• Trendlyne logo
  • Markets
  • Alerts
  • F&O
  • MF
  • Reports
  • Screeners
  • Subscribe
  • Superstars
  • Portfolio
  • Watchlist
  • Insider Trades
  • Results
  • Data Downloader
  • Events Calendar
  • What's New
  • Explore
  • FAQs
  • Widgets
More
    Search stocks
    IND USA
    IND
    IND
    IND
    USA
    • Stocks
    • Futures & Options
    • Mutual Funds
    • News
    • Fundamentals
    • Reports
    • Corporate Actions
    • Alerts
    • Shareholding

    The Baseline

    12
    Following
    368
    Stocks Tracked
    49
    Sectors & Interests
    Follow
    Load latest
    logo
    The Baseline
    05 Feb 2024
    5 auto and construction stock picks from analysts this week

    5 auto and construction stock picks from analysts this week

    By Satyam Kumar

    This week, we look at the stock picks from analysts from automobiles & auto components, and cement & construction sectors.

    1. Mahindra & Mahindra:

    Motilal Oswal reiterates its ‘Buy’ call on this car and utility vehicle manufacturer with a target price of Rs 2,005, indicating an upside of 17.7%. Analysts Amber Shukla and Aniket Desai believe that headwinds like a weaker monsoon made for a challenging FY24 for the tractor industry, but they expect FY25 to be better, led by favourable festive timings.

    The analysts are also positive about the company’s two new arms, set up to expand its electric SUV and LCV fleets. The company has earmarked an investment of Rs 10,000 crore for these electric vehicle subsidiaries. 

    Shukla and Desai remain optimistic on the back of Mahindra & Mahindra’s focus on launching new models and achieving healthy margin growth in its core business. Despite predicting growth moderation in some of its verticals, they say “the company is still better placed to outperform across all its verticals”. The analysts estimate a revenue and profit CAGR of 12.5% and 17%, respectively, over FY24-26.

    2. Maruti Suzuki India:

    HDFC Securities maintains its ‘Buy’ rating on this car manufacturer with a target price of Rs 12,887, indicating an upside of 23.6%. Analysts Aniket Mhatre and Maitreyee Vaishampayan say, “On the back of its aggressive launch spree over the last few quarters, Maruti Suzuki continues to be the market leader in the utility vehicles segment.” In Q3FY24, the company’s net profit jumped 34.1% YoY to Rs 3,206.8 crore (beating the brokerage’s estimate by 11%), while its revenue increased by 15.3% YoY to Rs 34,509.2 crore.

    The analysts note a margin improvement in Q3 by 210 bps to 12.3% (against their estimate of 11.5%), led by lower commodity costs, reduced royalties and positive forex impact. They attribute the decrease in the current order backlog to 215k units (from 250k units in Q2FY24), to the improved availability of semiconductors. 

    Mhatre and Vaishampayan are optimistic about the company as the management aims to launch 10 new models by 2030, including six EV models. With rising exports and higher plant utilisation, they expect the EBITDA margin to expand by 240 bps over FY24-26.

    3. Exide Industries:

    ICICI Direct maintains its ‘Buy’ rating on this auto parts and equipment manufacturer with a target price of Rs 380, indicating an upside of 9.3%. In Q3FY24, its net profit grew by 7.7% YoY to Rs 240.3 crore, while its revenue increased by 12.7% YoY to Rs 3,863.3 crore. Analyst Shashank Kanodia says, “The automotive division witnessed a broad-based uptick, showing signs of demand recovery, while the industrial segment benefitted from large investments in sectors such as renewables, telecom, and infrastructure.”

    Kanodia is optimistic as Exide has an early-mover advantage in the new-age lithium-ion battery business, highlighted by its joint venture (JV) with Leclanché SA (an energy storage solutions provider). This JV aims to set up electric vehicle battery assembly operations with a capex outlay of Rs 6,000 crore for a 12 GWH capacity, expected to be operational in CY25. However, the company faces competition from other established and new players in this space, such as Amara Raja Energy.

    Kanodia believes that the firm is an industry leader in the lead-acid battery space. He expects steady growth in this segment in the near-to-medium term, driven by healthy auto OEM sales, increasing industrial use, and export opportunities. The analyst projects margin expansion of 12.5%, up from the current 11.5%, if raw material prices remain stable.

