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

02 Nov 2022

Chart of the week: Subscriptions spike for Reliance Jio, Bharti Airtel as telcos get ready for 5G

India is all set to go 5G as major telecom companies, including Jio and Bharti Airtel, have started the rollout. India's 5G entry was made official at the Indian Mobile Congress (IMC) event held in New Delhi on October 1.

Reliance Jio picked Diwali to launch 5G, hinting that beta testing had launched on October 5. Bharti Airtel launched the service in eight Tier 1 cities on October 8. Vodafone Idea however, has not yet announced the date of its 5G launch or the cities where the service would be available.

5G will be the next big battle for domination among India's telecom companies. In the meantime, we take a look at their monthly subscription numbers over the past six months in this edition of chart of the week.

Reliance Jio’s active subscriptions took a hit in July but bounced back in August as it rose almost 1% to 38.5 crore. The data indicates that 91.8% of its total subscribers are active. The company had posted an average revenue per unit (ARPU) of Rs 176 in Q1FY23.

Bharti Airtel’s active subscribers in August rose 0.5% to 35.8 crore. It has the highest proportion of active subscribers to total subscribers, 98.3%. The company’s average revenue per unit (ARPU) has also been the highest, at Rs 183.

Vodafone Idea on the other hand, has seen its active subscribers decline in the past six consecutive months and fell 1.4% to 21.4 crore in August. Only 84.8% of the company’s total subscribers are currently active. The company had posted an average revenue per unit of Rs 128 in Q1FY23.

According to ICICI Direct, the telecom sector is due to see a rise in ARPU in H2FY23. This rise will come on the back of a higher number of days and residual benefits of the tariff hike.

The Baseline

01 Nov 2022

As investors seek alpha, DVM investing strategies beat benchmarks by big margins

By Tejas MD

Investors and traders are always on the hunt for alpha – gaining excess returns on an investment relative to the benchmark index. But managing a portfolio that delivers this magic consistently, and over a period of time is something very few investors/traders are capable of.

Why is this so difficult? A lot of factors come in the way of consistent alpha. A rising dollar may force foreign investors to temporarily exit the market, and cause indices to fall. Stocks in entire industries may fall as the sector struggles. Trading volumes may decline with changes in government regulations, or with a sharp economic downturn.

Investors also differ from traders, in seeking returns over a longer period, while investing in fewer stocks. These investors don’t like bear market periods as a result, as even sound investments can see share price declines. Traders on the other hand, take advantage of both rising and falling markets to enter and exit positions over a shorter period, and take smaller and more frequent profits.

Using DVM scores to deliver alpha on investments

Trendlyne’s durability (D), valuation (V), and momentum (M) scores allow investors to evaluate all aspects of a stock. By choosing from curated screeners or by creating your own, users can make use of these stock scores to devise a high-return trading or investing strategy. One can also backtest these screeners on Trendlyne to see how a particular strategy performed in the past. The backtests also have various filters that let you change the frequency of portfolio review, control for the number of stocks invested in each period, etc.

There is no one-size-fits-all strategy in investing or trading. A Momentum Score strategy, which looks for stocks with bullish technicals, is more suitable for traders with an appetite for higher risk, who are very active in the stock market. While the Valuation Score strategy is suitable for value investors who are always looking for stocks that are undervalued, a Durability Score strategy which selects financially healthy companies, is for those looking for lower risk and in it for the long game.

Finally, combinations of these scores help investors identify high-quality stocks that may favor one approach over another.

Let’s look at strategies that use these three DVM metrics individually, evaluate the results and then move on to combining these parameters in search of a better strategy.

A Momentum Score strategy favours traders, but comes with caveats

This Momentum Score screener helps select high-momentum (technically bullish) stocks with sufficient volumes, so that it is easy for investors to enter and exit. This strategy outperformed all others as it delivered the highest CAGR over a shorter time frame (one to three years). This is optimal for short-term traders who are active in the stock market. Surprisingly, it also performed the best even in volatile markets, as it focuses only on stocks with the highest momentum score. With weekly portfolio reviews, this strategy delivered a stellar three-year CAGR of 301% against Nifty 50’s CAGR of 16%.

The period analysis, which shows the returns every week, is also mostly in green. However, the maximum drawdown over longer investing time periods.

Maximum drawdown is the biggest observed loss from a peak to a trough of a portfolio before a new peak is attained. This did not have a stop loss, so the drawdowns show the maximum possible with this strategy.

Things to watch out for while employing this strategy:

A weekly portfolio review is essential since the momentum score is sensitive to share price changes, and can cause higher stock entries and exits. A stop loss can also reduce negative return periods.
Some stocks hit the upper/lower circuit as soon as the markets open–sometimes even before the market opens–in pre-market trading itself. Hence, in some cases, it can become difficult to enter/exit the stock when required.
For longer term investors, other strategies are more optimal as weekly portfolio reviews may not be feasible for everyone. In those cases, valuation and other strategies perform better.

A Valuation Score strategy delivers stellar long term returns, but has the highest drawdown

The Valuation Score trading strategy performs best in a longer time frame (10 years). This could be due to markets taking time to discover the stock’s true value and price it accordingly. The screener includes high valuation score stocks with sufficient volumes so that it is easy for investors to enter and exit.

Since the stock's Valuation Score changes with share price movement, it is necessary to review the portfolio every quarter. In fact, a quarterly review (as opposed to a yearly review) allows investors to select optimal stocks based on the screener and get maximum returns. In addition, limiting the number of stocks selected during each period keeps this number manageable (stocks can be limited under the ‘Advanced’ option in the screener - see image below)

Under these conditions, the strategy delivered a staggering 93.7% CAGR over 10 years.

However, investors will have to endure a high drawdown when following this strategy. Another important thing to note is that a single stock could be responsible for a significant portion of the returns.

In the top valuation score strategy for instance, Sunil HiTech Engineers (now delisted) delivered over 5,400% returns. So, missing a key stock could lead to lower-than-expected returns. In addition, not all low-valuation score stocks are undervalued stocks. There could be several reasons for low share price relative to earnings–litigations, distorted earnings due to one-time gains, etc. So, there is a chance that affordable stocks can plunge further in share price. In this strategy for example, Gitanjali Gems lost big as long-hidden fraud came into view –95% of its value.

Good for low risk investors: With lower drawdowns, the Durability Score strategy delivers results when combined with other metrics

The Durability Score strategy is most effective in relatively short terms (three years) for investors, as it delivers higher returns during this period, compared to others. Like the other two strategies, a quarterly review of stocks and controlling the number of stocks to five shows high returns for investors.

Compared to other strategies which are heavily dependent on the share price, this has a relatively lower drawdown. This could be due to the presence of fundamentally strong companies in this screener. However, it becomes more effective when combined with other metrics like valuation score.

One such strategy can be devised, by using a screener that lists high DVM-score stocks with tradable volume. Another option is to use one of Trendlyne’s expert screeners–DVM - High Return, Highly Durable Companies. This includes companies with high DVM scores with rising stock prices and strong fundamental growth. When this expert screener is used, returns increase significantly, compared to the high DVM strategy that only uses stock scores.

This is particularly effective for a long term (10 years), with quarterly portfolio review, and controlled for five stocks. The top strategy in this category delivered 85.4% CAGR with a maximum drawdown of 53%. In addition, filtering for Nifty 500 stocks made marginal changes in the returns, but reduced drawdown. But filtering for Nifty 50 stocks led to underperformance, mainly because of the low number of stocks selected due to stringent parameters.

