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21 Feb 2023

Five High Performing Analyst Picks This Week

This week, we take a look at analyst stock picks which saw positive YoY profit and revenue growth in Q3FY23, with strong Trendlyne Durability, Valuation and Momentum scores.

Oil India: Prabhudas Lilladher keeps its ‘Buy’ rating on this oil exploration & production company, and raises the target price to Rs 305 from Rs 300. This implies an upside of 19.8%. In Q3FY23, the company’s net profit surged by 76% YoY to Rs 2,284.4 crore and revenue grew by 37.7% YoY. Oil India has a high DVM score, with a Durability score of 85, Valuation score of 84.3 and Momentum score of 67.3.

Analyst Avishek Datta attributes the firm’s robust Q3 performance to healthy crude oil and gas realisations, along with increasing demand. He adds that the company’s Numaligarh refinery has had a steady performance.

Datta sees the company’s aggressive production expansion plans as a key positive, and expects oil volumes to increase by 30% and gas volumes to surge by 60% by FY25. The analyst believes, “Oil India’s earnings will ride on new capacity addition across crude oil, natural gas and refinery”. He expects the company’s net profit to grow at a CAGR of 15.7% over FY22-25.

Zydus Lifesciences: KRChoksey maintains its ‘Buy’ rating on this pharmaceuticals company and increases its target price to Rs 610 from Rs 507. This indicates an upside of 30.1%. In Q3FY23, the company’s net profit rose by 24.5% YoY to Rs 622.9 crore and revenue increased by 19.4% YoY. Zydus Lifesciences has a Durability score of 75, Valuation score of 33.3 and Momentum score of 67.7.

Analyst Abhishek Agarwal attributes the company’s growth in Q3 to healthy growth in the key markets of India and the US. He points to new product launches and innovations in the US market as growth drivers. According to the analyst, “Zydus Lifesciences has a strong portfolio of existing products and new US product launches in the pipeline, which provides revenue visibility over the long term.”

Agarwal expects growth in the India formulations business will be led by rising market share in key therapies. The consumer wellness segment will see an expansion in margins in the medium term, he says, due to pricing actions and recovery in rural demand. The analyst anticipates the firm’s revenue to grow at a CAGR of 14.3% over FY22-25.

JK Lakshmi Cement: Axis Direct maintains a ‘Buy’ call on this cement manufacturer with a target price of Rs 840, indicating an upside of 12.8%. In Q3FY23, the company’s net profit increased 19.1% YoY to Rs 76.4 crore, while its revenue grew 20.9% YoY. The company missed the brokerage’s estimates according to analysts Uttam Srimal and Shikha Doshi. JK Lakshmi Cement has a Durability score of 75, Valuation score of 37.5 and Momentum score of 60.8.

The analysts say, “The company is working on many levers – optimising geo-mix, higher production, sale of blended cement, increasing proportion of trade sales, premium and value-added products, logistic efficiency.” They expect the company to post EBITDA growth of 12% CAGR over FY21-24 on the back of better realisation, higher volume and cost-saving initiatives.

Srimal and Doshi are optimistic as the demand for cement remains robust on account of the government’s push for infrastructure development and affordable housing.

Mahindra & Mahindra: HDFC Securities maintains a ‘Buy’ call on this automobile manufacturer and increases the target price to Rs 1,554. It indicates an upside of 15.1%. In Q3FY23, the company’s profit rose 34.7% YoY to Rs 2,676.6 crore, while its revenue grew 30% YoY. Analysts Aniket Mhatre and Sonaal Sharma believe that the higher-than-estimated profit growth is backed by higher other income. Mahindra & Mahindra has a Durability score of 70, Valuation score of 47.5 and Momentum score of 58.9.

According to the analysts, “It is commendable that Mahindra & Mahindra has already achieved most of the targets it earmarked a couple of years ago (like EPS CAGR, improvement in auto margins, RoE at 18%, calibrated asset allocation, etc.) and the management has indicated that it is now time to raise its targets.”

They continue to remain positive about the company on the back of a big order backlog for utility vehicles, positive rural sentiment, strides taken to achieve a strong position in electric vehicles and cautious capital allocation.

Oil And Natural Gas Corp: ICICI Direct updates its rating to ‘Buy’ from ‘Hold’ on this oil and gas producer and gives it a target price of Rs 180, indicating an upside of 16.7%. In Q3FY23, ONGC reported an increase of 5.1% YoY in net profit to Rs 11,489 crore and a 15.7% YoY rise in revenue. Analysts Harshal Mehta and Payal Shah say the results are below estimates due to the decline in crude prices and increase in depreciation. ONGC has a Durability score of 70, Valuation score of 74.7 and Momentum score of 64.5.

The analysts believe that even if gas prices get capped, realisations are likely to remain high as they are well above historical averages, and with the commencement of production from the KG Basin in May, volumes are expected to grow. They add, “Sustained higher crude oil prices and gas realisations can result in better profitability.” Mehta and Shah remain optimistic due to the high dividend yield and payout ratio.

