Trendlyne Blog: The Baseline, Latest on stock market and finance in India and the world.

30 May 2023

Five stocks with a 'Buy' consensus from analysts post results

UNO Minda: KRChoksey upgrades its rating on this auto parts & equipment manufacturer to ‘Buy’ from ‘Accumulate’ with a target price of Rs 680, implying an upside of 21.5%. According to Trendlyne’s Forecaster, the consensus recommendation on the stock is ‘Buy’ from 19 analysts, including 14 that are ‘Strong Buy’, three ‘Buy’ and two ‘Hold’.

In Q4FY23, the company’s net profit increased by 26.5% YoY to Rs 182.7 crore, while revenue grew by 19.6%. Analyst Abhishek Agarwal is optimistic about the company's long-term growth prospects due to the easing of supply chain shortages and its focus on the electric vehicle (EV) segment. “The company is well set to see sustained revenue growth with a couple of CAPEX plans in line, and by catering to the expected demand from different original equipment manufacturers,” he adds.

Agarwal expects the firm to benefit from the multi-fold growth expected in the EV segment, particularly in two-wheelers and three-wheelers. The analyst sees the robust order book of Rs 1,000 crore in the company's EV vertical and the management’s plan to invest an additional Rs 500 crore over five years towards EV as key positives. He expects the firm’s revenue to grow at a CAGR of 25% over FY23-25.

Route Mobile: HDFC Securities maintains its ‘Buy’ rating on this internet software & services company with a target price of Rs 1,735, implying an upside of 20.2%. According to Trendlyne’s Forecaster, the consensus recommendation on the stock is ‘Buy’ from five analysts, which includes four that are ‘Strong Buy’ and one ‘Hold’. In Q4FY23, the company’s net profit surged by 122.4% YoY to Rs 101.6 crore and revenue jumped by 61.1% YoY.

Analysts Amit Chandra and Vivek Sethia believe the company posted better than expected revenue growth and margin expansion in a seasonally weak quarter. They note that the decline in billable transactions and new product sales due to seasonality was offset by better realisations, market share gains and new client additions.

The analysts believe the launch of new products like Trusense (used for identity and fraud detection) will aid growth. They also expect the firm to see organic growth of 18% in FY24 “led by strong tailwinds in the domestic termination business and expansion of international operations.” Chandra and Sethia project a CAGR of 18% for revenue during FY23-25.

PI Industries: Axis Direct keeps its ‘Buy’ rating on this agro-chemicals manufacturer with a target price of Rs 3,800, implying an upside of 9.4%. According to Trendlyne’s Forecaster, the consensus recommendation on the stock is ‘Buy’ from 25 analysts, including 14 that are ‘Strong Buy’, five ‘Buy’, four ‘Hold’ and two ‘Strong Sell’. In Q4FY23, the company’s net profit rose 37.3% YoY to Rs 280.6 crore and revenue grew 12.2% YoY.

Analysts Prathamesh Sawant and Shivani More maintain a positive outlook on the company’s prospects, even though it missed their revenue estimates by 10.8%. They attribute this shortfall to a slowdown in domestic growth due to industry-wide high inventory problems. However, they believe the company’s brand value in the custom synthesis manufacturing (CSM) segment remains strong, and the management has a bright outlook for it.

The analysts also anticipate improved margins in the traditional portfolio in the coming quarters due to the “introduction of new value-added branded products and acquisitions in the pharmaceuticals space, which will add to inorganic growth in the medium to long term”. They estimate the firm’s net profit to grow at a CAGR of 20.8% over FY23-25.

Motherson Sumi Wiring India: ICICI Direct keeps its ‘Buy’ call on this auto parts manufacturer with a target price of Rs 70, indicating an upside of 21.4%. According to Trendlyne’s Forecaster, it has a consensus recommendation of ‘Buy’ from 12 analysts, including eight that are ‘Strong Buy’, three ‘Buy’ and one ‘Strong Sell’. In Q4FY23, the company’s profit increased by almost 3x YoY to Rs 138.5 crore, while its revenue grew by 12.4% YoY.

Analysts Shashank Kanodia and Raghvendra Goyal remain positive due to the company's impressive return ratio (RoCE 42.2%), the growing electrification of vehicles, and the potential for increased content per vehicle in the domestic auto market.

The analysts expect a net sales CAGR of 16.5% in FY24-25 on the back of OEM ramp-up, focus on premiumisation and a greater share in utility vehicles. They believe, “Motherson Sumi Wiring’s asset-light model with expandable capacity, along with operating leverage gains, will push margins.”

Krishna Institute of Medical Sciences (KIMS): Edelweiss maintains a ‘Buy’ call on this healthcare facilities provider with a target price of Rs 1,935. This indicates an upside of 20.6%. According to Trendlyne’s Forecaster, the stock has a consensus recommendation of ‘Buy’ from six analysts, including five that are ‘Strong Buy’ and one ‘Hold’. In Q4FY23, the company reported a net profit growth of 15.6% YoY to Rs 93.3 crore and revenue growth of 52.6% YoY. According to analysts Thakur Ranvir Singh and Harsh Shah, “The YoY growth in revenue was driven by a rise in in-patient volume, out-patient volume and ARPOB.”

The analysts remain positive on KIMS due to its healthy expansion plan, improved occupancy, and higher operating margin, with a focus on operational efficiency. They expect an annual capex of Rs 700–800 crore over the next two-three years, with plans to add 1,600 beds during FY24-25.

Singh and Shah remain cautious regarding lower occupancy due to the closure of the Karim Nagar facility and assume that the new facilities may have low occupancy during the first year of its operations.

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

(You can find all analyst picks here)

The Baseline

26 May 2023

Five Interesting Stocks Today

Deepak Nitrite: This chemical manufacturer rose by 9.5% in trade on Wednesday, marking its highest single-day gain in over 26 months. This uptrend follows the company’s announcement that its subsidiary, Deepak Chem Tech, has signed an MoU with the Gujarat Government to invest around Rs 5,000 crore in the state over the next four years. The company plans to manufacture specialty chemicals like phenol, acetone and bisphenol in Dahej and Nandesari, Gujarat.