    4. Larsen & Toubro:

    BOB Capital Markets maintains its ‘Buy’ rating on this construction and engineering company with a target price of Rs 4,200, indicating an upside of 25.7%. In Q3FY24, its net profit grew by 15.5% YoY to Rs 2,947.4 crore, while its revenue increased by 18.7% YoY to Rs 55,965.6 crore. Analysts Vinod Chari, Swati Jhunjhunwala, and Arshia Khosla say, “The company posted a strong order inflow of Rs 76,000 crore in Q3, driven by infrastructure and hydrocarbon projects.”

    Larsen & Toubro has increased its FY24 order inflow and revenue growth guidance to 20% and the high teens (17-19%), respectively, as it ended 9MFY24 with a record order book of Rs 4.7 lakh crore.

    Despite a 50 bps YoY dip in EBITDA margin to 10.4% in Q3, which dragged the YTD margins to 7.5%, the management expects to complete all legacy orders this year and has guided for an FY24 EBITDA margin band of 8.3-8.5%. It also predicts sequential margin improvements over the next four quarters.

    5. Shree Cements:

    Axis Direct upgrades its rating on this cement products manufacturer to ‘Buy’ with a target price of Rs 31,470. This indicates an upside of 16.8%. In Q3FY24, the company’s net profit grew by 148.8% YoY to Rs 701.9 crore, while revenue increased by 20.1% YoY to Rs 5,370.6 crore. Analysts Uttam K Srimal and Shikha Doshi say, “Shree Cements posted robust results, exceeding our expectations, due to better demand in its operating regions and higher realizations from higher merchant power sales.” 

    The company’s EBITDA margins have improved to 25%, and the analysts expect it to improve further on the back of a better product mix, higher sales of premium products, brand-building exercises, and cost optimisation. They believe the company's capacity expansion move will allow it to compete with its larger peers and strengthen its market presence. They expect volume growth of 10% CAGR over FY24-FY26, and remain bullish on the cement demand, thanks to infrastructure and housing investments.

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

    (You can find all analyst picks here)

    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    02 Feb 2024
    Five Interesting Stocks Today

    Five Interesting Stocks Today

    1. Infibeam Avenues: 

    This internet & software services company has risen by 32.3% in the past week following its Q3FY24 results on January 23. Its revenue and net profit beat Trendlyne’s Forecaster estimates by 7.1% and 19.8%, respectively. Net profit grew by 1.1% QoQ to Rs 41.4 crore during the quarter, while revenue surged by 15.4% QoQ to Rs 911.9 crore, owing to gains from the CCAvenue segment. This helped the company appear in a screener of stocks with rising revenue for the past four quarters.

    The CCAvenue platform added two lakh new merchants in the Indian market during the quarter, boosting the company's India business revenue by 16.3% QoQ to Rs 860.2 crore. This accounted for 94% of total revenue. The company’s Chairman and Managing Director (MD), Vishal Mehta said, “Our digital payments business, through CCAvenue, led the way for revenue growth. Operating or EBITDA margins and profit margins remain strong as we take advantage of scaling up the international business.”

    The company’s total processed value (TPV) jumped by 1.4% QoQ on the back of a 7.6% QoQ rise in the gross take rate (GTR). TPV is the total monetary value of all transactions processed by a payment platform over a period, while GTR is the company’s cut – its percentage share from these transactions. 

    Post-results, KR Choksey maintains its ‘Buy’ rating on Infibeam Avenues with an upgraded target price of Rs 41.7, indicating a potential upside of 8.3%. The brokerage believes that the company will be increasing its international footprint by launching CCAvenue and Tap Pay in the UAE and Saudi Arabia, before expanding into other GCC countries.

    2. Jubilant Foodworks:

    This restaurant chain and Domino’s master franchisee fell by 3.4% on Thursday after announcing a Q3 net profit decrease of 18.2% YoY to Rs 65.7 crore, missing estimates by 41.9%. The decline was due to an increase in finance costs, employee benefits, and depreciation expenses. Revenue rose by 3.1% YoY but overall fell short of Trendlyne’s Forecaster estimates by 2.3%. With the share price fall, the stock features in a screener of companies with weak momentum. 