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

(You can find all analyst picks here)

The Baseline

18 Feb 2023

Five Interesting Stocks Today

Siemens: This heavy electrical equipment stock announced its Q1FY23 results on Tuesday with net profit growth of 85.1% YoY to Rs 462.7 crore. Revenue has also increased 17.4% YoY, with growth across segments like smart infrastructure, mobility, and digital industries among others. The stock closed 3% above on Wednesday after its robust results. It touched an all-time of Rs 3,248.05 on Wednesday and then increased again to Rs 3,250 on Thursday. It shows up in a screener of stocks with strong momentum.

The management says that a substantial increase in the outlay for capex in infrastructure and railways in the recent Budget announcements will boost all business segments. After the company received a Rs 26,000-crore locomotive order from Indian Railways on January 16, it entered into the golden crossover zone (SMA 50 day trading above SMA 200 day). Since then, the stock has gained more than 8% in a month.

ICICI Securities and Prabhudas Lilladher remain positive on the stock and expect the company to grow further in automation and digitization products, according to reports. Also, a large orderbook gives visibility for revenue streams in a long-term perspective. Bob Capital Markets expects traction to pick up in the automation and digitalisation businesses. It has raised target price for the stock by 22% to Rs 3,800. Trendlyne’s consensus recommendation shows that 12 analysts recommend a ‘Buy’, while five give ‘Hold’ and ‘Sell’.

However, the company is battling high import costs of machine components as input costs were up 37% YoY in Q1FY23. Also, any slowness in capex and low profitability from the mobility business can slow down growth.

Gujarat Gas: This city gas distribution company fell 2% on Tuesday as its sales declined 27.1% YoY to Rs 3,821.3 crore in Q3FY23. However, its net profit has grown 202.2% YoY to Rs 371.6 crore. The stock shows up in a screener of companies with increasing net profit and profit margin (YoY). Its net profit beat the Forecaster estimates by 7.5%, but revenue missed Trendlyne’s forecaster estimates by 21.4%.

ICICI Securities says that lower volumes from the key region of Morbi drove the drop in revenue. However, with rising propane prices, the brokerage believes the company may see some revival in volume trends in Q4FY23. The brokerage maintains its ‘Add’ rating on the company as volumes and margins are likely to remain volatile. But it believes a reduction in gas prices for both domestic and LNG, and a relatively stronger propane price environment could drive steady growth in operating margins. It has given the company a target price of Rs 540, indicating a potential upside of 11.8%. It estimates the company’s revenue to grow at a CAGR of 1.2% over FY22-25.

The stock ranks high on Trendlyne’s checklist with a score of 60.9%, while the consensus recommendation on the stock is ‘Hold’.

Zee Entertainment: This broadcasting & cable TV company has been falling after it posted weak results. In Q3FY23, the company’s profit fell 92% to Rs 24.3 crore from Rs 299 crore in Q3FY22, while revenue remained flat at Rs 2,111 crore. As a result, the company features in a screener of stocks with a decline in quarterly net profit and falling profit margin (YoY). Revenue has been in line with Forecaster estimates but profit missed estimates by over 90%.

Advertising revenue has declined to Rs 1,063 crore due slowdown in ad spends by FMCG companies, considering the challenging macroeconomic environment.

In addition, Zee’s EBITDA also fell 27.5% YoY and operating margins contracted because of elevated investments in content, marketing and technology.

Post results, foreign brokerage CLSA maintains its ‘Buy’ rating and believes the upcoming Zee-Sony merger could likely be a re-rating catalyst. But ICICI Securities maintains its ‘Hold’ rating. The brokerage has cut its EPS estimates for the company to around 14% for FY24E and reduced the target price to Rs 225.

On Tuesday, NCLT (National Company Law Tribunal) adjourned the hearing on the petitions against the merger of Zee Entertainment with Culver Max Entertainment (formerly known as Sony Pictures Networks India) to March 9, according to reports. In December 2021, Zee and Sony signed a definitive agreement to merge their operations. As the merger was nearing its finish line, Zee’s creditors and lenders, including IndusInd Bank, Axis Finance, IDBI Bank and Indian Performing Right Society (IPRS), filed a petition against the merger, seeking the repayment of debt. The company's merger had already been approved by NCLT, stock exchanges and shareholders. CCI has given conditional approval.

Torrent Power: Theelectrical utilities firm saw itsQ3FY23 revenue and profit grow by 33% and 86% YoY respectively. Torrent Power has been able to reduce its transmission and distribution losses across establishments. Electricity generation with Regasified LNG (RLNG) declined due to the higher cost of RLNG. However, it was offset by higher generation in solar power plants.

Torrent Power’s margins improved on the back of the sale of LNG and increased contribution of electricity generation from the newly acquired Dadar and Nagar Haveli units. The company has seen strong demand from its franchise and licence division. It gained 12% in the past week on the back of good results. The stock shows up in thescreener for strong momentum with price above short-term and long-term moving averages.