This sharp surge in the stock price comes despite the company’s subdued performance in Q4FY23. Its net profit has fallen 12.5% YoY to Rs 233.9 crore due to high input costs. Its revenue marginally increased by 4.8% YoY in Q4. However, it beat Trendlyne’s Forecaster profit estimates by 5.8%. The stock also shows up in a screener for companies with increasing net cash flows over the past two years.

Going forward, the company plans to become the largest producer of solvents, as it believes this will help it benefit from import substitution. To achieve this goal, the management is aggressively expanding the firm’s production capacity. However, the expansion plans have encountered project delays, with the management announcing a delay in three of its projects. This includes the debottlenecking of its phenol plant, which was supposed to be commissioned in Q4FY23. It has now been delayed to Q1FY24. Similarly, the commissioning of its methyl isobutyl ketone (MIKB) and methyl isobutyl carbinol (MIBC) plants has been delayed by one quarter to Q1FY25. Only the commissioning of its photo chlorination and fluorination units seems to be on track.
EIH: This hotel company rose 7.5% on May 18 and touched its 52-week high of Rs 218.5 per share as it posted a 5.7x growth in net profit to Rs 84.4 crore in Q4FY23. Revenue has shot up 111.7% YoY to Rs 637.1 crore, driven by industry-leading revenue per available room (RevPAR) of Rs 15,284. This growth has exceeded Trendlyne’s Forecaster estimates by 20.7% for revenue and 6.4% for net profit.

The company’s net cash flow turned positive for the first time in the past five quarters, owing to a reduction in debt. This has helped the company show up in a screener of stocks with improving return on capital employed (RoCE) in the past two years. EIH also leads the industry in RevPAR and average room rate (ARR), demonstrating its ability to command a premium.

MD and CEO Vikram Oberoi, expects further growth in occupancy levels and ARR, backed by strong domestic demand and the recovery of foreign occupancy in the winter season.

According to ICICI Direct, profitability is expected to remain healthy due to strong ARR and occupancy levels, particularly in key cities like Mumbai and Delhi with consistent demand. The broker has upgraded its rating on the hotel company to ‘Buy’ from ‘Hold’ with a target price of Rs 240, implying a potential upside of 18%.

Dixon Technologies: This consumer electronics company has risen 10% since announcing its results on Tuesday evening and 20.6% over the past week till Friday. Its PE ratio is 85.3 (above the industry median), but it is trading below its 3 and 5-year historical PE averages. In Q4FY23, its net profit increased by 28.1% YoY to Rs 80.6 crore, while its revenue grew by 3.8% YoY. It beat Trendlyne Forecaster’s revenue and profit estimates by 1.5% and 9.6% respectively. The firm also shows up in a screener for companies with improving cash flows and high durability scores.

This healthy Q4 performance was led by growth in home appliances and mobile business verticals. An increase in revenue contribution from original design manufacturers (ODM) has aided in margin improvement. Its EBITDA margin expanded by 110 bps YoY to 5.1%. But the growth in the white goods and lightning segments was subdued due to weak demand.

Despite the healthy performance in Q4 and the stock’s uptrend, analysts’ views on the company’s prospects differ. While BoB Capital Markets maintains a ‘Buy’ rating on the firm due to its dominant position in the electronics manufacturing space and growing revenue contribution from the ODMs, ICICI Securities maintains its pessimistic outlook toward the company. It believes weakness in demand for white goods and durables will impact revenue growth in the near term.

The management expects to deliver ‘industry-leading’ growth in FY24 on the back of its robust order book, new client additions, and increasing production capacity. It expects further expansion of the EBITDA margin in FY24 given the increasing contribution from the ODM business and its backward integration efforts.

Aditya Birla Fashion & Retail (ABFRL): This retailing company hit a new 52-week low on Tuesday after reporting a net loss of Rs 187 crore in Q4FY23, compared to a net profit of Rs 43.6 crore in Q4FY22. This was due to an increase in expenses, which offset the demand for its apparel and lifestyle products. The company features in a screener of stocks with declining profits for the past three quarters. However, its revenue has increased by 26.2% YoY, beating Trendlyne’s Forecaster estimates by 3.9%.

The company’s management states that the overall demand continues to be weak in the value and premium categories, which could likely affect the SSSG (same-store sales growth) and new store additions, especially for Pantaloons. Jagdish Bajaj, Managing Director, said, “The performance in metro cities continued to remain strong, but sales in Tier-2 and Tier-3 cities remained sluggish as inflationary pressures and weak consumer sentiments impacted demand.”

On the bright side, the Lifestyle brand posted its highest-ever Q4 revenue of Rs 1,535 crore, led by robust retail and strong e-commerce performance, while the Pantaloons segment has grown by 18% YoY, with an SSSG of 13% during the quarter.

Following the company’s results, ICICI Securities has downgraded its rating to ‘Add’ from ‘Buy’ and lowered the target price to Rs 220. The brokerage expects increased competitive intensity from online/offline players and a slower improvement in the profitability of emerging business. As a result, the company features in a screener of stocks where brokers have downgraded the target price or recommendation in the past month.

Narayana Hrudayalaya: This healthcare facilities provider has risen 9.3% until Friday after posting results on Monday. It also touched its new all-time high of Rs 880.8 on Wednesday. In Q4FY23, Narayana Hrudayalaya’s profit rose 151.2% YoY to Rs 173.1 crore, while its revenue increased by 30.1% YoY. It beat Trendlyne’s net profit Forecaster estimate by 11.5%. The company’s YoY profit growth also beat its industry’s profit growth of 41.4% YoY. The multispeciality private hospital appears in a screener for stocks with growth in quarterly profit and profit margin.

According to Emmanuel Rupert, Managing Director and Group CEO, Narayana Hrudayalaya achieved its highest-ever revenue and profitability due to a rise in patient footfalls, along with improvements in the specialty and payor mix. He added, “The performance improvement is supported by the growth in business across our flagship units, other hospitals, and newer hospitals, in addition to the increased contribution of international patients.” The average revenue per occupied bed has increased by 11% YoY to Rs 36,986 per day.

The management expects the India business to grow at the current pace and has guided an aggressive capex of Rs 1,100 crore for FY24.