Not surprisingly, period analysis is mostly in the green as the stocks selected here are fundamentally strong.

The DVM expert screener performs the best, when accounting for drawdowns

When mid to long-term strategies across different categories are considered, high-valuation stocks deliver the highest returns. But when we consider the maximum drawdown along with the CAGR, the expert screener comes out ahead as it has a lower drawdown.

The expert screener (DVM - High Return, Highly Durable Companies), delivered returns at a whopping 85% CAGR–meaning an investment of Rs 10,000 10 years ago is now worth over Rs 38.2 lakh. All an investor needed to do was to review the portfolio quarterly and shuffle it according to the entry and exit of stocks in the expert screener and stay invested.

This is just the tip of the possibilities available to investors. Investors can use several different parameters such as PE ratio and ROE to create screeners and backtest it to calculate the returns that particular strategy has delivered over a selected period. Combining these with Trendlyne’s stock scores can, as we saw above, substantially increase your alpha.

Investors can also choose several expert screeners encompassing different parameters and investment philosophies and backtest them to come up with a trading strategy that works for them.

The Baseline

31 Oct 2022

Five analyst picks from pharma and chemicals

By Suhas Reddy

This week we look at analyst picks from the Pharmaceutical and Chemicals & Petrochemicals sectors.

Granules India: ICICI Direct maintains its ‘Buy’ rating on this pharmaceutical company with a target price of Rs 410, implying an upside of 10.0%. In Q2FY23, the firm’s net profit rose 79.8% YoY and revenue, 29.5% YoY. Analysts Siddhant Khandekar and Utkarsh Jain say Granules’ revenue growth in this quarter has beaten their estimates, mainly driven by higher paracetamol sales in the US, increased market share and new launches. They added that the company’s EBITDA margins also beat their estimates. It grew by 409 bps YoY to 21.1%.

Khandekar and Jain believe that the company’s margin will improve in the coming quarters on the back of a focus on economies of scale and gradual expansion of complex products. Overall, they are positive about the company’s prospects, given its focus on product portfolio diversification, improving backward integration, and cost management. The analysts expect the firm’s net profit to grow at a CAGR of 27.8% over FY22-24.

Glenmark Life Sciences: BoB Capital Markets keeps its ‘Buy’ rating on this active pharmaceutical ingredient (API) manufacturer but reduces the target price to Rs 535 from Rs 560. This implies an upside of 25.9%. Analyst Saad Shaikh reduces the target price on the expectation of higher costs to commission the new plant in Dahej and a fall in the firm’s Q2FY23 revenue. GLS’ revenue fell on the back of a 33% YoY reduction in API business from its parent company Glenmark Pharmaceuticals, the analyst noted.

However, Shaikh remains positive about the company’s growth prospects for its “strong market position in key APIs and focus on product value over volumes, which translates to a superior margin profile”. He also believes that an increase in production capacity will benefit the company in the medium to long term. The analyst expects the company’s net profit to grow at a CAGR of 9.8% over FY22-25.

Torrent Pharmaceuticals: ICICI Securities maintains its ‘Buy’ rating on this pharmaceutical company and increases its target price to Rs 1,853 from Rs 1,769. This indicates a 12.3% upside. Analysts Vinay Bafna and Rohan John say that the firm’s Q2FY23 revenue and EBITDA margin growth was broadly in line with their estimates. But then, its profit growth came in below estimates. They attribute this to higher other expenses and lower other income. Despite its profit growth missing their estimates, the analysts remain positive on Torrent Pharma, considering “its strong branded franchise supported by a dominant chronic segment in India and Brazil”.

Bafna and John believe that the company’s recent acquisition of Curatio will augur well for it, despite the acquisition diluting the earnings per share in the near term. They also expect the firm’s operational leverage, cost optimisation, and resolution of its plants will drive margin growth in the coming quarters. The analysts estimate Torrent Pharma’s net profit to grow at a CAGR of 35.5% over FY22-25.

UPL: Prabhudas Lilladher maintains a ‘Buy’ call on this agrochemical manufacturer with a target price of Rs 1,020. This indicates an upside of 39.7%. UPL has announced a strategic realignment of its businesses into four distinct business verticals. Himanshu Binani remains optimistic about the company on the back of this business restructuring strategy.

Marquee investors like ADIA, TPG, Brookfield, and KKR are investing a total of $500 million in UPL. But ADIA and TPG will receive $241 million for their exit from non-crop protection in UPL Corp business resulting in net proceeds of $259 million. Binani believes that these net proceeds are likely to be utilized towards debt reduction and working capital requirement and would not meaningfully impact the earnings profile in the near term. “In terms of unlocking the fair value of each of the business segments, It will be a positive move in the long term,” he added.

Navin Fluorine International: Edelweiss maintains a ‘Buy’ call on this commodity chemicals company with a target price of Rs 5,500, indicating an upside of 20.8%. In Q2FY23, the company’s profit decreased 8.6% YoY to Rs 57.8 crore, despite a 23.1% YoY increase in revenue to Rs 430.1 crore. Analysts T Ranvir Singh, Nikhil Shetty, and Prasad Hase said, “Navin Fluorine International’s Q2FY23 performance was below our estimates and street expectations on the revenue and bottom-line front.”

Despite the lower-than-expected results, the analysts remain positive on the chemicals manufacturer on the back of strong hydrofluoroolefin demand, commercialization of phase one multi-product plant, robust demand outlook, ability to pass on price hikes, and healthy realizations across specialty chemical products. “The company’s long-term story is intact and we expect new capacity additions to drive top-line growth while gaining leverage after achieving optimum capacity utilization to improve profitability,” they concluded.

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

(You can find all analyst picks here)

The Baseline

30 Oct 2022

Can India keep rising as the world economy slows? | Companies with strong results and outlook

By Deeksha Janiani

Everyone thought that the pandemic would devastate global markets. But it is the post-Covid period that is proving to be dangerous, with sharp interest rate hikes around the world, a prolonged war in Europe and Xi's ‘zero-covid’ policy in China. As the overall outlook darkens, India may also face roadblocks.

In this week’s Analyticks:

Storm on the horizon?: India feels the heat of a worsening global economy
Screener:Stocks which saw growth in Q2FY23, and where analysts predict strong FY23

Let’s get into it.

Can the Indian economy steer through a worsening global environment?

The going was good for India until August 2022. Foreign institutional investors had finally become net buyers in Indian equities in July and August, after selling stocks for nine consecutive months. India offered shelter in the global economic storm.

Numbers and facts supported the idea that India was recovering rapidly. The country’s retail inflation was lower than that of advanced economies like the US and Europe. Economic activity was rising, GDP growth was up and India was projected to be the fastest growing economy both this year and the next. In another major relief, crude oil prices slipped below $95/bbl in August.

There were theories explaining India's outperformance: that the Indian economy was 'insulated' from the world due to domestic growth, and had ‘decoupled’ from the US market. The Nifty 50 index rode high and gained over 12% between June end and August end.

Cut to September 2022: the US Federal Reserve did another big interest rate hikeof 75 bps. And the ‘insulated economy’ story began to crack.

Rupee hits fresh lows against dollar, retail inflation hits a 5-month high

Last week, a statement by finance minister Nirmala Sitharaman became the talk of the town. According to her, the problem is not the falling rupee, but the strengthening dollar. Prima facie, this statement seems correct, as the greenback has gained strength against most currencies, including the euro, pound and yen.

The dollar’s rising strength has been driven by sharp interest rate hikes by the US Federal Reserve. Foreign investors are flocking back to the ultimate safe haven that are US treasuries, causing renewed capital flight from India. It's a reminder of what the US Treasury Secretary John Connally said to leaders of other countries in 1971: "The dollar is our currency, but it's your problem".