Its management sees a capex of Rs 1,500 crore in electricity generation and another Rs 250 crore in the transmission and distribution business to increase profitability. HDFC Securities says Torrent Power's profitability has increased on the back of solid LNG trading. Its investment in the transmission and distribution business will cut down losses and new plants (a 115 MW wind power plant, and a likely300 MW solar plant) will add to the revenue. The capex incurred by Torrent Power will help it sustain the growth, maintaining the bottom line. HDFC Securities maintains an ‘Accumulate’ rating on the company.

Finolex Cables: This electrical & telecommunication cables manufacturer has gained 22% till Thursday, since announcing its Q3FY23 results on February 9. Its consolidated net profit rose 7.9% YoY to Rs 154.3 crore. The firm’s standalone net profit surged 41.7% YoY, beating Trendlyne’s Forecaster estimates by 63.1%. Consolidated revenue grew 18.2% YoY, driven by robust growth in sales volumes across all segments. This healthy performance helped the company show up in a screener for companies with improving cash flows and high durability scores.

The stock’s bull run post its results comes on the back of a strong business outlook and economic tailwinds. The management believes that the company will be a direct benefactor of the Centre’s push toward infrastructure development. It expects demand for electric cables from real estate and construction sectors to increase in the coming quarters. Notably, the electric cables segment contributed 64.6% to the firm’s consolidated revenue in Q3 and grew by 14.6% YoY.

The company’s communication cables segment is also expected to benefit from the increased spending toward telecommunication from government and private companies. Although the segment has contributed only 10% to Finolex Cables’ revenue, it grew by 59.7% YoY. The sales volume of its optic fibre cables jumped 70% YoY on the back of robust demand.

Looking ahead, the management is focusing on expanding its distribution reach and improving product availability to gain market share. According to reports, brokerage Sharekhan believes the company is well-placed to capitalise on the Centre’s increase in infrastructure capex, given its debt-free balance sheet, improving cash flows and distribution reach.

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

The Baseline

15 Feb 2023

Chart of the week: The top Nifty sectoral indices have shifted between 2006 and now

By Abdullah Shah

The market has been under pressure over the past year with rising inflation amid slowing economic growth. However, Indian markets managed to outperform major global indices in 2022. In this edition of Chart of the Week, we take a look at the major Nifty sectora indices and their shift since 2006, tracking 14 years of data.

During 2007-09, the Nifty Energy index was among the top and highest-rising indices in India. The index rose 97.6% and 58.1% in 2007 and 2009 respectively. In 2008, the index declined 47.4%, as the year witnessed the Great Recession. As of 2022, the Nifty Energy index has risen at a compound average growth rate (CAGR) of 9.9% over the past 16 years.

It was a particularly gruesome year for investors as the global financial crisis hit the world in 2008, causing all major indices to decline. However, in 2009, all major indices recovered, with the Nifty Auto and Nifty IT indices growing the most, by 186.1% and 155.2% respectively.

2011 was a tough year for the banking sector in particular, as Nifty Bank declined 32.4%, owing to concerns about rising bad debts caused by a slowdown in economic growth. However, the index recovered in the years after, rising by 58.8% in 2012 and 64.7% in 2014. The Nifty Bank index has a CAGR of 13.1% over the past 16 years. In 2011, Nifty 50 and Nifty 500 also fell 24.6% and 27.2% respectively, their second-highest decline after the crisis of 2008.

However, Nifty FMCG rose by 8.6%, while Nifty Pharma fell the least among sectoral indices in 2011 as fast moving consumer goods (FMCG) and Pharmaceuticals are considered to be defensive sectors, which tend to be stable in a falling market. Owing to this, Nifty FMCG has a CAGR of 14.3% over the past 16 years, while Nifty Pharma has grown at a CAGR of 9.9%.

Nifty Energy and Nifty Bank witnessed a resurgence during 2016-19 and 2017 was especially good, as they rose 37.7% and 39.3% respectively. The Nifty IT index ended the decade till 2019 on a strong note and started the 2020s equally strong. It rose 55.6% in 2020 and 58.2% in 2021. However, 2022 was a difficult year owing to the rising inflation and interest rates all around the world and it declined 26%.

In 2022, investors switched to more domestic sectors which are not affected by global issues, and as a result Nifty PSU Bank witnessed a rise of 70.7%. With several macroeconomic factors at play in 2023, investors will have to wait and see how the indices fare going forward.

The Baseline

14 Feb 2023

Five infra picks from analysts this week

By Suhas Reddy

This week, for analyst picks, we take a look at companies from the utilities, cement & construction sectors with revenue and profit YoY growth above 10%.

Mahanagar Gas: ICICI Securities maintains its ‘Buy’ rating on this city gas distribution company and increases the target price to Rs 1,050, implying an upside of 12.3%. In Q3FY23, the firm’s net profit jumped over 3X YoY to Rs 172.1 crore and revenue rose 55.2% YoY to Rs 1,582.3 crore.