    During the quarter, Domino’s Pizza’s like-for-like (LFL) sales growth contracted 2.9% YoY, remaining in the negative territory for the fourth consecutive quarter. This was due to a 5.6% YoY decline in dine-in sales. However, delivery sales grew by 6.2% YoY. The ‘Cheesy Rewards’ program continued to gain traction, with its membership base reaching around 2.1 crore. 

    The restaurant major expanded its store network in Q3FY24 by opening 58 new outlets across various brands, taking the total to 2,007 stores in India. Sameer Khetarpal, MD and CEO, said, “We will continue to add new stores as inflation moderates, and maintain our guidance of 200 new stores for FY24.” 

    QSR companies have seen a volatile quarter. Despite strong demand during the Cricket World Cup and Diwali, inflationary pressures, fewer people dining out, and competition from unorganised players led to a slowdown after the festive season. The industry expects these challenges to persist for a few more quarters, but remains hopeful about demand recovery. 

    Following the earnings announcement, Motilal Oswal downgraded its rating to ‘Neutral’ from ‘Buy’ and lowered the target price to Rs 480. The brokerage believes that the current valuation does not reflect the earnings pressure. It also expects sluggish demand in the near term to affect the company’s profitability.

    3. DLF:

    This realty company has risen by 4.3% in the past week, and trading near its 52-week high. The price rise came after the announcement of its Q3FY24 results. Its net profit has improved by 26.5% YoY to Rs 656.6 crore, while its revenue increased by 5.4% YoY to Rs 1,643.5 crore. DLF’s pre-sales rose by 261% YoY to a lifetime record of Rs 9,047 crore, led by its Privana South (luxury high-rise) project, which sold-out within 72 hours. The company appears in a screener for stocks with low debt.

    With new sales bookings at Rs 13,316 crore for 9MFY24, the management says that it has exceeded its own full-year guidance of Rs 13,000 crore already. Despite this, It missed Trendlyne Forecaster’s net profit and revenue estimates by 2.4% and 7.6%, respectively, as analysts had anticipated higher numbers.

    Revenue from its annuity portfolio, primarily driven by higher office occupancy, grew 8% YoY to Rs 1,476 crore. The company improved its net cash position to Rs 1,246 crore, backed by strong collections and focused cash management. 

    Looking ahead to FY25, DLF plans to launch 10 million square feet with a gross development value of Rs 32,000 crore. The management expects pre-sales to exceed Rs 15,000 crore. It has a launch pipeline of Rs 79,000 crore or 32 million square feet over the next four years. 

    Nuvama maintains its ‘Buy’ call on DLF, driven by strong sectoral tailwinds, an extensive launch pipeline, and the expansion of its annuity portfolio. The company appears in a screener for stocks where brokers have upgraded their recommendation or target price in the past month. 

    4. Coal India:

    This coal producer has risen by 36.9% in the past quarter and 7.8% over the past week. The recent surge came after the Union Cabinet for Economic Affairs, headed by the Prime Minister, approved two thermal power plants with a combined capacity of 2,200 MW. In its December 2023 business update, Coal India reported an 8.2% YoY increase in production to 71.9 million tonnes (mt), the highest since March 2022.

    The world’s largest coal miner sells around 90% of its output in the open market through Fuel Supply Agreements (FSA). In H1FY24, 9% of its coal was sold through e-auctions, where it commands a premium over the FSA notified prices. FSA prices are usually discounted to moderate domestic electricity costs. E-auction premiums, which dipped to 58% in July due to softer international coal prices, bounced back to 80%-100% as power demand surged. The firm has independence in fixing base prices for e-auctions, where premiums rise with higher demand, especially during power shortages.

    Despite a shift towards clean energy, India needs to increase its thermal capacity as domestic coal demand is expected to reach 1.3-1.5 billion tonnes by 2030. This growing demand was evident in the December Index of Industrial Production (IIP) numbers, where the index grew by 3.6%, and coal demand alone rose by 10.6%. Coal India, a Maharatna PSU, accounts for 80% of the country’s coal output.

    The firm’s stable dividend payout ratio of around 50% and its  6% dividend yield is one of the best in the industry. With a P/E ratio of 7.6, Coal India is trading at a discount compared to its Chinese peers. ICICI Direct states, “As the government plans to achieve 24-hour power supply by 2025, coal production at CIL will grow at a CAGR of 11% over FY23-26 to 950 MT by 2025.” The brokerage has a ‘Buy’ rating on this firm with a target price of Rs 500.