The rupee could have fallen much further. But the RBI has spent over $100 billion from India’s forex reserves since January 2022 to rescue the rupee. The apex bank sold dollars in the open market to increase dollar supply, and prevent it from rising further. So while Sitharaman claims that our currency has fared better than others against the dollar, that's because the RBI put a big cushion under the rupee.

A weak rupee has led to India importing additional inflation, as dollar-priced imports become more expensive. Some domestic factors have also worked against us. Monsoons were uneven in India with major agrarian states like UP and Bihar reporting a rainfall deficit. This caused food price inflation to soar to 8.6% and overall consumer price inflation to hit a 5-month high in September 2022.

The silver lining here is that India’s retail inflation still trends lower than that of US and Europe. However, US inflation levels have relaxed from their 40-year highs in June 2022. The aggressive rate hikes undertaken by the US Fed tamed inflation to some extent. But European inflation is proving to be sticky, with energy shortages driving higher gas prices.

India's economic activity slows down, China sees some GDP recovery

In September, India saw its composite Purchasing Manager's Index, which tracks business health, fall to a five-month low due to a sharp drop in services activity growth.

Growth in manufacturing activity also softened in the previous month. The Index of Industrial Production, a measure of India’s industrial output, fell by nearly 1% on a YoY basis in August 2022. This was due to a slowdown in manufacturing and mining activity. Manufacturing activity was pulled down by a fall in production of textiles, apparels, pharmaceuticals and electrical equipment.

US and Europe numbers are even weaker - their PMI levels have contracted for the fourth consecutive month now. High levels of inflation and rise in borrowing costs have impacted their domestic demand.

China however, finally witnessed a jump in economic activity in June after three months of decline thanks to Xi Jinping's zero-Covid policy. Although growth is still slow, it has finally turned positive - China reported a GDP growth of 3.9% in Q3-2022 (compared to near zero growth in Q2).

Overall, economic indicators paint a better picture for India compared to much of the world. However, we will not be able to avoid the spill-over effects from weak demand in other major economies. After all, India derived 23% of its GDP from exports in Q1FY23.

Speedbumps ahead: 2023 recessions abroad worsen India’s outlook

According to the new IMF report, the worst is yet to come for global growth, and many countries will experience a recession in 2023. If we go by recent predictions from the economist Nouriel Roubini, the world is going to face a 'triple crisis' of high inflation, high debt and low growth in 2023. He terms this a ‘stagflationary debt’ scenario, which he predicts will be worse than the 1970 or the 2008 crisis. (Keep in mind however, that the media calls Roubini 'Dr Doom', because he is an incurable pessimist about the global market outlook. He's not going to 'buy the dip' anytime soon).

As a result, the Indian government has grown cautious. The Indian Finance Ministry’s recent report noted that geopolitical conflicts may further strain the supply chains of oil, natural gas, metals and fertilizers, as well as commodities like wheat and sunflower oil. This may push up India's inflation levels again in 2023. RBI economists say that the fight against high inflation is likely to be ‘dogged and prolonged’.

Oil producers are not helping. In an effort to keep oil prices high, the OPEC nations announced a production cut of two million barrels per day for crude oil, the highest cut since 2020. Accordingly, brokerages like Morgan Stanley and Goldman Sachs have raised their crude oil price forecasts for Q1-2023 to $100/bbl and $115/bbl respectively. This might worsen inflation in India and put pressure on its trade deficit.

Citing these concerns, analysts have cut growth forecasts for Indian GDP growth to below 7% in 2022. Although India will still be the fastest growing economy among the major nations, it may not come out unscathed in this global turmoil.

Screener:Outperformers with healthy growth in recent results, and strong FY23 estimates

As the Q2FY23 results start to roll in, we take a look at companies which have seen a jump in their revenues and net profits. This screener shows stocks that reported high YoY revenue growth and net profit growth in Q2FY23, and are also expected to post strong growth in FY23.

The screener is dominated by major Banks and NBFCs as well as IT Consulting & Software companies. Notable stocks are CreditAccess Garmeen, Canara Bank, Axis Bank, Avenue Supermarts and Syngene International.

CreditAccess Grameen saw a net profit growth of 2.7X in Q2FY23. All of CreditAccess' operating parameters rose to pre-covid levels, as its net customer base jumped to its highest level since March 2020, and return on assets touched pre-covid levels of 4%. Trendlyne’s Forecaster sees its annual net profit growing over 2X in FY23.

Canara Bank’s net profit in Q2FY23 grew 2.5X. The company beat forecaster estimates for revenue and net profit in Q2FY23 by 5.4% and 21.3% respectively. The bank’s asset quality has improved, as its gross and net non-performing assets declined by 205 bps YoY and 102 bps YoY, respectively.

Avenue Supermarts’ net profit grew by 64% YoY in Q2FY23. BNP Geojit Paribas believes that the company has strong recovery potential due to its healthy balance sheet, with no debt and strong operational efficiency. Forecaster expects the company’s net profit to jump 70% in FY23.

You can find some popular screeners here.

The Baseline

28 Oct 2022

Five Interesting Stocks Today

IDFC First Bank: This bank’s stock rose 4% on Monday during Muhurat trading after reporting robust results for Q2FY23. Its net profit rose 3.6X YoY to Rs 555.6 crore, beating Trendlyne’s Forecaster estimates by 19.5%. It also reported an increase in net interest income by 32% YoY and a drop in provisions by 11% YoY. The asset quality of the bank improved significantly as gross NPAs fell 109 bps YoY to 3.2%. The management says that NPAs in the retail and commercial segments have improved, contributing to the overall gain in asset quality.

The stock makes it to the screener of companies with increasing net profit for the past four quarters. It also shows up on a screener which lists stock in the PE Buy Zone with a reasonable durability and rising momentum score. The stock also performed decently in the last 90 days as it rose nearly 60% and over 20% in the last month.

The bank also saw a rise in advances with credit card and gold loans growing by more than 100% in Q2FY23. V Vaidyanath, Managing Director & CEO of IDFC First Bank, says that the growth momentum for the bank is likely to continue and expects loan advances to grow by 20-25% for FY23-24.

However, analysts maintain a diverse view of the stock. ICICI Securities downgraded its rating for the stock from ‘Buy’ to ‘Hold’ as the bank’s credit cost increased to 1.2% in Q2FY23 from 0.9% in Q1. Even though the management has plans to reduce credit costs to less than 1.5% in FY23, analysts at ICICI Securities remain sceptical. Motilal Oswal remains bullish on the stock with a ‘Buy’ rating. It expects loans to grow by 24% CAGR over FY22-24E. It also expects credit costs to moderate in the coming quarters. However, Trendlyne’s consensus estimates show a mixed view as five analysts recommend a ‘Buy’ while seven, a ‘Hold’ or ‘Sell.’

Dodla Dairy: This dairy company’s stock price rose nearly 5% in reaction to its strong Q2FY23 results. Dodla Dairy’s revenues increased by 22% YoY on the back of a gradual rise in selling prices coupled with strong demand for milk and value-added products during the festive season. With such strong Q2 results, Dodla comes up in the screener of companies that posted the best results in the past week in terms of YoY net profit and revenue growth.