Analysts Probal Sen and Hardik Solanki write that the firm’s volumes have fallen on a YoY basis, but its profitability is better than expected. They attribute this to aggressive price hikes the company took. Going forward, analysts expect volumes to rise as gas costs will likely reduce due to the Kirit Parikh Committee recommended price implementation. They expect “volumes and margins to see an improvement over FY24-25”.

Sen and Hardik are optimistic about the company’s prospects for the next 12-18 months. They expect the company’s net profit to grow at a CAGR of 19% over FY23-25.

Praj Industries: Axis Direct maintains its ‘Buy’ rating on this construction & engineering company with a target price of Rs 500. This indicates an upside of 37.3%. In Q3FY23, the company’s net profit grew 68.2% YoY to Rs 62.3 crore and revenue increased 55.4% YoY to Rs 910 crore.

Analyst Prathamesh Sawant says that the company’s EBITDA margin and net profit beat his estimates due to the moderation in sleet prices. He adds that the completion of the old fixed cost order in Q3 has helped boost margins.

Sawant notes, “Praj Industries is the pure equity play on India Ethanol Revolution and now marching its footprints globally”. As the company has begun to expand its engineering services across growth industries like compressed bio-gas, green hydrogen, ethanol production, and others, the analyst believes its growth prospects will improve. He anticipates the firm’s net profit to grow at a CAGR of 29.2% over FY23-25.

Dalmia Bharat: Motilal Oswal maintains its ‘Buy’ rating on this cement & cement products manufacturer with a target price of Rs 2,120. This implies an upside of 10.5%. In Q3FY23, the company’s net profit jumped 98.1% YoY to Rs 204 crore and revenue rose 22.9% YoY to Rs 3,355 crore.

Analysts Sanjiv Kumar Singh and Mudit Agarwal are upbeat about the firm’s Q3 performance as it beat their net profit estimates by a healthy margin. They attribute the improvement in profitability to pricing recovery in eastern India and better cost controls. They add that the company is trading at an attractive valuation.

Kumar and Singh believe that Dalmia Bharat has good long-term prospects due to its diversified capacity expansion plan, dominant presence in the high-growth market of east India and its focus on sustainability. According to them, “The company maintains its target of delivering 1.5x demand growth than the industry average in FY23.” The analysts expect the company’s revenue to grow at a CAGR of 10.6% over FY23-25.

Tata Power: ICICI Securities maintains a ‘Buy’ call on this utilities company with a target price of Rs 262, indicating an upside of 28.8%. In Q3FY23, Tata Power’s net profit increased by 121.9% YoY to Rs 945 crore, while its revenue increased by 30.7% YoY to Rs 14,402 crore. Analysts Rahul Modi and Anshuman Ashit say, “Tata Power’s strong quarterly results continued in Q3FY23 as well, sustained by higher profits from the coal and Mundra businesses, and robust performance of distribution businesses.”

The company had planned a capex of Rs 8,000-10,000 crore, of which Rs 3,000 crore was incurred in H1FY23. The analysts believe that the utilities company has a strong long-term potential, especially its renewables and distribution businesses which can outperform. They also believe that Tata Power is among the best-placed private players in the power sector, with businesses across the value chain and backward integration.

Star Cement: Bob Capital Market maintains a ‘Buy’ call on this small-cap cement manufacturer with a target price of Rs 138. This indicates an upside of 25.4%. In Q3FY23, the company’s net profit grew 20.7% YoY to Rs 52.9 crore, while its revenue increased 12.3% YoY to Rs 631.3 crore.

Analysts Milind Raginwar and Yash Thakur state that the revenue growth is backed by higher realisations (up 8% YoY to Rs 6,823 per tonne) and volumes (up 5% YoY to 0.9 metric tonnes), indicating healthy demand in key markets. They further add that the cement manufacturer had hiked price in mid-December and its full impact will be reflected in Q4FY23.

The analysts “like Star Cement for its strong presence in the remunerative northeast market, plans to de-risk revenue, and light debt burden despite capex”.

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

(You can find all analyst picks here)

The Baseline

10 Feb 2023

Five Interesting Stocks Today

Cummins India: This industrial machinery company's stock rose 7% and hit its all-time high of Rs 1,618 on Thursday as its Q3FY23 net profit increased 65.9% YoY to Rs 413.8 crore. Both revenue and net profit beat Trendlyne’s forecaster estimates by 8% and 52% respectively. An increase in domestic and export sales has helped revenue grow 25.8% YoY. The company is in a screener of stocks with improving QoQ revenue for the past three quarters.

Cummins India’s revenue from the engines segment, which contributes to 77.7% of its revenue, has grown by 25.9% YoY. The company stands to benefit from the government’s estimated outlay of Rs 2.4 lakh crore in FY24 in the railways segment. Ashwath Ram, Managing Director of the company, states, “The recent budget announced by the Government of India has a stronger outlay for the infrastructure sector, including railways, which is expected to create strong demand from various segments in the domestic market.”