ICICI Direct maintains a ‘Buy’ call on the healthcare facilities provider on the back of improved occupancy levels, ramp-up in new hospitals, and consistent performance at the Cayman Islands facility. According to Trendlyne’s Forecaster, the company has a consensus recommendation of ‘Strong Buy’ from nine analysts, of which five are ‘Strong Buy’, three ‘Buy’ and one ‘Hold’.

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

The Baseline

24 May 2023

India gets a boost from foreign investors | Outperforming stocks with rising FII holdings

By Tejas MD

In the first two months of 2023, Indian indices fell around 4.5%. Market observers suggested that India was 'out' as the emerging market investors were betting on. The new favorites would be China and Taiwan.

But fast forward to now, and there's been a remarkable recovery - the benchmark Nifty 50 index has risen over 9% from the year’s low, and now stands 3% away from its all-time high, which it hit in December last year.

What is driving the momentum? A key factor is the increasing bullishness of foreign institutional investors (FII) on India. FII inflows into Indian equities accelerated in May. And one reason the Indian market is becoming more attractive to foreign investors, is the risk of the US defaulting on its debt.

If President Joe Biden and House Speaker Kevin McCarthy cannot reach a deal to raise the US debt ceiling by June 1, there is a real possibility that the US Treasury will run out of money, and default on its payments.

However, such back-and-forth negotiations and threats are typical in the United States before an agreement. The last debt-ceiling standoff happened as recently as 2021. While the likelihood of a default is low - few US elected officials actually want to see a humiliating default happen on their watch - the uncertainty has cast a shadow over the US stock market and prompted investors to move money into alternate investment destinations until an agreement is reached.

But this is not the only reason FIIs are investing in Indian equities.

Let’s dive in.

In this week’s Analyticks:

FIIs have increased their investments into India. Is this a blip, or will it last?
Screener: Stocks with rising FII holding, strong performance in Q4FY23 and outperforming the Nifty 50

Will the FII inflow into Indian equities continue?

The IMF Managing Director Kristalina Georgieva was not a cheerful person at the start of the new year. She had some tough words about the global economy: "2023 is going to be harder and more stressful than 2022," she said, "with recessions in multiple parts of the world."

As economies slow down, investors are struggling to find 'safe' securities and countries to invest in. India, which is expected to be among the fastest-growing economies in the world in 2023 and has zero likelihood of a recession, is an attractive option.

India’s retail inflation also fell to 4.7% in April and is currently below the RBI’s upper tolerance limit of 6% for the second consecutive month. The RBI paused repo rate hikes as inflation went down, which has attracted foreign investors.

Logically, another investment destination would be China, where the interest rate is currently at 3.65% and has been on pause for nine months. But China is not very popular these days in the West after the supply chain issues during the pandemic, and as the US-China relationship deteriorated.

India in comparison, looks like a Goldilocks destination for institutional investors - not too hot, not too cold, a low-inflation, growing economy that’s not picking fights.

As the Adani cloud lifts, FIIs turn bullish

The recent rise in FII inflows comes after investors pulled money out of Indian equities in January. China was reopening, and the Adani-Hindenburg crisis had raised questions about the health of the Indian stock market.

But since March, there has been a consistent inflow of FII funds into Indian stocks. This has continued through April and May.

In May, FIIs have invested (net) in Indian equities in every single trading session. In fact, their 16-day buying streak is still active as of May 22, and is the longest streak in three years. FIIs are favoring the auto and auto components sector as the sector saw FII inflows every month.

US investors may be parking money into foreign equities (like India) until a last-minute agreement is reached to raise the debt ceiling. This could mean a sharp outflow of FII funds once US President Biden and House Republican Speaker McCarthy make a deal.

Despite potential short-term outflow concerns, FII inflows into India could continue to rise as the country is expected to be one of the fastest-growing economies in the world this year. This is despite the IMF and foreign brokeragesloweringIndia’s GDP growth projection for 2023.

Indian retail inflation moderates, RBI pauses rate hike

The RBI’s decision to pause interest rate hikes in its May meeting, has boosted investments into India. Devang Shah, co-head of fixed income at Axis MF, evenanticipates 50 bps of rate cuts in the next 12 months.

Morgan Stanley also expects rate cuts in early 2024. Usually, equity markets become more attractive as interest rates decrease, and investors increase their asset allocation in stocks.

The US Fed and the European Central Bank, on the other hand, have continued with their rate hikes in May. While the US Fed is expected to keep the same rate at its next meeting, a rate hike is on the cards for the ECB due to high inflation levels in Europe.

India seems to be doing better here. Inflation in India has fallen due to decreasing fuel and food prices, which are major components of the CPI.

While inflation in the US, UK and EU softenedover the past six months, it is still over expected levels. When asked about the rocketing food prices in the UK, former minister for employment, Anne Widdecombe, said, “Don’t make cheese sandwiches if you can’t afford them.”

The global landscape looks chaotic. Biden and McCarthy are fighting in the media, China is battling sanctions, and the UK is worried about the price of sandwiches. India looks like a safer bet in comparison for foreign investors, and the benchmark Nifty 50 index reflects that belief.

Screener: Stocks with rising FII holding, strong performance in Q4FY23 and outperforming the Nifty 50

With the shareholding data for Q4FY23 in hand, we take a look at stocks that have seen the highest rise in foreign institutional investor (FII) holdings. This screenerconsists of stocks that FIIs bought in Q4, with strong financial performance, and which also outperformed their industries and the Nifty 50 index.

The stocks in the screener are from industries like banks, IT consulting & software, auto parts & equipment, pharmaceuticals and heavy electrical equipment. Major stocks in the screener are Equitas Small Finance Bank, Sona BLW Precision Forgings, Syngene International, KPIT Technologies, CG Power & Industrial Solutionsand Adani Enterprises.

Equitas Small Finance Bank saw the highest rise in FII holding, with an increase of 18.6 percentage points QoQ to reach 22.7% in Q4FY23. While funds like Ellipsis Partners LlC and Massachusetts Institute of Technology bought a 2.5% stake each, Rimco India purchased 2.1%. The bank’s stock price surged 17% over the past month, boosted by strong Q4FY23 results.

