in risk-weighted assets for every Rs 100 lent as an unsecured loan. This will prompt banks to increase the capital set aside for these loans. The RBI has set 9% as the minimum capital adequacy ratio to be maintained on total risk weighted assets. 

Risk weights for home loans, for example, range from 50% to 70% depending on the size of the loan. Meanwhile, it is 75% for gold loans. Segments with higher risk, like business loans, have 100% risk weightage.

Cost of funds likely to increase for top private and public sector banks 

High exposure to unsecured lending leads to a marginal decrease in capital ratios

An analysis of the RBI’s increased risk weights on capital requirements finds that banks with substantial exposure to unsecured loans will see an increase in capital requirements. Banks like SBI, ICICI Bank, HDFC Bank, and Axis Bank, which have allocated over 15% of their total lending to unsecured loans, may see their capital ratios decline. These four banks may see a decrease of more than 50 bps in their CET 1 (Core Equity Tier 1 (CET 1) is an important metric as it includes only equity and reserves, which form the core capital for banks).

On the other hand, banks like Bank of Baroda, IndusInd Bank, and Canara Bank, with less than 10% exposure towards unsecured loans, could see their capital ratios fall by just 30-40 bps. 

The new regulation will affect banks with higher exposure to unsecured loans in three ways. Firstly, banks have to maintain certain ratios like CET 1, which is calculated as a percentage of total risk weighted assets. Due to the increase in risk-weighted assets, banks now have to keep more capital while lending, which could result in higher lending rates. 

Secondly, due to an increase in capital requirements, banks may have to raise capital from bond markets at higher rates. Finally, this could moderate growth in consumer credit, which is traditionally a high-margin segment for banks.

Regulations that make changes in risk weights, provisions, exposure limits or loan-to-value ratios aim to manage risk at a broader level rather than focusing on individual institutions. RBI’s latest regulatory move is aimed at controlling risks in vulnerable segments without constraining credit to other sectors of the economy. 

1. Sansera Engineering:

ICICI Direct maintains its 'Buy' rating on this auto parts and equipment company with a target price of Rs 1,100, indicating an upside of 19.7%. Analyst Shashank Kanodia views the company's robust order book, standing at Rs 1,930 crore, as a key growth driver and foresees double-digit growth in FY23-25. He expects this growth to be driven by the China+1 strategy and the vehicle light-weighting trend.

Kanodia points to the company's strong order inflow of Rs 600 crore in incremental orders during H1FY24, with 58% earmarked for exports to global markets. He believes that the company aims to reduce its reliance on ICE (Internal Combustion Engine) sales to 60% from the current 78%, de-risking its portfolio.

Since the post-COVID lows, the company's sales have seen a 17% CAGR over FY20-23, consistently outperforming the domestic automobile sector. Kanodia emphasizes Sansera’s strong order book, driven by export wins and enduring client relationships. With precision engineering capabilities and a new manufacturing plant focusing on aerospace and defence, Kanodia believes the company is well-positioned to surpass industry growth.

2. Bajaj Auto:

KRChoksey upgrades its rating on this vehicle manufacturer to ‘Buy’ from ‘Accumulate’ with a target price of Rs 7,093, indicating an upside of 13.4%. Analyst Unnati Jadhav says, “Domestic sales were on a very strong footing during this year’s festive season.” During September-November 2023, two-wheeler volumes grew by 26.6% YoY, while domestic commercial vehicle (CV) volumes increased by 44.2% YoY. According to Jadhav, exports remained under pressure YoY but have seen gradual sequential improvement. 

Jadhav adds that the unexpected uptick in demand for Triumph in the premium segment will contribute to volumes, and improve the mix as Bajaj Auto expands its capacity and distribution. She expects the strong growth trajectory in the CV segment to continue on the back of  CNG and electric vehicle penetration. She projects the company’s revenue, EBITDA and profit to grow at a CAGR of 15.9%, 19.3% and 16.4%, respectively, over FY24-26. 

3. One97 Communications:

Motilal Oswal maintains its ‘buy’ rating on this internet software and services company with a target price of Rs 1,025, implying an upside of 63.2%. Due to Paytm’s history of negative earnings, its durability score is low. But analysts Nitin Aggarwal, Disha Singhal and Dixit Sankharva believe that the increase in high-ticket personal and merchant loan disbursals and an expanding number of lending partners will support steady growth in the near term. The analysts have maintained their rating even as Paytm’s share price fell 19% on Monday. 

Due to asset quality concerns, the firm recently discontinued its postpaid product, Buy Now Pay Later (BNPL), which accounted for 56% of total disbursements. It has also shifted focus away from personal loans below Rs 50,000. As a result, the firm’s management expects a 25% reduction in its monthly total disbursement rate to Rs 4,500 crore, and a 50% decline in customer acquisition in Q3FY24 to 4,00,000.