The company’s board of directors has also approved an interim dividend of Rs 12 per share on 27.7 crore shares. Record date for the payment of the dividend is set for February 21.

InterGlobe Aviation (Indigo): This airline stock’s net profit has zoomed 10X YoY to Rs 1,422.6 crore in Q3FY23. The stock closed 2% above its opening price since its declaration of results last Thursday. The surge in profit is because of reducing fuel costs – aircraft fuel expenses have fallen 7.6% QoQ as jet fuel prices fell globally in Q3FY23. Another cost advantage Indigo has is the dip in lease charges as a percentage of revenue. In Q3FY23, lease charges fell to 12.9% of revenues, compared to 19.2% in Q3FY22. This is because Indigo’s number of fuel-efficient aircraft has gone up. As of December 2022, Indigo has 238 new engine (Neo) aircraft – which are designed to accommodate more passengers with the same fuel costs – out of the total 302.

Indigo’s domestic and international demand has been high in Q3. It aims to increase the international ASK (available seat per kilometre) mix to 40% over the next 3-5 years. A report from ICICI Securities suggests that the international ASK will increase more than 40% YoY in Q4FY23. The management, in its earnings call, said that Indigo is operating at 105% of its pre-Covid capacity. According to CEO Pieter Elbers, Q3 performance has been strong operationally and financially, as demand for air travel improved. Indigo expects capacity to increase by 15% in FY24. However, new airlines might eat into the current market share of 55%.

As of February, 17 analysts recommend a ‘Buy’ on the stock. ICICI Securities and Prabhudas Lilladher have increased their target price for the stock by more than 15% after the airline’s robust performance in Q3FY23. In the past three months, the stock has gained 15% and shows up in a screener with a high momentum score.

Varun Beverages: This non-alcoholic beverage company rose over 5% on Tuesday after it posted strong Q4CY22 results. Varun Beverages’ (VBL’s) net profit has jumped 2.5x YoY to Rs 74.8 crore and beat its Forecaster estimates by over 25%. Its revenue increased by 27.7% YoY in Q4CY22 thanks to strong volume growth and higher realisations. With strong Q4CY22 results, the company features in a screener of companies with annual net profit improving for the past two years.

VBL’s profit has risen as net realisation per unit improved through strategic measures, including selective price hikes, rationalised discounts and incentives, and improved product mix. This was also backed by energy drink Sting, which has a higher realisation. Commenting on the performance of the company, Ravi Jaipuria, Chairman of Varun Beverages said that a strong recovery in demand post-pandemic and continued efforts towards expanding the distribution network across markets resulted in the growth of sales volume.

Axis Direct has maintained its ‘Buy’ rating on the stock post VBL’s Q4CY22 results announcement. The brokerage expects the company to perform well in terms of expansion in its distribution, growth in international geographies, and focus on expanding the high-margin energy drink, Sting, across outlets.

Meanwhile, ICICI Securities maintains its ‘Hold’ rating but increases the target price to Rs 1,225. Though the brokerage is positive on growth prospects, it says that it would be difficult for the company to grow at a fast pace on a high base in CY23.

Vinati Organics: This specialty chemicals stock released its Q3FY23results on February 6. Vinati Organics’ revenue has grown by 38% YoY to Rs 508 crore but fell 10% QoQ owing to low volumes in the ATBS chemical, which constitutes ~40-50% of overall revenue. The capacity is expected to expand from 40,000 MT to 60,000 MT for ATBS and the new chemical portfolio. The upcoming commissioning of ATBS, MEHQ, Guaiacol and Iso Amylene plants will aid revenue growth. Post expansion, the revenue is expected to grow by 23% to Rs 2,630 crore. EBITDA margin has seen an expansion of 1,072 bps YoY, backed by increased pricing power for its products.

Vinati Organics has not seen much growth post results. ICICI Direct and HDFC Securities have downgraded their target price owing to overvaluation. The stock shows up in our DVM scorescreener as an expensive performer.

ICICI Direct says the IBB chemical, which contributes to approximately 30% of the company’s revenues, is seeing a revival in demand and an increase in market share. Revenue numbers are below the estimated levels, whereas EBITDA and PAT margins have exceeded expectations. ICICI Direct has a ‘Hold’ rating on the stock.

According to HDFC Securities, the company’s shift in revenue mix towards lower margin products (IBB) will hamper EBITDA margin expansion going forward. HDFC has a ‘Sell’ rating on the stock.

Blue Star: This consumer electronics manufacturer has grown over 12% since announcing its Q3FY23 results on January 31, which beat the street’s estimates. Its net profit grew 23% YoY to Rs 58.4 crore, beating Trendlyne’s Forecaster estimates by 3.3%. The management attributes this improvement in profitability to a healthy order inflow, robust demand and a better product mix. Due to this strong Q3 performance, the stock is trading above its short, medium and long-term moving averages.