The company’s average milk procurement and sales rose over 10% YoY in Q2FY23. In addition, Dodla's revenue from exports registered a strong growth of 70.3% YoY in Q2, helping the company to diversify its geo mix. Exports revenue contribution rose over 200 bps YoY to 7.5% in Q2FY23. Dodla’s Q2 revenue growth beat its peers Hatsun Agro Products and Heritage Foods, which derive a majority of their revenue from milk products. In fact, according to Trendlyne’s stock comparison tool, Dodla beats both its peers comfortably in at least 24 out of 37 parameters, including quarterly revenue and net profit growth YoY.

Dodla Sunil Reddy, the Managing Director of Dodla Dairy said the company was committed to strengthening its procurement network and continues to look for organic and inorganic growth opportunities. Post Dodla’s Q2 results announcement, ICICI Securities maintained its ‘Buy’ rating on the dairy company and raised the target price marginally to Rs 620, indicating an upside of 20%.

United Spirits: This leading alcoholic beverages company posted a strong quarterly net sales growth of 17.7% to Rs 2,879.7 crore in Q2FY23. Net sales of the Prestige & Above segment were up 23.1%, driven by innovation and renovation in the previous quarters.The Popular segment’s net sales rose 1.7%. The company’s net profit was up substantially at Rs 553.1 crore, supported by the gain from its recent slump sale transaction.

Its gross margin fell QoQ and was at 39.5% due to inflationary pressures. Motilal Oswal maintains its ‘Neutral’ call on the stock with a target price of Rs 880, as it expects gross margin pressures to continue.

Hina Nagarajan, Managing Director and CEO at Diageo India, said the company had delivered a quarter of strong top-line growth and resilient bottom-line performance. She also said that the company is focused on maintaining the momentum while driving revenue growth management initiatives and ramping up productivity across the value chain.

ICICI Direct is optimistic and has a healthy outlook on United Spirits’ growth. It maintains its ‘Buy’ rating, with a target price of Rs 1,050.

Trendlyne’s forecaster expects the company’s EPS to grow by 4.7% in FY23. It makes it to the screener with companies having strong annual EPS growth.

Multi Commodity Exchange of India: The stock of this commodity derivatives exchange gained nearly 15% ever since it announced its Q2FY23 results on October 22. The stock was also among the top-10 index outperformers for the past week. The company’s net profit jumped close to 2X YoY, backed by a robust rise in topline.

The revenue growth for MCX India was mainly driven by a 5X jump in average daily notional turnover reported for the options segment. The options turnover also saw a strong sequential growth of over 60% in Q2FY23. Within the options segment, it was the energy division which drove the astronomical rise in daily turnover. Options on crude oil and natural gas are the main products within this division of MCX. The heightened volatility in oil and gas prices has shifted all the action here. In contrast, the average daily turnover for the futures segment fell both YoY and QoQ. According to the management, options are the future of all types of markets, be it equities or commodities. More and more traders are switching to an options contract, owing to higher margins required for a futures contract. Recognizing this trend, the company will launch a monthly options contract for gold soon.

There is one major overhang that remains for this stock. MCX is set to shift to a new platform developed by TCS from January 2023. The new platform is currently in the user testing phase and mock trading will begin from November. The successful transition to this new platform is now critical for MCX, according to its management. MCX also renewed its contract with 63 Moons at ‘exorbitant rates’ to ensure smooth operations in the transition period. The impact of higher software costs will be visible in the next quarter.

Hindustan Unilever (HUL): This FMCG company’s Q2FY23 net profit rose 22.2% YoY and revenue grew 16.1% YoY beating the street’s expectations. It beat Trendlyne’s Forecaster profit estimates by 7.9% and shows up on the screener for companies with increasing profits sequentially over the last four quarters. The management attributed its growth to price hikes and market share gains. Despite the robust performance, the stock has dropped nearly 5.1% till Thursday since announcing its Q2FY23 results on October 21.

The downtrend in the stock’s price is mostly due to a contraction in its EBITDA margin and lower-than-expected volume growth. EBITDA margin fell 180 bps YoY to 23.3%, while volume rose by 4% YoY. Margin pressures persist as key commodity prices of crude oil, soda ash, and milk powder are 30-55% higher compared to last year, according to reports. A depreciating Indian rupee amid elevated commodity prices made matters worse. The only commodity to decline compared to last year was palm oil. To pass on the benefit of lower palm oil prices to its customers, the firm reduced the prices of its skin cleansing products in October. HUL expects this to improve volumes, but reports suggest volume growth is contingent upon demand recovery.

The management expects growth to be price-led in the near term, as commodity prices would remain volatile. The company plans to increase its advertising & promotion spending to drive volume growth. With its focus on premiumisation and market share gains, the firm expects margin expansion in the medium-to-long term.

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

The Baseline

24 Oct 2022, 01:21AM

Eight Diwali Picks from Analysts with High Upside

By Abhiraj Panchal

This week, we bring you a list of stocks where analysts are expecting fireworks. We identify Diwali picks with siginficant upside from ICICI Direct, KR Choksey, Edelweiss and HDFC Securities.

ICICI Direct’s Top picks for Diwali are Laurus Labs and Havells India, among others.

Laurus Labs: ICICI Direct gives this pharmaceutical company a ‘Buy’ …

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This week, we bring you a list of stocks where analysts are expecting fireworks. We identify Diwali picks with siginficant upside from ICICI Direct, KR Choksey, Edelweiss and HDFC Securities.

ICICI Direct’s Top picks for Diwali are Laurus Labs and Havells India, among others.

Laurus Labs: ICICI Direct gives this pharmaceutical company a ‘Buy’ call with a target price of Rs 675, indicating an upside of 38.8%. The brokerage mentions a buying range between Rs 485-510. The company has 11 manufacturing units with 74 drug master files, 32 abbreviated new drug applications filed and 192 patents granted. In addition, it has also acquired Richore Life Sciences to diversify in the area of recombinant animal-origin-free products.

Analyst Pankaj Pandey says, “Formulations are expected to do well on account of product launches in anti-diabetic (FY23) and CV portfolio (FY24) in the US and Europe.” He adds, “Laurus has multiple planned capacity expansions in the portfolio based on complexity and scale towards strengthening and diversifying the business.” He remains optimistic about the company on the back of its focus on custom synthesis business, stable order book, increasing reactor volume, expansion, product launches, and capacity expansion.

Havells India: Pandey also gives a ‘Buy’ call to this home appliance manufacturer with a target price of Rs 1,650 and mentions buying range of Rs 1,220-1,320. This indicates an upside of 41.5%. He says, “Havells has a strong presence in the organised product category with market share ranging at 6-20%.” He also adds that the company is constantly working on new product launches and increasing penetration in tier-two and tire-three cities.

The electronic goods manufacturer has plans to spend Rs 700- 800 crore in FY23 to expand manufacturing capacities. ICICI Direct expects Havells to report a revenue CAGR of 16% over FY22-24 led by new product launches, and dealer expansion, and with softening of raw material prices estimates that profit will register a strong CAGR of 20% over FY22-24.

KR Choksey’s Diwali Picks include Aarti Industries and Devyani International.

Aarti Industries: KR Choksey maintains a ‘Buy’ call on this specialty chemicals company with a target price of 1,094, indicating a significant upside of 61.4%. Vikrant Kashyap and Saptarshi Mukherjee say, “Aarti Industries has been witnessing higher volume offtake and better realisation for its products.” They add, “Aarti’s continued focus on value-added products coupled with operating leverage has been helping the company to maintain better profitability.”

According to Kashyap and Mukherjee, the specialty chemicals manufacturer has planned a capex of Rs 30 billion over FY23-24 to capitalise on the robust demand of the specialty chemical sector. The analysts remain positive on the company as it continues to focus on the large opportunity arising from import substitution and supply chain diversification by global majors.

