
- Polycab India: This consumer durables company has surged over 19% since Tuesday and touched a new all-time high of Rs 4,717.4 on Thursday. This comes after it reported strong Q1FY24 results, beating analyst estimates.
During the quarter, Polycab’s revenue increased 42% YoY to Rs 3,889.4 crore, led by the wires & cables and international businesses. The company’s net profit also grew by 81% YoY to Rs 399.3 crore. Both revenue and net profit beat Trendlyne’s Forecaster estimates by 24.8% and 45.9% respectively. EBITDA margins also improved by 270 bps YoY due to a fall in commodity prices, and price hikes by the firm.
Polycab’s cables & wires segment, which contributes 89% of its total revenue pie, has clocked a 47% rise in revenue on the back of strong volume growth in both domestic and international markets. The FMEG (fast-moving electrical goods) segment saw a 2% increase due to subdued demand. Commenting on the company’s performance, Inder T Jaisinghani, Chairman and MD, said: “The company registered its best-ever first quarterly revenues and profitability. Centre’s focus on infrastructure development and structural reforms, improving private capex and continued momentum in real estate has given us favourable results.”
Several analysts are bullish following the company’s strong performance and expect a recovery in the FMEG segment in the near future. BoB Capital maintains its ‘Buy’ rating but raises the target price to Rs 5,000. The brokerage believes that Polycab will achieve its revenue target of Rs 20,000 crore before FY26, as guided in FY21 under Project Leap. As a result, the company features in a screener of stocks where brokers have upgraded recommendations or target prices in the past month.
- CIE Automotive India Ltd: Thisauto part and equipment manufacturer has risen by 33% in the past quarter, while the broader benchmarkNifty Auto increased by 19.6%. The stock is trading at a 52-week high, according toTrendlyne’s Technicals. The firm’s Q2CY23 earnings released on Tuesday, showed its revenue and profits increasing by 5% and 16% YoY respectively. The boost in net profit was aided by a margin expansion of 260 bps. The revenue slump was due to a slowdown in the EU business, while in India the company was impacted by lower demand from 2- wheelers and commercial vehicles.
The firm is adding new orders from EV manufacturers under its aluminum and steel forging segment. It received a new EV transmission system order worth $20 million (apart from the existing $80 million order) from US-based gear manufacturer Metalcastello. CAIL has also won orders from Bosch, Royal Enfield, Stellantis, and Tata Motors.
The firm is focusing on profitability rather than scaling up low-margin businesses. It expects 50% of its new business to come from EVs (currently 30%) in the next two years. It shows up in ascreener of stocks with growth in net profit and profit margin
Mahindra & Mahindra recently exited from CIE Automotive and is no longer considered a promoter of the firm. This has positioned CIE as a pure-play MNC with no conflict of interest. As a result, CIE India now directly operates under CIE Spain, granting it access to the European market and technology.
According toICICI Securities, the firm’s growth will be driven by its EV portfolio expansion, new order execution, 2-wheeler revival, and new passenger vehicle launches. It is expected to expand its margin to 18-19% from the current 17.7%. The brokerage maintains a ‘Buy’ rating on the firm.
- LTIMindtree: This IT consulting & software stock fell 2.6% on Tuesday despite its net profit growing 3.4% QoQ to Rs 1,151.5 crore in Q1FY24, as it missed Trendlyne’s Forecaster estimates by 3.1%. Revenue was flat, while also missing Forecaster estimates marginally by 0.7%.
The rise in net profit has helped the company appear in a screener of stocks with increasing net profit over the past two quarters. Muted growth in the banking, financial services & insurance segment, which constitutes 38% of the company’s revenue, hit revenue growth.
The company’s EBITDA margin expanded by 90 bps QoQ to 20% in Q1, owing to reduced subcontracting expenses. It also booked new orders worth $1.4 billion during the quarter, reflecting a rise of 4.9% QoQ. The management remains confident of regaining demand momentum and profit margin in the medium to long term, driven by previously won orders. Citing these reasons, the management has given a revenue guidance of single-digit to low double-digit growth for FY24.
However, ICICI Securities believes that the company is unlikely to achieve its double-digit guidance in FY24 owing to the Q1 estimates miss and the muted demand outlook for the BFSI segment in Q2 as well. But it maintains its ‘Add’ rating on the stock post results and lowers the target price to Rs 5,325 from Rs 5,582 per share. This indicates a potential upside of 8.2%. It expects some revenue pick up in H2FY24, from a strong order book, healthy deal pipeline, and revival in broader tech demand. The broker expects the company’s revenue to grow at a CAGR of 10.3% over FY23-26.
- Kajaria Ceramics: This tiles & ceramics manufacturer has risen 10.2% over the past week till Friday, ahead of its Q1FY24 results on July 26. The firm is expected to benefit from the decline in commodity prices like oil and natural gas amid rising domestic demand. The company’s profitability and margins are likely to increase due to the correction in natural gas prices, which account for roughly 20-25% of its costs. The management expects to save Rs 130-140 crore in power and fuel costs in FY24 and has guided for EBITDA margins in the range of 14-16%, compared to 13.5% in FY23.
In Kajaria’s Q4FY23 earnings call, it provided volume growth guidance of 13-15% for FY24. This growth is expected to be led by demand from tier-2 and tier-3 cities, an enhanced distribution network, and strong brand recall. Moreover, there is a steady shift in demand towards the organised sector, which is favourable for large organised players like Kajaria Ceramics, according to reports. The management has given a revenue growth guidance of 14-16% for FY24.
According to Trendlyne’s Forecaster, the ceramic maker’s revenue and net profit are expected to rise by 14.4% YoY and 42.5% YoY respectively. The stock also shows up in a screener for companies with low debt.
ICICI Direct believes the company will be a major beneficiary of these industry tailwinds, given its healthy balance sheet, superior brand, and its expanding reach. The consensus recommendation from 27 analysts on the company is ‘Buy’.
- CCL Products India: This coffee products manufacturer’s stock price fell by 15.1% in the past week despite a 15.1% YoY rise in Q1FY24 net profit to Rs 60.7 crore. Its revenue also increased by 28.6% YoY. The drop in price was likely due to a decline of 551 basis points in EBITDA margins, which now stands at 16.2%. The company also missed Trendlyne’s Forecaster’s net profit estimate by 20%.
The fall in price can also be attributed to the management's decision to increase the debt guidance to Rs 2,000 crore for FY25, due to rising capex. It plans to expand the capacity to approx 77,000 metric tonnes (MT) by FY25 in Vietnam and India. This includes a 16,500 MT facility in Tirupati and capacity expansion in the Vietnam plant by FY24.
CCL Products aims to double its market share to 15% and targets substantial volume growth. Speaking about this, Managing Director Praveen Jaipuriar says, “We are looking to end the year at somewhere between 20 to 25% volume growth.” The company also plans to increase outlets in the domestic market by 30-40%. It is also trying to expand its footprint in the United Kingdom by acquiring Lofbergs Group’s six coffee brands.
IDBI Capital maintains a ‘Buy’ call on CCL Products India due to its aggressive capacity expansion and strong growth visibility. The brokerage expects sales and net profit to grow at a CAGR of 19% and 27%, respectively, over FY24-25. The company also features in a screener for stocks with broker target price or recommendation upgrades in the past month. According to Trendlyne’s Forecaster, it has a consensus recommendation of ‘Buy’ from 10 analysts.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.