The company’s largest segment, electromechanical projects & commercial air conditioning systems, has grown 20.5% YoY and contributed 55.9% to the consolidated revenue. This growth was aided by healthy order inflow. BoB Capital Markets expects this segment’s order book to see greater traction in the near term, given the Centre’s push to increase the infrastructure capex. The brokerage also anticipates a rise in orders from the railway electrification business vertical.

The unitary products segment, which primarily produces room air conditioners and commercial refrigeration products, saw its EBIT margins expand by 100 bps YoY to 7.4%. Margins improved on the back of a better product mix and sustained demand for commercial refrigeration products.

The company began commercial production at its new facility in Sri City, Andhra Pradesh in January 2023, just in time to ramp up for the summer season. The new facility will manufacture 3 lakh AC units and will reach 12 lakh units annually by 2027. The management is optimistic about the near-term demand growth given the onset of summer. It has also guided to increase its market share in the room air conditioners business to 15% in FY25 from 13.25% currently.

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

The Baseline

10 Feb 2023

Which stocks did superstar investors buy in Q3FY23?

By Abhiraj Panchal

Many investors closely track the portfolios of superstars to identify interesting sectors and stocks to invest in. We take a look at some of the stocks superstar investors bought or added more of, during Q3FY23.

Most superstar investors didn’t see major QoQ changes in their net worth in Q3FY23, except Dolly Khanna. Her net worth fell by 21.4% QoQ to Rs 409.74 crore during the quarter.

Sunil Singhania and Vijay Kedia’s net worth fell by 5.1% and 5.3% respectively, while Porinju Veliyath’s net worth fell by 1.3%. Ashish Kacholia’s net worth rose by 1.6% and Rakesh Jhunjhunwala's portfolio value rose marginally.

These superstars have varied investing interests, as shown in the chart below, which indicates the sector with the biggest share in each superstar’s portfolio.

RARE Enterprises’ favoured sector is textiles, apparels and accessories, while Sunil Singhania’s is metals and mining, Ashish Kacholia’s is chemicals and petrochemicals.

Rare Enterprises increases stake in Banking & Finance and Auto stocks

Rakesh Jhunjhunwala’s portfolio rose marginally by 0.01% QoQ to Rs 33,230.4 crore in Q3FY23. Rare Enterprises, which manages the late big bull’s portfolio, increased stakes in several companies during the quarter.

Rakesh Jhunjhunwala’s portfolio increased its stakes in Rallis India and Federal Bank by 0.9% each to 10.3% and 3.5% respectively. It also increased its holding in Geojit Financial Services and Canara Bank by 0.8% and 0.6% to 8.4% and 2.1% respectively.

Rare also increased holdings in Tata Motors and NCC by 0.5% each during Q3, and bought more shares in Karur Vysya Bank, Tata Communications and Edelweiss Financial Services.

According to shareholder filings, the portfolio’s largest buys were healthcare supplies company Bilcare and auto parts and equipment maker Autoline Industries. But this data point should come with a disclaimer.

In Q1FY23, the total holding of Rakesh and Rekha Jhunjhunwala in Bilcare and Autoline was 8.5% and 4.5%, respectively. In the Q2FY23 BSE fillings of Bilcare and Autoline Industries however, the names of Rakesh Jhunjhunwala or Rekha Jhunjhunwala are not mentioned in the shareholders list. But the Q3FY23 BSE filings of both the companies show Rekha Jhunjhunwala back in the list as a shareholder with significant stakes. She holds a stake of 7.4% in Bilcare and 4.3% in Autoline Industries.

The large movement in shareholding could be due to a filing error in Q2, and hence these companies are not included in the chart above.

Sunil Singhania’s Abakkus Fund increases stake in multiple small-cap companies

Sunil Singhania’s Abakkus Fund saw its consolidated net worth fall by 5.1% QoQ in Q3FY23 to Rs 1,973.8 crore. It added Tracxn Technologies to the portfolio during the quarter by buying a 1.6% stake in the IT consulting company. It also bought a 1.8% stake in Dreamfolks Services, a travel support services company and added a 0.3% stake in Mastek, increasing its stake in the IT company to 3.1%.

The fund also bought an additional 0.2% stake in Sarda Energy & Minerals, Ion Exchange (India) and Technocraft Industries (India) each, bringing its stake to 2.1%, 3.2% and 3% respectively. It added minor stakes in already existing small-cap portfolio companies like Dynamatic Technologies, Stylam Industries, Siyaram Silk Mills and HG Infra Engineering, taking its holdings to 2.6%, 2.4%, 2.1%, and 1.5% respectively.

After selling its stake in CMS Info Systems in Q2FY23 to below 1%, Abakkus now holds a 1% stake in the company.