Devyani International: Kashyap and Mukherjee also keep a ‘Buy’ rating on this quick service restaurant (QSR) company with a target price of Rs 230, indicating an upside of 19.9%. The analysts are positive about the company’s prospects given its aggressive store addition plans, expansion into newer markets, cost efficiency, faster store rollout, and timely price hikes. They also add, “the company reached the landmark of 1,000+ stores in Q1FY23 and the management has guided for 1,000 stores addition in the next four years. Faster store addition and expansion in newer cities will provide visibility for growth.”

Kashyap and Mukherjee also expect the footfall into the QSR company’s stores to continue to improve as out-of-home consumption recovers. They say that an improvement in the dine-in channel has led to an increase in average daily sales. They expect the company’s revenue to grow at a CAGR of 40.5% over FY22-24.

Edelweiss’ Diwali picks include Cholamandalam Investment & Finance Co and Max Healthcare Institute.

Cholamandalam Investment & Finance Co: Edelweiss keeps its ‘Buy’ rating on this non-banking finance company (NBFC) with a target price of Rs 827. This indicates an upside of 16.1%. Analysts at Edelweiss expect the company’s new businesses to drive growth in the coming quarters. These new businesses are the consumer & small enterprise loan segment, secured business & personal loan segment and small & medium enterprise loan segment. The analysts believe that the NBFC’s management has shown an ability to scale up new businesses fairly quickly while maintaining its return ratios and asset quality. They also add that the company “has been able to deliver robust return ratios while maintaining a robust growth trajectory”.

The analysts expect the NBFC’s asset quality to recover from the spike in non-performing assets in FY22 due to Covid-related issues and change in asset quality reporting norms for NBFCs. They see collections normalising and asset quality drastically improving by FY24. They expect the company’s net profit to grow at a CAGR of 23% over FY22-24.

Max Healthcare Institute: Edelweiss also maintains its ‘Buy’ rating on this healthcare facilities company with a target price of Rs 470. This indicates an upside of 14.4%. The analysts at Edelweiss are optimistic about the company as its non-Covid business is recovering on the back of the normalisation of outpatient department (OPD) footfalls and annual price revisions. They see this leading to an improvement in the overall average revenue per bed occupied (ARPOB). They also anticipate revenue from international patients to reach pre-Covid levels as international travel resumes.

The analysts expect EBITDA margins to steadily improve as they see the hospital’s plans to reduce the bed occupancy of its institutional business to 15% in two years from 31%. The pricing in the institutional business segment is at a 30-40% discount compared to other segments. “The healthcare company aims to add over 4300 beds in the next five to seven years”, they note. Overall, its a strong outlook for Max Healthcare given its rising ARPOB, expansion plans, and focus on scaling up.

Bharat Dynamics and Deepak Fertilisers & Petrochemicals Corp are among HDFC Securities’ Diwali picks. The brokerage mentions ‘till next Diwali’ as the time horizon for the targets.

Bharat Dynamics: HDFC Securities recommends a ‘Buy’ call for this Aerospace and defence company with a target price of Rs 1,022, and recommends adding more till a dip of Rs 774. The target implies an upside of 6.9%. The analysts say, “The company benefits from the government’s thrust on indigenous guided weapon system production, supporting a healthy order pipeline and revenue visibility.” They also note that the defence player has a strong manufacturing base and possesses execution capabilities to capitalise on the government’s Make in India and Atmanirbhar Bharat policies.

The analysts add, “Strong revenue visibility, backed by a robust pipeline, large projects being awarded (Akash and next-gen anti-tank guided missiles are expected to be awarded soon) and a focus on indigenisation and internal efficiency are likely to fuel earnings growth.” They expect revenue and profit to grow at a CAGR of 26.7% and 17.7% respectively over FY22-24.

Deepak Fertilisers & Petrochemicals Corp: HDFC Securities also gives this agrochemicals company a ‘Buy’ call with a target price of Rs 1,058 and recommends adding more till a dip of Rs 791. The target price indicates an upside of 2.6%. The analysts expect a revenue CAGR of 14% led by strong growth and estimate an EBITDA margin in the range of 18-20% over the next two years. They believe that strong revenue and a steady margin could drive a 17.5% CAGR in net profit.

The analysts say, “The long-term growth of the company is expected to be underpinned by a change in its product mix, headroom availability of additional capacities emerging from better operational management, and de-bottlenecking, along with greenfield expansions.” They remain optimistic on the back of strong growth, high regulatory entry barriers, improving capacity utilisations, and a strong uptick in return ratios.

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

(You can find all analyst picks here)

The Baseline

21 Oct 2022

Chart of the week: Best performing IPOs of 2022

By Abdullah Shah

2022 has seen 109 initial public offerings (IPO) listed to the Indian exchanges. With two months to go, we are already closing in on the 117 number - which was the total IPOs listed in 2021. In this week’s chart of the week, we take a look at the best performing IPOs listed in 2022.

The best performing IPO of the year is telecom company Steelman Telecom which has risen 135.3% since its listing. The IPO was listed on October 10 with an issue size of Rs 26 crore at an issue price of Rs 96 per share. The company offers support services and solutions to address the network requirements of the Telecom industry. The stock is currently trading at around Rs 225.

The second best performing IPO of 2022 is snack business Annapurna Swadisht, which has risen 129.7% since its listing on September 27. The issue size of the IPO was Rs 30.3 crore with an offer price of Rs 68 per share, and it has been trading at around Rs 155 since its listing. The IPO was 133.4x oversubscribed. The company is a manufacturer of snacks and food products like fryums, cakes, candies, namkeen, chips, and gohona bori.

Telecom equipment manufacturer Frog Cellsat comes third, with a 79.5% rise in price since its listing on October 13. The IPO debuted with an issue size of Rs 41.6 crore at an issue price of Rs 102 per share. The company manufactures telecom equipment like 2G/3G/4G multi-band digital RF repeaters, multi-band frequency shift repeaters, multi-band optical DAS systems, relative software, and accessories. The stock has been trading at around Rs 195, at a substantial premium to its issue price.

The fourth best performing IPO is electronics retailer Electronics Mart India, which has risen 60.9% since its listing. The IPO listed this month on October 17 with an issue size of Rs 500 crore at an issue price of Rs 59 per share. The company offers a range of products with a focus on large appliances, air conditioners, televisions, washing machines, refrigerators, and also mobiles and small appliances, IT and others. Last traded price of the IPO was Rs 93.

See the full list of most successful IPOs

The Baseline

21 Oct 2022

Five Interesting Stocks Today: Results Edition

KPIT Technologies: This IT Consulting & Software company fell nearly 7% in intraday trade on Wednesday after announcing its Q2FY23 results but recovered to close only 1.7% lower. The company’s net profit in Q2 declined 2.3% QoQ despite its revenue rising 8.6% QoQ. The fall in profitability is due to rising employee benefit costs and other expenses, which also led to a decline in its EBIT margin by 90 bps QoQ to 14.2%. The stock makes it to the screener for companies with revenues rising sequentially over the past eight quarters.

The recovery in the stock price despite its weak Q2 performance is due to the management raising its revenue guidance for FY23. It revised the organic revenue growth guidance to 23% from 18-21% and the constant currency (CC) revenue growth guidance to 31-32% for FY23. The management’s revenue guidance seems to be higher than the street’s expectations as Trendlyne’s Forecaster estimates the company’s revenue to grow by 20.7% in FY23.