However, the analysts believe the surge in high-ticket personal loan disbursals could offset the impact. Paytm’s management has insisted that the recent RBI decision to increase risk weight will not impact its growth, thanks to its robust network of partners.

4. Polycab India:

Bank of Baroda maintains its 'Buy' rating on this electrical equipment/products company, setting a target price of Rs 6,100. This indicates 8.2% upside. Analysts Vinod Chari, Arshia Khosla, and Swati Jhunjhunwala express optimism even as the company unveils a new brand logo, to emphasize its leadership in wires, cables, and fast-moving electrical goods.

Following a 33% YoY revenue growth in H1FY24, the analysts expect this momentum to continue into H2FY24, driven by favourable demand and market conditions. They foresee growth in the B2C business (currently at 33%), with improved margins. The planned capex of Rs 700 crore for an extra-high voltage cable facility aligns with its positive outlook.

Chari, Khosla, and Jhunjhunwala predict that Polycab will soon meet its 10% topline growth target, having already reached 9.3% in Q2FY24. They believe that the company’s efforts to improve its export potential and streamline operations will contribute to achieving its growth targets. 

5. Cyient:

Axis Direct maintains its ‘Buy’ call on this IT consulting and software company with a target price of Rs 2,195. This indicates an upside of 10.7%. The company’s management has highlighted its focus on consistent growth, projecting strong double-digit growth in FY25. They expect operating margins to improve with volume growth, cost optimization efforts, and better pricing. Analyst Omkar Tanksale believes that it has developed robust capabilities and domain expertise to improve client engagement and service portfolio.

Tanksale remains confident due to Cyient’s improved outlook on the vertical business and better collaborations with customers. The analyst believes that Boeing’s interest in partnering with large engineering services players specialising in aerospace bodes well for Cyient. He remains optimistic overall, citing “strong growth potential backed by robust deal wins and superior execution capabilities.”

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

(You can find all analyst picks here)

1. Radico Khaitan:

This breweries & distilleries stock has risen by 9.4% since launching its Magic Moments Remix Pink Vodka on November 23. The new product caters to the growing  demand for coloured vodka, and is set to strengthen the company’s 60% market share in the vodka segment. It appears in a screener of stocks that have risen by more than 20% over the past month, thanks to a 23.6% growth in share price during the same period.

The company’s Chief Operating Officer (COO) Amar Sinha said, “The launch of the first Magic Moments Vodka in 2006 was our response to the premiumization trend in the Indian liquor industry when Vodka was not really a household drink. We are pioneers in this category.”

In Q2FY24, the company’s net profit and revenue grew by 19% and 21.5% YoY, beating Trendlyne’s Forecaster estimates by 8.3% and 3.2%, respectively. The revenue rose due to better sales of its Royal Ranthambore whiskey, which has already surpassed its FY23 volumes in H1FY24. The EBITDA margin expanded by 130 bps YoY to 13.1% in Q2FY24, owing to price increases and ongoing premiumization in the Indian-made foreign liquor (IMFL) business.

Dolat Capital maintains its ‘Buy’ rating on the stock with an upgraded target price of Rs 1,850 per share. This indicates a potential upside of 17.9%. The brokerage believes that strong growth in the parts & accessories (bottle and distillery manufacturing) segment, volume recovery in the ‘Popular’ brand, and a reduction in raw material prices will help the brewery’s revenue. It expects the company’s revenue to grow at a CAGR of 12.4% over FY23-26. 

2. Angel One:

This capital markets firm rose by 10% in intraday trade on Wednesday, helped by robust growth in its client base and average daily turnover (ADTO) in November. Its client base surged by 51.3% YoY, reaching 1.85 crore and its gross client acquisition jumped by 114% YoY to 6.8 lakh. The company's investments in technology and digital products have given its customer experience a boost. This, along with its expanding social media presence,  has sped up its client acquisition over the past year. 

The firm has also tied up with fintech platforms like Sensibull, Smallcase, and Streak to expand its digital presence. Its ADTO increased by 165% YoY to reach Rs 34.4 lakh crore in November. The futures and options segment, which accounts for 98.8% of the total turnover, has played a key role. The impressive performance has also helped its market share, which climbed by  530 bps YoY to 14.6% as of September.

The platform’s total number of orders has grown by 51.4% YoY to 10.7 crore. This surge is due to its rising client acquisitions and daily turnovers on the back of its simplified pricing structure. Angel One is a discount broker and charges a nominal Rs 20 for options, currency, and commodity trades. The firm’s rapid growth in core operations over the past year places it in a screener of companies with strong cash-generating abilities from core businesses.