Ashish Kacholia adds four small-cap companies to his portfolio

Ashish Kacholia’s net worth increased by 1.6% QoQ to Rs 1,800.3 crore in Q3FY23. During the quarter, he added Goldiam International (textile company), Raghav Productivity Enhancers (capital goods company), Likhitha Infrastructure (infrastructure service provider) and Knowledge Marine & Engineering Works (transportation company) to his portfolio. He purchased 1%, 2.1%, 2% and 2.3% stakes in these companies respectively.

The marquee investor purchased 1.3% and 1.2% stakes in chemical companies Agarwal Industrial Corp and Yasho Industries respectively and now holds 3.8% in each. During Q3FY23, he added 0.8% of Best Agrolife (now holds 2.3%), 0.6% of SJS Enterprises (now holds 4.4%), 0.4% of TARC (now holds 2.2%) and 0.2% of Ador Welding (now holds 4.4%) to his portfolio.

Kacholia bought an additional 0.1% stake in Gravita India, Megastar Foods and Xpro India, and now holds 2.1%, 1.1% and 4.5% stakes respectively. The other companies where he increased stakes were Garware Hi-Tech Films and PCBL.

Dolly Khanna makes no new additions to her portfolio in Q3FY23

Dolly Khanna’s net worth fell by 21.4% QoQ to Rs 409.7 crore in Q3FY23. Compared to previous quarters, the investor drastically slowed down buying in Q3. She only increased her stake marginally in three companies and did not make any new additions to her portfolio. Khanna tends to turn bearish when markets become volatile, so this is not unusual for the investor..

She raised her stake in Industrial Gases company National Oxygen by 0.1% to 1.2%. The company has risen over 6.3% over the past three months till February 8. She also raised 0.05% stake each in Monte Carlo Fashions and Prakash Pipes.

Porinju Veliyath makes three new additions to his portfolio in Q3FY23

Porinju V Veliyath’s net worth fell by 1.3% QoQ to Rs 174.9 crore in Q3FY23. He added three new small and micro-cap companies to his portfolio. He bought a 1.3% stake in furniture manufacturer Priti International and 1.1% stake each in Max India and Lakshmi Automatic Loom Works in Q3.

The investor raised his stake in Special Consumer Services company Kaya by 1% to 2.4% in Q3FY23. This is after he cut 0.1% from the company holding in Q2FY23. He also bought an additional minor stake in Aurum Proptech.

Vijay Kedia adds Siyaram Silk Mills to the portfolio

Vijay Kedia’s net worth fell 5.3% QoQ to Rs 729.7 crore in Q3. Kedia’s only buy during the quarter was a new addition–a 1.1% stake in Siyaram Silk Mills, an Indian blended fabric and garment manufacturer. In Q3FY23, the textile company’s net profit fell for the first time in the past seven quarters to Rs 51.9 crore.

Mohnish Pabrai increases his stake in Edelweiss Financial Services

Mohnish Pabrai’s net worth in Q3FY23 fell by 6.9% QoQ to Rs 1,540.02 crore. The only change he made in his portfolio was buying an additional 0.3% stake in Edelweiss Financial Services. As of Q3FY23, he holds a 6.7% stake in the company. The financial services company reported a 42.7% YoY increase in net profit to Rs 101.3 crore in Q3FY23.

The Baseline

09 Feb 2023

Screener of the week: MFs and FIIs buying infrastructure-related companies

By Abdullah Shah

We take a look at a screener with key infrastructure companies that are seeing a jump in mutual fund and foreign institutional investor holdings. The companies are from three industries that could benefit from the Union budget – construction & engineering, heavy electrical equipment and roads & highways.

Out of seven companies, only Ashoka Buildcon is in the screener from the roads and highways industry. Construction & engineering, and heavy electrical equipment industries have three companies each (see chart above).

TD Power Systems, a heavy electrical equipment manufacturer, rose the highest in MF holding change QoQ, rising 1.22 percentage points to 12.93%. ICICI Prudential Infrastructure Fund bought 2.7 lakh shares (or 0.2% stake) in the company in Q3FY23.

Among the companies we discussed earlier, KEC International from the construction & engineering industry made it to the list as its FII holding increased by 1.04 percentage points, while its MF holding rose 3 basis points QoQ. Fidelity Funds-India Focus Fund bought 20.2 lakh shares (or 0.8% stake) in the company over the past quarter.

You can find more screeners here,

The Baseline

07 Feb 2023

Five analyst picks this week post results

By Abhiraj Panchal

This week in analyst picks we take a look at stocks with YoY revenue and profit growth above 10% in Q3. We also look at forward PE ratio estimates for these stocks one year from now.

The forward PE estimate is the expected value of earnings to the share price one year ahead. To calculate the FY24 forward PE ratio, we use the Forecaster's target price estimates and annual one-year forward forecaster EPS estimate.

Larsen & Toubro: BOB Capital Markets maintains its ‘Buy’ rating on this construction and engineering company, and raises its target price to Rs 2,440 from Rs 2,390. This indicates an upside of 12.7%. In Q3FY23, the company’s net profit grew 24.3% YoY to Rs 2,552.9 crore and revenue rose 17.3% YoY to 46,389.7 crore.