Sona BLW Precision Forgings saw its FII holding rise by 13.4 percentage points QoQ to 35.3% during the quarter. While major buyers of the auto parts & equipment stock were the Government of Singapore and Fidelity Funds, which bought 4.1% and 1.3% stake respectively, BNP Paribas Arbitrage increased its stake by 130 bps. The stock grew 14.4% over the past month, owing to a 35.3% YoY improvement in revenue for the quarter.

Syngene International saw a 6.4 percentage point QoQ improvement in its FII holding, totalling to 23.3% in Q4FY23. The Government of Singapore was the biggest buyer as it bought a 3.9% stake in the pharmaceutical company. Its net profit rose 20.9% YoY, while revenue surged 31.2% YoY in Q4FY23. This helped the stock grow by 13.3% over the past month.

You can find more screeners here.

The Baseline

23 May 2023

Five analyst picks with high upsides post Q4 results

By Abhiraj Panchal

Indian Oil Corp: ICICI Securities maintains its ‘Buy’ rating on this oil marketing and distribution company with a target price of Rs 115, implying an upside of 29.2%. The company’s net profit for Q4FY23 has increased by 54.8% YoY to Rs 10,289.82 crore, while operating revenue rose by 16.3% YoY. It beat Trendlyne Forecaster’s profit estimates by 87.8%. Analysts Probal Sen and Hardik Solanki say that IOC has shown an overall improvement in operational metrics.

The analysts estimate a 21% YoY improvement in gross margins. They believe that the continued growth in volumes and considerably higher retail margins to date in Q1FY24 will boost earnings growth over the next two years. They forecast retail margins to increase to Rs 2.5-3 per litre for both FY24 and FY25. They also expect earnings per share to increase by 14% in FY25 due to stronger marketing margins and normalised gross refining margins.

The analysts consider Indian Oil Corporation to be trading at attractive valuations, with a forecasted dividend yield of 7.4% in FY24/FY25. The support from Chennai Petroleum Corp earnings makes the risk-reward here favourable.

APL Apollo Tubes: IDBI Capital maintains its ‘Buy’ rating on this iron & steel products manufacturer and raises the target price to Rs 1,491. This implies an upside of 29.3%. In Q4FY23, the firm’s net profit rose 23.8% YoY to Rs 201.8 crore and revenue grew by 5.1%. It beat Trendlyne Forecaster’s profit estimates by 0.6%.

Analyst Bhavesh Chauhan believes that the company’s healthy performance in Q4 has been driven by rising sales volume, led by robust demand across product categories. But he adds that margins are relatively weak despite volume growth, with EBITDA/tonne growing by only 3% YoY due to a weaker product mix. Nevertheless, he expects the EBITDA/tonne to cross Rs 5,000 in the medium-to-long term.

Chauhan is optimistic about margin improvement given the company’s capacity expansion initiatives. “The company targets 400 kt (kilo-tonnes) of volumes from the Raipur plant in FY24, which should aid margin improvement. It targets a sales volume of 3 million tonnes in FY24 and 4 million tonnes in FY25,” he says. The analyst expects the firm’s revenue to grow at a CAGR of 18.3% over FY23-25.

Bank of Baroda: Motilal Oswal keeps its ‘Buy’ rating on this bank with a target price of Rs 240, implying an upside of 30.9%. In Q4FY23, the company’s standalone net profit jumped 168.5% YoY to Rs 4,775.3 crore, and revenue grew by 42.3% YoY. It beat Trendlyne Forecaster’s net profit estimates by 18.9%.

Analysts Nitin Aggarwal and Yash Agarwal attribute the bank’s robust growth in profitability to lower provisions, higher other income, and healthy growth in loan disbursements across segments. They also see margin expansion and an improvement in the CASA mix as key positives.

The analysts point out that the bank’s asset quality has improved on the back of controlled slippages and healthy recoveries. They add, “The bank’s slippages were limited at Rs 2,740 crore, which coupled with healthy recoveries led to a 74 bps and 10 bps QoQ improvement in Gross NPA and Net NPA to 3.8% and 0.9% respectively.” They expect the bank’s net profit to grow at a CAGR of 18.2% over FY23-25.

Granules India: ICICI Direct maintains a ‘Buy’ call on this pharmaceutical company with a target price of Rs 360, indicating an upside of 30.5%. In Q4FY23, the company’s net profit grew by 7.8% YoY to Rs 119.6 crore, while the revenue increased by 15.9% YoY. It has missed Trendlyne Forecaster’s profit estimates by 14.6%. Analysts Siddhant Khandekar, Kushal Shah and Utkarsh Jain say, “The overall growth is primarily from improved performance in the US and European geographies.”

The analysts believe that Granules’ plan to extend its core products via additional strength forms in the US, and launches in other geographies, will provide better operating leverage. They also remain positive on the company due to its geographical expansion, change in product mix, and a compelling risk-reward matrix.

The company’s progress in improving margins and executing its aggressive capex of Rs 700 crore will be key.

Cipla: KR Choksey maintains its ‘Buy’ call on this pharmaceutical company but revises the target price down to Rs 1,167 from Rs 1,289 earlier. This indicates an upside of 25.4%. In Q4FY23, the company’s profit increased by 44% YoY to Rs 521.5 crore, while its revenue increased by 10.3% YoY. It has missed Trendlyne Forecaster’s profit estimates by 32%. According to analyst Abhishek Agarwal, the revenue has been driven by good traction in the US markets. He, however, notes that the quarterly margins shrank due to the high inflationary environment and rise in R&D spend.

Despite his cautious stance, Agarwal is optimistic about new product launches. During FY23, Cipla launched over 50 new products in the Indian trade generics market. He adds, “Cipla has a strong product launch pipeline for the US and emerging markets, which is expected to boost the revenues as well as the profitability of the company.”

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

(You can find all analyst picks here)

The Baseline

21 May 2023

Which stocks did superstar investors sell in Q4FY23?

By Suhas Reddy

Looking into the portfolios of Superstar investors gives us insights into the sectors and stocks they are bullish or bearish on. This can help us better understand their sentiments around the market, especially as it has turned volatile.