Apart from launching mutual fund distribution on its platform, the firm has also entered the consumer credit segment in FY24. Analysts at Keynote Capitals note a steep increase in cross-selling as customers are increasingly willing to purchase multiple services. Trendlyne’s Forecaster estimates the company’s annual net profit to grow by 23.4% YoY in FY24. 

3. Sonata Software: 

This IT consulting & software firm rose by 7% on November 30 after announcing December 12 as the record date for a 1:1 bonus issue. According to Trendlyne’s Technicals, the stock has risen by 4.4% in the past week. It appears in a screener of stocks with strong momentum.

In Q2FY24, Sonata Software’s TTM operating revenue grew by 22.8% YoY, helped by an increase in the international IT and domestic services segments. The company’s TTM operating profit margins also improved by 33 bps YoY, thanks to better utilization and operational efficiency overall. The management plans to expand International IT Services, aiming for a revenue target of $1,500 million by FY26E, an increase of 118% from FY23. It is also focused on maintaining EBITDA margins around 20%, a notable increase from the 11.5% in Q2FY24.

Post the integration of Quant Systems, the company has unlocked partnership opportunities worth $150 million in healthcare, life sciences, and BFSI verticals. The firm also grew its major deal pipeline by 38%. It expects a 25% revenue contribution from AI through Harmony.AI by H1FY25. Additionally, as Microsoft's systems integrator partner, Sonata is at the forefront of the “Fabric Platform” launch. Fabric offers data-related services, including integration, warehousing and real-time analytics.

KR Choksey notes that Sonata has achieved robust growth, especially in its international IT services segment (46.0% YoY). With a strong client base, including partnerships with major players like Google, SAP, AWS, and Microsoft, the firm maintains an ‘Add’ rating on the stock. 

4. Kalpataru Projects International (KPIL):

This electric utilities company has risen by 3.1% in the past week, following the announcement of new orders worth Rs 2,263 crore on Monday. The company’s transmission and distribution (T&D) business has obtained orders totaling Rs 1,564 crore across India and overseas markets. Its water and buildings & factories (B&F) businesses bagged orders worth Rs 458 crore and Rs 241 crore, respectively. 

KPIL’s order inflows stand at Rs 14,441 crore post these order wins. Manish Mohnot, the Managing Director & CEO, said “These T&D orders have strengthened our order book in India, Latin America, Africa and Sweden. We expect the T&D business to be a significant growth driver for KPIL in the coming years.” He also highlighted its plans to achieve an order inflow of Rs 25,000 crore in FY24. The T&D segment contributes around 36% of the company’s total revenue as of Q2FY24. 

In Q2FY24, its net profit improved by 3.5% YoY to Rs 89 crore. Its revenue also increased by around 19% YoY to Rs 4,518 crore, driven by the engineering, procurement and construction segments. 

Prabhudas Lilladher has a ‘Buy’ rating on Kalpataru Projects with a target price of Rs 740, implying an upside of around 8.2%. The brokerage has a positive outlook on the company due to its focus on geographically expanding across the water, railways, and civil segments, and its increasing pre-qualification for large contracts. 

5. GAIL (India):

This natural gas company has risen by 6.4% in the past week, reaching an all-time high of Rs 145.1 on Monday. This surge follows a decline in average liquefied natural gas (LNG) prices, thanks to an easing of global supply conditions. Natural gas prices also fell by 25.3% in November. 

In the past week, GAIL filed an arbitration case against SEFE Marketing & Trading Singapore, a former unit of Russia's Gazprom, seeking $1.8 billion in damages for not receiving the supply of LNG. GAIL had signed a 20-year contract in 2012 to buy 2.9 million tonnes of LNG from Gazprom, with deliveries starting in 2018 and expected to reach full volume by 2023. However,  supplies stopped in June 2022 following Western sanctions against Russia for invading Ukraine. The supplies were later resumed in April 2023.

In Q2FY24, GAIL’s net profit increased by 85.8% YoY to Rs 2,444.1 crore (beating Trendlyne Forecaster’s estimate by 35.2%), despite a 14.7% decline in revenue. This resulted in a 639 basis points YoY increase in EBITDA margin due to lower inventory costs. The management expects to cross an EBITDA of Rs 4,000 crore in FY24 in the trading segment, a 25% increase.

GAIL incurred a capex of Rs 2,460 crore in Q2, mainly in pipelines, petrochemicals, and city gas distribution projects. 

ICICI Securities reiterates its ‘Buy’ call on GAIL on the back of its strong Q2 performance. The brokerage remains optimistic, expecting stronger tariffs, higher transmission volumes, and falling costs for petrochemicals and LPG.

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