Analysts Vinod Chari, Tanay Rasal and Nilesh Patil write that the firm remains “the best play on India’s capex story, and is our preferred capital goods pick.” They believe the company is well-positioned to benefit from the Centre’s push toward infrastructure given its robust tendering pipeline and order win rate of 15–20%. The analysts also see increasing private sector orders as a positive for the company. In Q3FY23, private sector orders accounted for 39% of L&T’s total order inflows, up from 18% a year ago.

Given the robust order pipeline, the analysts anticipate healthy growth in order inflows in the coming quarters. Chari, Rasal and Patil expect the company’s revenue to grow at a CAGR of 16.9% over FY22-24. Larsen & Toubro’s FY24 forward PE estimate is 31.7, higher than the current PE TTM of 30.

Coal India: ICICI Securities maintains its ‘Buy’ rating on this coal mining company and revises its target price to Rs 282 from Rs 294. This implies an upside of 28.6%. In Q3FY23, the firm’s net profit surged by 70.1% YoY to Rs 7,755.6 crore and revenue grew by 23.7% YoY to Rs 35,169.3 crore.

Analysts Rahul Modi and Anshuman Ashit cite cost increases - driven by higher wage provisioning and contractual expenses - for lowering the target price despite robust results. The analysts do point out that growth was driven by an increase in volumes and realisations. They expect this growth momentum to continue given the strong domestic demand for coal. The analysts expect Coal India’s production volume to touch 700 million tonnes in FY23. They added, “With 9MFY23 production/offtake already at 479 and 509 million tonnes (+15.8%/+5.4% YoY), CIL's volume is poised to reach 700 million tonnes in FY23.”

Given the strong operational performance and with domestic demand for coal remaining strong, Modi and Ashit anticipate the company’s net profit to grow at a CAGR of 11.4% over FY22-25. The forward PE estimate for Coal India stands at 5.3, higher than its current PE TTM of 4.6.

Bajaj Finance: KRChoksey maintains a ‘Buy’ call on this NBFC with a target price of Rs 8,030, indicating an upside of 30.3%. In Q3FY23, the company’s net profit grew by 39.9% YoY to Rs 2,973 crore while its revenue grew by 26.4% YoY to Rs 10,786 crore.

Abhishek Agarwal said, “Bajaj Finance continued to post strong growth in terms of business and profitability.” He added, “The NBFC has registered the highest-ever customer addition during the quarter.” The analyst is optimistic about the finance company on the back of its strong background, brand name, diversified product offerings, prudent risk management, and long-term potential for robust AUM growth. He expects Bajaj Housing Finance (a subsidiary) to be a core driver for growth in upcoming quarters, led by improving opportunities in the housing finance business.

Agarwal expects profit and net interest income to grow at 35.1% and 25.4% CAGR respectively, and the asset quality to remain stable. The forward PE estimate for Bajaj Finance is 39.5, which is higher than the current PE TTM of 34.4.

Laurus Labs: ICICI Direct retains a ‘Buy’ call on this pharmaceutical company with a target price of Rs 400. This indicates an upside of 21.2%. In Q3FY23, the company reported an increase of 32.1% YoY in net profit to Rs 203 crore. It reported revenue of Rs 1,546.2 crore (up by 49.5% YoY), which the analysts Siddhant Khandekar, Kushal Shah and Utkarsh Jain believe increased on the back of 210% YoY growth in custom synthesis.

According to the analysts, the company is well-positioned to meet the fast-growing global demand for new chemical entity drug substances and drug products with ongoing supplies for seven commercial products. They are also positive about the pharma company due to its robust order book, product launches in anti-diabetic (FY23) and CV portfolio in the United States and Europe that have a target opportunity at $40 billion. The forward PE estimate for Laurus Labs is 27.7 as against the current PE TTM of 19.4.

Westlife Foodworld: Axis Direct maintains its ‘Buy’ call on this fast food restaurant holding company with a target price of Rs 930, indicating an upside of 32.7%. In Q3FY23, the company’s net profit increased by 72.4% YoY to Rs 36.4 crore and its revenue grew by 28.7% to Rs 619.2 crore.

Analyst Preeyam Tolia believes that same-store sales growth stood at 20% led by increased footfalls, improved product mix and price hikes. His confidence in the restaurant chain holder comes from bright future prospects supported by the company’s strong execution track record of revenue and EBITDA growth, driven by new product launches and cost rationalisation programs. He expects Westlife Foodworld to deliver revenue EBITDA growth of 30% and 43% CAGR, respectively, over FY22-25. Westlife Foodworld’s forward PE estimate is 104.3 as compared to the current PE TTM of 102.7.

All these stocks have a higher forward PE ratio as the average target share price of these stocks is relatively higher compared to their forward earnings per share.

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

(You can find all analyst picks here)