Previously, we looked at the key superstar buys in Q4FY23. Now, let's analyze their sells.

Rakesh Jhunjhunwala/RARE Enterprises makes some key sells

Rakesh Jhunjhunwala’s portfolio sold stakes in seven companies in Q4FY23. The late investor’s portfolio is currently managed by the investment firm Rare Enterprises and Rekha Jhunjhunwala (his wife). The portfolio reduced its stake to below 1% in Dishman Carbogen Amcis (from 1.6%), a small-cap pharmaceuticals firm, which rose by 24.7% over the past six months till Friday.

The big bull’s portfolio also pared its stake by 0.96% in Singer India to 6.95% and in Autoline Industries by 0.35%, bringing its holding to 3.96%. Additionally, its stake in Edelweiss Financial Services was cut by 0.2% to 1.3%.

Rare Enterprises also sold minor stakes in Nazara Technologies, D B Realty and Aptech in Q4FY23.

Sunil Singhania sells minor stakes in micro and small-cap companies

Sunil Singhania’s Abakkus Fund sold a 0.35% stake in IT consulting and software company Tracxn Technologies in Q4FY23. He added the company to his portfolio in Q3FY23 by buying a 1.63% stake, and now holds 1.27% after selling a portion.

Singhania also cut stake in The Anup Engineering by selling a 0.17% stake. He has been gradually reducing his stake in the industrial machinery company for three consecutive quarters, and now holds a 4.06% stake against 5.72% in Q1FY23.

Singhania also sold a 0.09% and 0.05% stake in Carysil (consumer durables manufacturer) and Rajshree Polypack (containers and packaging company), respectively. He now holds 6.14% and 7.62% in these companies, respectively.

Ashish Kacholia cuts his stake to below 1% in two companies

Ashish Kacholia cut stake in consumer durables company Hindware Home Innovation to below 1% in Q4FY23. He also sold the stake in pharma company IOL Chemicals and Pharmaceuticals to below 1% during the same period. Prior to the Q4 sell-off, he consistently held 1.3% and 2%, respectively, in these companies for four consecutive quarters.

The ace investor also sold a 0.3% stake in Safari Industries (India), a textile manufacturer, bringing down his stake to 2.3%. He sold a stake in Xpro India for the first time since adding it to his portfolio and now holds 4.3%. He had been gradually increasing his stake in the packaging company each quarter since his initial purchase in Q2FY22.

He also sold a 0.1% stake in Raghav Productivity Enhancers, leaving him with a 2% stake.

Kacholia also trimmed stakes in Genesys International Corp and Stove Kraft, where he now holds 1.6% and 1.8% respectively.

Vijay Kedia makes minor changes to the portfolio in terms of stake sell

Vijay Kedia sold a 0.3% stake in Ramco Systems (IT consultant) in Q4FY23, reducing his holdings in the company to 1.1%. He also reduced his stake in Tejas Networks (a telecom hardware company) by 0.3% to 2%. Kedia has been reducing minor stakes in both of these companies since Q4FY22.

Ramco Systems has consistently reported losses since Q1FY22, while Tejas Networks has been loss-making since Q3FY22, except in Q2FY23.

Dolly Khanna continues to lighten her portfolio

Dolly Khanna continued her selling spree, signaling her bearish outlook on the market. The Chennai-based investor reduced her stakes in 12 companies during Q4FY23. Her biggest sells include Rama Phosphates, a small-cap fertilizer company, in which she lowered her stake below 1% from 1.5%. She also pared her stake in the apparel company, Monte Carlo Fashions, by 0.4% to 2.1%.

Of the 12 companies Khanna reduced her stakes in, two each were from the textiles, fertilizers, automobiles & auto components and FMCG sectors. She also decreased her holdings in one company from the metals & mining, oil & gas, general industrials and cement & construction sectors.

She cut her stake by 0.2% each in Tinna Rubber & Infrastructure, Ajanta Soya and Talbros Automotive Component, bringing her holdings to 1.4%, 1.3% and 1% respectively. She also pared her stake in KCP by 0.18% to 2.25%. The ace investor reduced her holdings in Simran Farms, Prakash Pipes, Chennai Petroleum Corp and Nitin Spinners by 0.1% each to 2%, 2.7%, 2.1% and 1.3% respectively. She sold minor stakes in Mangalore Chemicals & Fertilizers and Pondy Oxides & Chemicals.

Porinju V Veliyath reduces holdings in six companies

Porinju V Veliyath pared his stakes in a total of six companies in Q4FY23. Among them, he took his holdings below 1% in the household appliances company, Hindware Home Innovation, from a previous 1.1%. He also reduced his stake in Orient Bell, a ceramic tiles manufacturer, by 1% to 3.8%.

The ace investor cut his stakes in TCM by 0.3% to 1% and in Duroply Industries by 0.2% to 6.8%. He also sold minor stakes in Aurum Proptech and Taneja Aerospace & Aviation.

This analysis by Trendlyne is meant for investor education - to help understand companies and make informed investment decisions on their own. It should not be considered an investment recommendation.

The Baseline created a screener Tweezer Tops - Potential …

20 May 2023

Tweezer Tops - Potential Trend Reversal

Stocks closing at day low the previous day, but opening today at the previous day high

The Baseline

19 May 2023

Five Interesting Stocks Today

Exide Industries: This automotive and industrial batteries manufacturer has risen 9% since announcing its Q4FY23 results on May 8, reaching its 52-week high on Wednesday. This price uptrend comes despite its net profit declining 95% YoY to Rs 181.1 crore and revenue increasing 3.9% YoY. The street has not been deterred by the sharp drop in its profitability, as the high base last year had played spoilsport. The firm’s profit stood at Rs 3,959.2 crore in Q4FY22 due to gains made from divesting its entire share in Exide Life Insurance Co. Excluding the gains from this divestment, the firm’s consolidated profit rose 28.9% YoY in Q4FY23.

The management is optimistic about its lithium-ion battery business, as it expects to have a first-mover advantage with lithium-ion battery manufacturing in India. The company's present order book for lithium-ion battery modules and packs manufacturing stands at Rs 600-700 crore, which will be executed in the next 12-15 months.