The management expects organic growth across all its business segments, led by strategic clients. It is especially optimistic about the demand from vehicle manufacturers as they are heavily focusing on software-defined vehicles, which augurs well for the company. The software firm bagged new deals with a total contract value (TCV) of $142 million in Q2. The CEO and Managing Director, Kishor Patil cites a healthy order pipeline and expectation of winning more deals in the next 3-4 months for increasing the revenue guidance for FY23. Along with the anticipation of higher demand, the company also expects attrition rates to fall in the coming quarters.

Polycab India: This consumer durables stock touched its 52-week high on Wednesday after it reported an increase in net profit by 37% to Rs 270.5 crore in Q2FY23. Despite falling commodity prices and inflationary pressures, revenue was up 11% YoY on the back of strong volume growth in the cables and wires business. The company’s revenue and net profit beat Trendlyne’s Forecaster estimates by 10.1% and 9.7%, respectively. Its EBITDA margin grew sequentially to 12.8% during the quarter.

ICICI Securities remains optimistic about the company considering its competitive advantages and growth prospects in the consumer durables sector. It raised the target price to Rs 2,700 from Rs 2,250. However, it maintains its ‘Hold’ rating on the stock as it is cautious about the possible increase in input prices.

Polycab shows up on a screener with stocks that have high TTM EPS growth. This is in line with Trendlyne’s Forecaster estimates that expect the company’s EPS to grow by 25.1% in FY23. It also makes it to the screener with stocks that outperformed their sectors in the past month.

Ultratech Cement:This cement stock has underperformed its industry by 10.8% in the past 90 days, which is not a surprise given that Q2 is a seasonally weak quarter for the cement industry. However, the stock rose for six consecutive sessions until it declared its Q2FY23 results. Its net profit fell 42.5% YoY to Rs 756 crore dented by high energy costs causing the stock to fall by 1.7% on Thursday. It missed Trendlyne’s Forecaster estimate by 8.5%. But the company reported an increase in net sales by 15.8% YoY.

Although profitability fell, the management expects demand to improve post the festive season. They even gave a double-digit volume growth guidance for FY23-24. The company has capex plans worth Rs 6,000-7,000 crore to be rolled out for FY23 and FY24. Also, an additional capacity of 15.4 million tonne per annum is to be added in H2FY23 increasing total capacity to 131.3 million tonne per annum which will aid revenue growth in the second half of the year. ICICI Direct expects Ultratech’s capacity to grow by nearly 10% CAGR as against the industry capacity growth of 7.2% over the next three years.

Also, with the price hikes taken in September and further hikes expected post-Diwali, the company’s EBITDA earnings are likely to improve. IDBI Capital expects EBITDA to improve by 2-10% in FY23-24.

The only hindrance to growth lies with the high energy costs. Pet coke – a key raw material, saw a fall in its prices to $170 per tonne in Q1FY23. But prices have again increased to $205 per tonne. Imported coal prices are still high. And although crude prices cooled off a bit, the prices are likely to hover around $90 per barrel because of production cuts taken by OPEC. Ultratech Cement’s management expects fuel costs to fall in H2FY23 but remains cautious given the volatility and tightening crude oil supplies. Despite these risks, Forecaster’s consensus estimate shows 36 analysts recommending a ‘Buy’ on the stock.

Tata Elxsi: The stock of this engineering, research and development player fell nearly 13% since it declared its Q2FY23 results on October 14. This is despite the fact that the company saw strong sequential growth of nearly 5% and YoY growth of over 25% in its revenues. The ER&D player, however, disappointed investors on the earnings front. Its net profits fell nearly 6% on a QoQ basis owing to the sharp compression in margins.

Tata Elxsi saw its EBITDA margins contract by nearly three percentage points sequentially in Q2FY23. The company went on a fresh hiring spree and onboarded the highest-ever no. of employees in Q2. Tata Elxsi also had to make investments in building a new leadership team at the mid-and senior-management levels as it was facing a supply crunch there. These factors coupled with the expansion of facilities at centres like Bengaluru, Chennai and Pune caused a material fall in its EBITDA margins. This ultimately weighed negatively on the bottom line of the company. Tata Elxsi missed the consensus estimates of analysts on Q2 net profits by nearly 7%. Since its PE valuations are also pricey at 69X, the market came down heavily on the stock. The concerns on the cost and supply front are not the only factors worrying the investors.

While Tata Elxsi witnessed strong sequential growth in its transportation and healthcare segment, its media and communication segment was essentially flat. According to the management, media clients in the US and Europe deferred decisions to sign new deals to a later time. Key clients are now on a wait-and-watch mode and are being a little careful with their R&D spends. Notably, the media segment contributes over 35% share to the company’s revenues. Hence, the slowdown in this segment has spooked investors even though the outlook for transportation and healthcare segments continues to be robust.

PVR: This multiplex operator’s share price fell marginally on Monday after it announced its Q2FY23 results. PVR’s net losses narrowed to Rs 71.2 crore from Rs 153.1 crore in Q2FY22 with its revenue jumping 5.7X YoY. But this did not excite the investors as both revenue and net profit missed Trendlyne’s Forecaster estimates.

PVR’s lower-than-expected earnings could be attributed to the underperformance of Bollywood movies in Q2. The average gross collection of the top five Bollywood movies for PVR dropped by 37% to Rs 25.6 crore over the pre-pandemic base (Q2FY20). Regional movies’ contribution rose to 44% in Q2FY23 against 28% in Q2FY20. This outperformance of regional movies vs Bollywood movies could diversify the genre and regional risk for multiplex operators. However, footfalls overall were 39% lower than a comparable pre-COVID quarter. But the management is focused on improving admissions back to cinema halls and expects a full recovery in footfalls to pre-Covid levels by the end of FY23.

Despite a revenue miss in Q2, brokerages maintain a positive outlook on PVR on the back of a strong content slate in the near term. The company shows up in the screener that lists stocks with high analyst ratings with at least a 20% upside. Investors are also looking ahead to PVR’s merger with Inox Leisure, which is expected to be completed in three months. Inox’s revenue jumped nearly 8X in Q2FY23. According to Trendlyne’s comparison tool, Inox outperforms PVR on 27 out of 40 parameters including YoY revenue and net profit growth.

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

The Baseline

17 Oct 2022

Five analyst picks with high target upside

By Suhas Reddy

HCL Technologies: Motilal Oswal reiterates its ‘Buy’ call on this IT consultancy company with a target price of Rs 1,240. This indicates an upside of 24.6%. In Q2FY23, HCL reported an increase in net profit of 6.3% QoQ to Rs 3,489 crore (2.8% higher than the brokerage’s estimate) and an increase in revenue of 4.4% QoQ to Rs 24,922 crore. Analysts Mukul Garg and Raj Prakash Bhanushali note that the revenue growth was led by IT services, and engineering, research and development verticals.

Garg and Bhanushali say, “Strong sequential growth within services, robust headcount addition, healthy deal wins, and a solid pipeline indicate an improved outlook.” Given the company’s abilities in the digital space, its strategic partnerships, and investments in the cloud, analysts expect HCL Technologies to emerge stronger on the back of an expected increase in enterprise demand for these services.

Havells India: ICICI Securities maintains a ‘Buy’ call on this consumer durables company with a target price of Rs 1,621, indicating an upside of 31.1%. Aniruddha Joshi, Manoj Menon, Karan Bhuwania and Pranjal Garg say, “While consensus appears concerned about higher copper prices hurting earnings and stock price movement, we note there is a strong positive correlation (0.8) between copper prices and revenues and EBITDA of Havells.” They add that while copper prices increased at a CAGR of 8.5%, the company’s revenue grew at 15.3% CAGR over FY09-22.