Subir Chakraborty, Exide Industries’ CEO, says that the company is setting up a 12 GWh (Gigawatt hours) lithium-ion cell manufacturing plant in Bengaluru for Rs 6,000 crore with its joint venture (JV) partner SVOLT Energy Solutions (one of the largest players in China). He adds that construction has already begun, and the factory will be operational by the end of FY25.

ICICI Direct believes that the company will benefit from sourcing technology and raw materials from its JV partner. The stock also shows up in a screener for companies with broker recommendations or target price upgrades in the past three months.

CreditAccess Grameen: This NBFC stock rose 7.8% and reached its 52-week high of Rs 1,212.7 per share after posting an 86.4% growth in net profit in Q4FY23 on Wednesday. Its net interest income (NII) has expanded by 32.7% YoY to Rs 689.8 crore, while the net interest margin (NIM) improved by 90 bps YoY. The stock has risen 25.1% over the past month, helping it to show up in a screener of stocks that have gained more than 20% in one month.

The lender’s gross loan portfolio (GLP) stands at Rs 21,031 crore, reflecting a 26.7% YoY growth; Its asset quality has also increased, with gross and net NPAs declining by 240 bps YoY and 40 bps YoY, respectively. According to the management, the growth in its loan portfolio is supported by strong customer additions, and the addition of branches in newer geographies. The cost of borrowing for the lender has, however, increased due to rising repo rates over the past year.

Axis Securities maintains its ‘Buy’ rating on the stock, with an upgraded target price of Rs 1,315. This indicates a potential upside of 21%. The brokerage believes that the lender’s strong growth in GLP and a stable cost structure, helped by falling credit costs, will contribute to the expansion of the company’s NIM.

Karur Vysya Bank: This bank’s stock price has grown by 9% and is trading near its 52-week high since it posted results on Monday. Its Q4FY23 net profit increased by 58.3% YoY to Rs 337.8 crore and beat Trendlyne’s Forecaster estimates by 16%. But it missed revenue estimates by 25.1%. The bank's net interest income increased by 25.7% YoY during the same period.

Karur Vysya Bank's gross non performing assets (NPA) fell by 376 bps YoY to 2.3% in Q4. In value terms, gross NPAs stood at Rs 1,458 crore, down from 57.5% YoY. As a result, the company features in a screener for stocks with decreasing NPAs. The bank’s total loan advances increased by 16% YoY.

Despite the decline in NPAs, its provisions doubled in Q4, indicating preparations for contingencies. Speaking about NPAs, Managing Director Ramesh Babu says that lower slippages of NPAs and a better collection system should help them keep their credit cost at 75 bps for FY24.

ICICI Securities maintains a ‘Buy’ call on Karur Vysya Bank due to its competitive advantage in terms of cost of deposits over peers, a balanced loan book, broad-based growth, and superior return ratios. According to Trendlyne’s Forecaster, the bank has a consensus recommendation of ‘Strong Buy’ from eight analysts.

Amber Enterprises: This consumer electronics company surged 14% on Wednesday on the back of robust Q4FY23 results. Due to the rise in stock price, the company features in a screener of stocks with strong momentum. The company’s net profit has increased 81.7% YoY to Rs 104 crore in Q4, beating Trendlyne’s Forecaster by 46.3%. Its revenue also improved 38% YoY. As a result, it makes it to a screener of companies with increasing net profit and profit margin YoY.

The strong performance can be attributed to the addition of new clients in the electronics and RAC (room air conditioner) divisions, with the RAC segment contributing 79% to the company’s total revenues.

Commenting on the results and performance, Jasbir Singh, Chairman & CEO, says that the company’s RoCE is expected to improve from 15% in FY23 to 19-21% in the next few years.

Amber Enterprises’ management is targeting to deliver a growth of 10-15% in the core RAC business in FY24, while anticipating growth rates of 35-40%, 20-25% and 15-20% respectively for the electronics, motors and mobility divisions. However, they also expect a muted performance in Q1FY24 due to unseasonal rains in North India.

Following the results, BoB Capital maintains its ‘Hold’ rating but raises the target price to Rs 2,260. The brokerage anticipates better growth in the company’s new verticals but remains cautious of high competition, and the impact of unseasonal rains on the AC business.

Ceat Ltd: Theauto tyres and rubber products firm has seen its share price increase by33.9% in the past month, while the broaderNifty Auto index saw a 5.9% rise. The firm reported an 11% YoY increase in its revenue, led by the replacement market. It also saw strong demand in export and OEM markets. A stronger dollar has also added to the top line. Ceat is expanding into off-road, truck, and bus tyres in the US, Canada and South America, in addition to its existing European market. Ceat tyres will be categorised under the mid-premium category in the US. Currently, the export market contributes 18% of the revenue.

The firm has witnessed a margin expansion of 553 bps YoY to 13.1%, from lower raw material costs (which were 9% lower) and a better product mix. The firm has increased its market share in the passenger car radial segment from 13.4% in Q3FY23 to 14.2% in Q4FY23. Strong CV and PV markets are expected to drive the firm’s top line in FY24. Ceat shows up in a screener for stocks with strong momentum and price above short-term and long-term moving averages.

The firm has a planned capex of Rs 700 crore towards agri-radial tyres and other downstream products. The management is positive about volume growth in off-highway tyres and margin expansion led by speciality tyres.

Prabhudas Lilladher says that the margin expansion has been led by lower raw material costs; however, margins are expected to moderate once the benefits of lower input costs are passed on to end customers. Ceat expects to see a better replacement market and export mix in FY24.

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

The Baseline

17 May 2023

Good things come in small packages: 7 smallcap stars | Screener of recently upgraded stocks

By Deeksha Janiani

There' was a lot of optimism around global growth at the beginning of 2023. China was reopening post Covid, inflation was slowing in the EU and US. India's rise was also being noticed by many analysts - "India is on the move", the writer Noah Smith declared.

But it's May now, and some of that early cheer has wilted in the heat. Germany, Europe's growth engine, is slowing down, China's reopening bump has faded, and Nomura in its recent report said that India is also affected. “India is on the cusp of a macro change," Nomura wrote, "moving from a 'high growth, high inflation' regime to a 'low growth, low inflation' one.”

India's retail inflation dropped to 4.7% in April (good), but industrial output stayed flat in March (not so good).

Financial organisations now forecast India’s GDP growth rate falling to 6% on average in FY24. They aren’t as optimistic as the RBI, which raised its growth forecasts slightly in April.

Signs of a slowdown are also visible in the Q4 results. According to India Inc’s Q4 results so far, net profit growth has fallen to single digits due to weaker sales growth, higher interest costs, and depreciation. On the positive side, industries like cement, paints and auto have seen margins improve as their input costs declined.

Even with growth decelerating, some companies have achieved industry-beating performance in Q4 and are confident of their prospects in the year ahead.

In this week’s Analyticks:

Smallcap stars: Industry outperformers which are forecasting good growth in FY24
Screener: Stocks which saw recent broker target price or recommendation upgrades

Let’s get into it.

When good things come in small packages: Seven smallcap stocks that are beating their industries

Size isn't everything. Tendulkar was the 'Little Master' of cricket for decades - his height was probably the only area where he underperformed compared to the other cricketers.

Some companies in the smallcap index are similar outperformers. We identify seven stocks from the BSE SmallCap that have beaten their respective industries in terms of both top-line and bottom-line growth in Q4. These companies also have a positive growth outlook for the future.

Syngene International to benefit from global supply chain shifts

Pharma player Syngene International beat consensus net profit estimates by 18% in Q4. Its growth was driven by its strong performance in both research services and contract manufacturing.

Commenting on the demand environment, Jonathan Hunt, CEO at Syngene, said, “We have seen a weaker funding environment for biotech startups in the US. So they are much more cost conscious and are looking to make sure that the funding they have can go a long way. That’s not a bad thing for Syngene as we are cost-competitive”.

The company’s management has guided for a 17%-19% growth in FY24 revenue (dollar terms). However, net profit growth may be lower due to a change in the tax rate. But analysts expect Syngene’s profits to rise by over 25% in rupee terms.

KPIT Technologies to gain from changing auto priorities in FY24

This tech player, which serves the auto space, outperformed the industry’s net profit growth by more than 30 percentage points in Q4. KPIT Tech’s strong performance in both top line and bottom line, with over 35% growth, was driven by the European markets.

Going forward, the company’s management is confident of clocking 27%-30% revenue growth (in dollar terms) in FY24. Its focus remains on getting more business from existing clients.

With auto OEMs working to reduce the number of electronic control units in vehicles, KPIT sees a big opportunity. It expects OEMs to spend $40 billion annually over the next 5-7 years to build centralized software architecture.

Market share gains, capacity additions to boost Blue Star’s growth

Blue Star surpassed its industry’s revenue and net profit growth by over 15 percentage points (excluding extraordinary gains) in Q4. Its growth was driven by its unitary products segment, which includes room ACs and commercial refrigerators.

The company sees the room AC market growing at a CAGR of 20% in the next three years, as summers keep getting hotter. Its own business will grow even faster aided by market share gains. To capture a higher share, Blue Star plans to spend Rs 500-600 crore in capex in the next two years.

Analysts are optimistic about the company and expect it to clock bottom-line growth of over 40% in FY24, backed by healthy sales and margin improvement.

Craftsman Automation set to see growth in all segments in FY24

Craftsman outperformed the auto parts industry’s net profit growth by over 90 percentage points in Q4FY23. This was partly due to the acquisition of DR Axion India in the quarter.

Going forward, the company sees all its segments - powertrain, aluminum die-casting, and industrial engineering - growing by at least 20% in FY24. The demand for off-highway commercial vehicles and trucks is expected to be the driver for its powertrain business.

Analysts predict over 40% top-line and bottom-line growth in FY24. Their estimates are high as they see DR Axion contributing an additional 20-25% to its revenues.

Glenmark Life set for a turnaround in FY24

Glenmark Life delivered an impressive earnings performance in Q4. It beat analyst estimates on net profit growth by 35%. However, the API maker posted lackluster growth in FY23, due to inventory rationalization undertaken by its parent company, and contract manufacturing clients.

During a recent earnings call, Yasir Rawjee, Managing Director at Glenmark Life, commented, “Glenmark Pharma was in inventory tightening mode. But they have finished that. So, we began to see very good demand from them in Q4, which will be sustainable.”

The company’s management has guided for 12%-14% top-line growth in FY24 and plans to double its reactor capacity by FY26. Analysts' growth expectations are similar.

Newgen focuses on larger deal wins

Newgen Software beat the IT industry’s net profit growth by over 35 percentage points in Q4. It also delivered a double-digit earnings surprise. Its growth was driven by the India and Middle East markets.

The company is now focussing on winning more business from existing clients and pulling in larger accounts. Commenting on the latter strategy, Virender Jeet, CEO at Newgen, said, “Initially in the US, we focused on banks which were sized from $1 billion and up to $20 billion. We have now started focusing on banks which are at least $10 billion”.

Newgen has set a minimum revenue growth target of 20% in FY24. However, analysts are slightly conservative here.

Stylam Industries announces new capex plans

This laminates maker outperformed its industry’s net profit growth by over 50 percentage points in Q4. Growth was fueled by a jump in exports and healthy growth in the domestic markets.

Stylam is planning a greenfield expansion involving an outlay of Rs 150 crore in FY24. This has a sales potential of Rs 500 crore. Including Stylam’s ongoing brownfield expansion, its overall capex spends will be around Rs 170-176 crore.

Going forward, the company sees a resilient export market and expects strong demand from new home construction in the domestic market. Analysts expect the company’s bottom line to rise over 25% in FY24.

Screener: Stocks which saw recent broker target price or recommendation upgrades

This screener shows stocks which have received broker upgrades for target price and recommendationin the past month, while also boasting a high analyst rating.

Stocks from the banking, NBFC, hotels, gems & jewellery and personal products industries feature in the screener. Major stocks in the screener are Cholamandalam Finance, ICICI Bank, Titan, Indian Hotels and SRF.

Chola Finance stands out with seven target price upgrades from brokers over the past month. These upgrades were driven by the company’s impressive growth in Q4 and improving asset quality. With an average broker rating of 4.6, it leans towards a ‘Strong Buy’ consensus.