The analysts, while settling down the concern about inflation add, “Havells has historically been able to initiate pricing action to pass on additional costs and maintain/improve margins. With steady earnings growth, the stock price has also improved in spite of volatility in copper prices.” They remain positive on the company on the back of strong moats and growth opportunities.

Tata Consultancy Services: KRChoksey upgrades its rating on this IT consulting & software company to ‘Buy’ from ‘Accumulate’ with a target price of Rs 3,739. This indicates an upside of 20.6%. Analyst Saptarishi Mukherjee is bullish on the stock despite its Q2FY23 revenue and net profit being marginally below the brokerage’s estimate. The analyst is positive about the company’s future growth prospects as all its business verticals grew on a sequential basis.

Mukherjee sees TCS’s deal booking of $ 8.1 billion in Q2 as an indication that the demand for its services is healthy and stable. He adds “Operating margin is expected to improve on the back of lowering the sub-con cost, improvement in retention, pricing, and efficiency”. Overall, he believes the company is well-positioned to weather global macro uncertainties given its size, market leadership, and robust order book to deliver industry-leading growth in the coming quarters. The analyst expects the software giant’s revenue to grow at a CAGR of 13.6% over FY22-24.

Titan: Sharekhan maintains its ‘Buy’ rating on this jewellery & watch manufacturer with a target price of Rs 3,140. This implies an upside of 19.7%. The analysts at Sharekhan expect the company’s consolidated revenue to grow 20% in Q2FY23. They expect this growth to be led by the jewellery and watches segments after the company announced its pre-quarter business update. The firm’s standalone jewellery and watches segment grew by 18% and 20%, respectively. “The strong tailwind demand led by a desire to own more premium watches helped brand Titan grow fastest in the watches category aided by higher volume and average selling prices YoY”, the brokerage adds.

Analysts at Sharekhan are optimistic about the company’s future growth prospects given its aim to increase its revenue at a CAGR of 20% over FY22-27. They also believe that its consistent margin improvement will improve cash flow in the coming quarters. The analysts expect the company’s financial performance in FY23 to be strong due to a low base in its core businesses. They estimate the firm’s revenue to grow at a CAGR of 22.1% over FY22-25.

Bharti Airtel: Axis Direct maintains its ‘Buy’ rating on this telecom services company with a target price of Rs 875, implying an upside of 13.9%. The analysts at the brokerage expect data consumption in India to increase in the coming quarters, which they believe augurs well for the company. They add that in Q1, “The company continued a strong share of 4G net ads in the market as the 4G customer base grew by 4.5 million QoQ to reach 195.5 million”. The home business segment also saw a healthy addition of new customers, write the analysts.

Axis Direct is bullish on Airtel’s future growth as its revenue has consistently been rising sequentially, with growth across its business verticals. Positives here include the company’s efficient execution, superior customer mix, and strong customer additions in 4G will aid margins. The analysts expect Airtel’s net profit to grow at a CAGR of 39% over FY22-24.

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

(You can find all analyst picks here)

The Baseline

14 Oct 2022

Despite ‘September effect’, MFs make fresh buys in FMCG, Capital goods stocks

By Ketan Sonalkar

Traders often talk about the September Effect - that since 1928, indices have historically seen a decline during this month. And 2022 was no exception, as the benchmark Nifty index fell by 3.7% and retreated from the highs made in August. The month saw rising uncertainty around the Russia Ukraine war, and the US Fed and other Central Banks hiking rates to control inflation and the rise in oil prices.

Despite this, mutual funds found buying opportunities in stocks that hold future potential. This month also saw a lot of recently launched schemes add stocks to their portfolios. This month's buys include a life insurance company, FMCG players as well as capital goods manufacturers.

This list is based on a screener where the mutual fund holding grew by a certain minimum percentage and at least four schemes bought more than a lakh of shares each.

HDFC Life - Tie up with group company to widen customer base

HDFC Life is one of India’s leading private life insurance companies and part of the HDFC Group. It has been gaining market share and also has better operating metrics than other private insurers.

In September 2022, it partnered with another group company, general insurance player HDFC ERGO, to provide a combination of life insurance along with health insurance. This is expected to further widen its customer base. Another positive development for HDFC Life includes the approval of the merger of Exide Life with HDFC Life from the NCLT.

Fund managers who bought shares of HDFC Life

Shares of HDFC Life were added to respective schemes by Mahesh Patil for Aditya Birla Sun Life Frontline Equity Fund Growth, Hiten Shah for Kotak Equity Arbitrage Fund Growth, Aniruddha Naha and A. Anandha Pabmanabhan for PGIM India Flexi Cap Fund Regular Growth as well as Vinay Sharma and Kinjal Desai for Nippon India Banking & Financial Services Fund Growth.

CG Power - Railway orders put the company on the fast track

CG Power (CG Power and Industrial Solutions) is a manufacturer and distributor of electrical equipment such as transformers, reactors, and other control equipment. It also manufactures industrial motors and pumps, and communication systems.

Indian Railways, which is undergoing dynamic growth in both freight and passenger transportation, has fueled CG Power with various opportunities for future growth. Indian Railways continue to give orders to CG Power for electrification, signaling system upgrades, and high horsepower locomotives. The company has also approved a capex of Rs 32 crore for the railway business. The motors business, which constitutes around 78% of the CG Power product portfolio, has also been issued a capex of Rs 80 crore.

Fund managers who bought shares of CG Power

Buying interest in CG Power saw addition to portfolios by Atul Bhole and Dhaval Gada toDSP Flexi Cap Fund Payout of Income Dist cum Cap Wdrl, Vinit Sambre and Resham Jain to DSP Midcap Fund Growth, Shridatta Bhandwaldar to Canara Robeco Flexi Cap Fund Growth and Atul Bhole and Vikram Chopra to DSP Equity & Bond Fund Growthschemes respectively.

Triveni Turbine - Robust demand and capacity expansion drive interest in the stock

Triveni Turbine is the domestic market leader in steam turbines up to 30 MW. The company designs and manufactures steam turbines up to 100 MW, and delivers end to-end solutions to customers.

In Q1FY23 it registered a robust revenue growth of 40.7% to Rs 259 crore supported by 59% YoY increase in export business, while domestic business increased by 32% YoY. The management expects execution to pick up pace and to generate 35% top-line growth in FY23. This is backed by its expansion plans with the addition of a new bay in the Sompura plant. This is expected to augment the space for assembly and testing of steam turbines at the factory. The management expects this to be complete in Q2FY23 and post the expansion, the capacity will rise from 150-180 machines to 200- 250 machines per annum.

Fund managers who bought shares of Triveni Turbine

Fund managers who bought Triveni Turbines include Sohini Andani and Mohit Jain for SBI Magnum Midcap Fund Regular Growth, Mahesh Patil and Dhaval Shah for Aditya Birla Sun Life Multi-Cap Fund Regular Growth, Vishal Gajwani for Aditya Birla Sun Life Small Cap Fund Growth and Sudhir Kedia and Ravi Gopalakrishnan for Sundaram Flexi Cap Fund Regular Growthschemes respectively.

Dabur - Expanding product range and good monsoon to provide a boost

Dabur is one of India’s largest FMCG companies with a presence in segments like health supplements, oral care, hair care, home care and juices. Dabur also derives around 50% of its sales from rural regions with a presence in 90,000 villages.