ICICI Bank has received six target price upgrades from brokers in the past month. This comes as a result of its strong growth in Q4 net profit and continued investments in its digital capabilities. The stock has an average broker target price upside of nearly 20%.

Titan has six target price upgrades and one recommendation upgrade from brokers in the past month. Brokers remain positive on the stock following the Q4 results, citing strong demand trends in jewellery and scalability in wearables, eyewear and Taneira.

You can find some popular screenershere.

The Baseline created a screener test

16 May 2023

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The Baseline

16 May 2023

Five analyst picks trading in the PE Buy Zone post Q4 results

By Suhas Reddy

This week, we take a look at five analyst picks trading in the PE Buy Zone (a stock is in the PE Buy Zone if it is trading at a PE lower than its historical PE average). These stock picks also have PE TTM lower than their respective industry, as well as revenue and profit growth of more than 10% YoY.

Chalet Hotels: IDBI Capital maintains its ‘Buy’ rating on this hotel chain with a target price of Rs 457, implying an upside of 9.2%. The company is trading in the PE Buy zone and its current PE TTM is lower than the hotel industry’s PE average. Over the past year the company has gained 45.5%.

In Q4FY23, Chalet posted a net profit of Rs 39.3 crore, an improvement compared to a loss of Rs 11.6 crore in Q4FY22. Its revenue has also jumped 128.3% YoY.

Analyst Archana Gude states that the firm beat her estimates on various key parameters and “the company continued its robust operational performance in Q4FY23 as well, which resulted in highest-ever quarterly net sales and best ever margins”. The analyst believes that the company’s foray into the leisure segment by acquiring Dukes Retreat, Lonalvla, is encouraging, as it will add inventory, particularly in an industry facing rising demand and supply shortages.

The analyst believes that the hotel is well-placed to benefit from the growing demand for corporate travel in the near term. She anticipates the company’s revenue to grow at a CAGR of 21.5% over FY23-25.

Equitas Small Finance Bank: ICICI Securities keeps its ‘Buy’ rating on this bank and increases its target price to Rs 100 from Rs 70. This implies an upside of 27.1%. The stock is trading in the PE Buy zone, and its current PE TTM is lower than the banking industry’s average. Over the past year the stock rose by 44.2%.

In Q4FY23, the bank’s net profit rose 59% YoY to Rs 190 crore and revenue grew by 29%. Analysts Renish Bhuva, Jai Prakash Mundhra and Chintan Shah attribute the bank's profitability growth to a sustained rise in advances, stable NIMs, and a decline in the cost/income ratio. They believe that continued investments towards building capabilities and new product launches have aided growth momentum. They add, “Disbursements in its newly launched products (e.g. affordable housing, used car financing, etc) continue to gain momentum”.

Bhuva, Mundhra and Shah highlight that the bank’s asset quality has improved on the back of slippages moderating sharply in Q4. They are also optimistic about the bank’s ability to maintain its credit cost within its guided range of 1.2%-1.25% in FY24. The analysts expect the bank’s net profit to grow at a CAGR of 42.1% over FY23-25.
Craftsman Automation: Motilal Oswal reiterates its ‘Buy’ call on this auto parts manufacturer with a target price of Rs 3,950, indicating an upside of 12.8%. The company is currently trading in the PE Buy Zone, and its PE TTM is lower than the auto parts and equipment industry’s average. Its price changed by 59.9% in the past year.

In Q4FY23, Craftsman Automation’s profit grew by 50.9% YoY to Rs 77.7 crore, and revenue increased 49.1% YoY. According to analysts Jinesh Gandhi, Amber Shukla and Aniket Desai, the company’s growth has been driven by the auto powertrain, Al products and Industrials & storage segments.

The analysts say, “Craftsman’s track record of creating and gaining market leadership organically is uncommon in the auto component industry.” They believe that this has enabled it to deliver a good balance of strong growth and superior capital efficiency. The analysts expect growth in the aluminum division and industrials to drive overall growth in FY24/25. They estimate consolidated revenue and profit CAGR of 27% and 37%, respectively, for FY24-25.

Mahanagar Gas: ICICI Direct maintains its ‘Buy’ call on this utilities provider with a target price of Rs 1,300, indicating an upside of 22.5%. The company is currently trading in its PE Buy Zone, and its PE TTM is lower than the non-electrical utilities industry average. Its price rose by 44.5% in the past year.

In Q4FY23, Mahanagar Gas’s net profit increased by 103.9% YoY to Rs 268.8 crore and its revenue grew by 35.8% YoY to Rs 1,644.1 crore (in line with the brokerage’s estimate).

Harshal Mehta and Payal Shah note that the company has passed on the benefits of revised APM gas prices to its customers while still maintaining profitability. In Q1FY24, spot LNG prices have further softened. Owing to these reasons the analysts say, “growth in sales volume will be a key factor to monitor, going ahead.”

Mehta and Shah remain positive as they believe Mahanagar Gas will benefit from India’s aim to increase the share of natural gas in the energy mix from 6% to 15% by 2030, and also due to the company’s debt-free balance sheet and consistent dividend payout.

DCB Bank: Axis Securities maintains its 'Buy' rating on this bank with a target price of Rs 140, indicating an upside of 20.5%. The company is currently trading in the PE Buy Zone, and its PE TTM is lower than that of the banking industry. Its price rose by 39.1% in the past year. In Q4FY23, DCB Bank's operating revenue increased by 28.19% YoY to Rs 1,179.28 crore, and its net profit grew by 25.36% YoY to Rs 142.21 crore.

According to analysts Dnyanada Vaidya, Prathamesh Sawant, and Bhavya Shah, DCB Bank will sustain its growth momentum as it looks to double its balance sheet in the next four years. They believe the bank is on track to deliver a 1% RoA and an RoE of 11-13% over the medium term.

The analysts expect advances growth of 18% CAGR over FY24-25 due to strong traction in disbursements with continuous sequential growth. They opine that the stock currently trades at attractive valuations as the bank aims to double its balance sheet to Rs 1 trillion in four years.

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

(You can find all analyst picks here)