Dabur introduced new products across categories in the past few months. These include the premium tea segment with the Vedik Tea brand. It has also entered a new segment of peanut butter. Dabur is also pushing its marketing strategy by hiring Amitabh Bachchan as their brand ambassador. Another factor favourable to Dabur is a good monsoon season which is expected to boost the rural economy, a major contributor to its sales.

Fund managers who bought shares of Dabur

Fund managers who added shares to respective schemes include Mahesh Patil for Aditya Birla Sun Life Frontline Equity Fund Growth, Yogesh Patil forLIC MF Large & Mid Cap Regular Growth andLIC MF Large Cap Fund Growth, and Hiten Shah forKotak Equity Arbitrage Fund Growth.

Sundram Fasteners - Rebound in the auto sector drives growth

Sundram Fasteners manufactures a range of high tensile fasteners for precision-driven sectors like Automotive, Wind Energy, Aviation, Farm Equipment and Infrastructure. They specialize in cold extruded and precision forged parts used in two-wheelers, front wheel drive vehicles and internal combustion engines.

The company has planned a capex with fresh investments worth Rs 400 crore over the next two years as it sees bright prospects for the Indian automobile sector. The powertrain components division had won contracts worth Rs 150 crore for EV products in July 2022.

Fund managers who bought shares of Sundram Fasteners

Addition of shares of Sundram Fasteners was done by Harish Bihani and Sharmila D’mello to ICICI Prudential Long Term Equity Fund (Tax Saving) Growth andICICI Prudential Smallcap Fund Growth, Samir Rachh and Kinjal Desai to Nippon India Small Cap Fund - Growth and Vishal Gajwani to Aditya Birla Sun Life Small Cap Fund Growth.

Tata Chemicals - Strong leadership to be further strengthened with capacity expansion

Tata Chemicals is one of the top five players in the global soda ash market. The company manufactures soda ash, sodium bicarbonate, cement, salt, marine chemicals and crushed refined soda along with other specialty chemicals. Basic chemicals form 75% of overall revenue while the rest comes from specialty products.

The company posted its highest ever quarterly revenues and net profits in Q1FY23. In the Q1FY23 results management commentary, they said that demand for soda ash is strong in spite of high prices. Demand is also robust from the detergent and glass industry. They expect better growth from solar panels to aid demand for the glass industry and thereby soda ash.

The company has expansion plans with a capex of Rs 1,100 crore in progress where the capacity of soda ash will increase by 2.3 lakh MT, bicarb by 0.7 lakh MT and salt by 3.3 lakh MT.

Fund managers who bought shares of Tata Chemicals

Buyers of Tata Chemicals for respective schemes include Pankaj Tibrewal for Kotak Small Cap Growth, Kayzad Eghlim and Priyanka Khandelwal for ICICI Prudential Equity Arbitrage Fund Regular Growth, Sailesh Jain for Tata Arbitrage Fund Regular Growth and Neeraj Kumar and Arun R. for SBI Arbitrage Opportunities Fund Regular Growth.

Interglobe Aviation - Demand for air travel crosses pre Covid levels

Interglobe Aviation, more commonly known as Indigo is one of India’s low cost carriers (LCC) with a market share of 54% in the Indian aviation sector.

The airline industry which was affected badly during the pandemic is now bouncing back in FY23. Indigo operated at a load factor of 80% in Q1FY23. The rising load factor was driven by a strong rebound in leisure & corporate travel. Further, international travel has normalised and has reached its precovid levels.

Indigo in September also announced that it has entered freight services. Its first freight plane was one that was converted from a passenger plane. The freight carriers will be able to service markets between China in the east and the Gulf in the west, as well as the CIS countries to the north, according to the management. IndiGo also said it will be utilising the same pool of pilots and engineers that fly and service its current fleet for the cargo planes.

Fund managers who bought shares of Interglobe Aviation

Shares of Indigo were bought by Manish Gunwani and Kinjal Desai for Nippon India Growth Fund - Growth, Atul Penkar and Dhaval Gala for Aditya Birla Sun Life Tax Relief 96 Pyt of Inc Dis cum Cap Wdrl, Sailesh Jain for Tata Arbitrage Fund Regular Growth and Mahesh Patil for Aditya Birla Sun Life Frontline Equity Fund Growthschemes respectively

Syngene - New international deal to have significant long term impact

Syngene International serves pharmaceutical, biotechnology, nutrition, animal health, consumer goods and speciality chemical companies globally, with a range of integrated research services for the clinical development and manufacturing process.

Recently Syngene signed a 10-year biologics manufacturing agreement with leading animal health company, Zoetis. It will manufacture the drug substance for Librela (bedinvetmab), a monoclonal antibody used for treating osteoarthritis in dogs. According to the management, this agreement paves the way for development and manufacturing of other molecules in the coming years and is expected to be worth $500 mn to Syngene over 10 years, subject to regulatory approvals and market demand.

Fund managers who bought shares of Syngene

Addition of shares of Syngene was done to respective schemes by Harish Bihani and Sharmila D’mello for ICICI Prudential Long Term Equity Fund (Tax Saving) Growth and ICICI Prudential Smallcap Fund Growth, Gaurav Misra for Mirae Asset Focused Fund Regular Growth, and Pranav Gokhale and Amit GanatraInvesco India Growth Opportunities Fund Growth.

Hatsun Agro Products - Expansion to a pan India brand drives revenue growth

Hatsun Agro Products manufactures and markets dairy products like milk, curd, ice creams, dairy whitener, skimmed milk powder, ghee, paneer and other milk based products. The Q1FY23 results recorded highest ever quarterly revenues at Rs 2,020 crore. This was the result of expanding beyond its stronghold in South India.

While the company for most of its existence was limited to the southern states, its retail expansion in the last two years helped it reach customers in new markets like Maharashtra, Odisha, West Bengal and Madhya Pradesh. Hatsun Agro Products invested about Rs 450 crore in the last financial year across new manufacturing facilities for capacity expansion in ice cream, milk, curd, milk products and cattle feed.

Fund managers who bought shares of Hatsun Agro Products

Shares of Hatsun were added by S. Bharath and Ratish Varier to Sundaram Mid Cap Growth, Sohini Andani and Mohit Jain to SBI Magnum Midcap Fund Regular Growth, R. Srinivasan and Mohit Jain to SBI Focused Equity Fund Growth and Saurabh Pant and Mohit Jain to SBI Large & Midcap Fund Regular Payout Inc Dist cum Cap Wdrlschemes respectively.

Britannia - Management rejig and and international foray key positive triggers

Britannia, a leading food-products company, sells various brands of biscuits, cakes, dairy products, breads etc. in India as well as globally.

The company recently teamed up with Nairobi-based Kenafric Industries to purchase Catalyst Capital-backed Britannia Foods Ltd. in Kenya in a $20 million transaction that also involved acquiring property and a plant, Mikul Shah, a director at Kenafric, said in an interview. Britannia Industries, unrelated to Britannia Foods, took a controlling stake in the partnership.

The company also saw a change in the top management team with Ranjit Kohli taking over from Varun Berry as the CEO, while Varun Berry was elevated to executive vice-chairman and managing director.

Fund managers who bought shares of Britannia

Buyers in Britannia included Sohini Andani and Mohit Jain for SBI Bluechip Fund Regular Growth, Sankaran Naren and Sharmilla D’mello for ICICI Prudential Focused Equity Fund Growth, Shridatta Bhandwaldar for Canara Robeco Flexi Cap Fund Growth and Neelesh Surana and Ankit Jain forMirae Asset Emerging Bluechip Fund Growthschemes respectively.