    5. ACC:

    This cement & cement products firm rose 10% on Thursday as its Q3FY24 net profit grew by 137.9% YoY to Rs 537.6 crore. The company appears in ascreener of stocks with improving net profits and margins. According to Trendlyne’s Technicals, the stock outperformed the cement and construction sector by 3.7%, with a 11.4% increase in the past month. 

    Revenue rose by 8.3% YoY in Q3FY24, thanks to increased demand and higher realization. The firm’s realization rose by 4.9% YoY to Rs 5,185 during the same period. ACC’s EBITDA margin improved by 840 bps YoY, thanks to lower fuel/freight and fixed expenses. With the acquisition of a majority stake in Asian Cement and Concrete (ACCPL), ACC expanded its cement capacity to 38.6 mtpa, setting the stage for a 10% CAGR volume growth over FY24-26. This is a jump from the 2% CAGR over the last decade.

    ACC’s management expects EBITDA margin expansion of Rs 200/tonne in FY25-26, helped by the implementation of a waste heat recovery system (Rs 90/tonne), logistic optimization (Rs 60/tonne), and raw material optimization (50/tonne). The management has guided FY24 capex at Rs 7,000 crore, including Rs 200 crore for capacity enhancement at the newly acquired Sanghi Industries. ACC’s sales volumes are poised to hit 36.2 mtpa in FY24, with an expected 5.3% CAGR growth to 41.7 mtpa by FY26.  

    Motilal Oswal highlights the start of production at the Ametha Plant (1 mtpa) and additional capacity from ACCPL (1.5 mtpa) boosts ACC's total capacity by 7% QoQ. With this expansion, the brokerage expects realization to rise by 10.2% by FY27. It maintains an ‘Accumulate’ rating on the stock.

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

    1
    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    01 Feb 2024
    Which stocks did superstar investors buy in Q3FY24?

    Which stocks did superstar investors buy in Q3FY24?

    By Abhiraj Panchal

    Many investors closely track the investments of superstar investors like Rekha Jhunjhunwala, Ashish Kacholia, Sunil Singhania, and Vijay Kedia for valuable market insights. Their buys and sells help investors identify potentially profitable sectors and stocks. In this piece, we look at some investments made by these superstar investors during Q3FY24.

    (You can now also invest in shadow superstar baskets available on Starfolio, which are updated and rebalanced as per Trendlyne's superstar portfolios).

    The chart below looks at changes in superstar investors' current portfolio net worth. Note that net worth reflects both changes in current holdings as well as new buys and sells. 

    All superstars see a rise in their net worth in Q3FY24

    Each superstar investor’s public portfolio reflects their unique investing style and their preferred approaches. The following chart provides a breakdown of the dominant sectors in each investor’s portfolio. 

    Industries preferred by superstars

    Industry preferences among the superstars vary: Rare Enterprises (Rekha Jhunjhunwala and Rakesh’s portfolio) leans towards textiles, apparels and accessories stocks, while Sunil Singhania and Porinju Veliyath favour software and services. Ashish Kacholia prefers chemicals and petrochemicals. Vijay Kedia’s preferred sector is automobiles & auto components, and Dolly Khanna prefers oil and gas.

    Rare Enterprises continues to invest in D B Realty 

    Rakesh Jhunjhunwala’s portfolio, now managed by Rekha Jhunjhunwala and Rare Enterprises following his passing, grew by around 22% QoQ to Rs 48,186.3 crore by the end of Q3FY24. During the October-December quarter, the firm did not add new stocks to its portfolio, and increased its stake in just one company. 

    Rare Enterprises increased its holding in realty stock D B Realty by 1%, and now owns 3% of the company. 

    Rare Enterprises buys a 1% stake in D B Realty

    This marks the second consecutive quarter of increased investment in the realty company, after consistently holding 1.4% in Q4FY23 and Q1FY24. Over the past quarter, D B Realty’s share price has risen by 52.1%. 

    Sunil Singhania’s Abakkus Fund invests in an industrial machinery company 

    Sunil Singhania’s Abakkus Fund saw its net worth rise by 19.2% QoQ to Rs 2,838.9 crore in Q3FY24. The fund's significant new investment was in Shriram Pistons & Rings, an industrial machinery company where it bought a 2.3% stake. The company has a Durability score of 80, indicating high financial strength, and an affordable Valuation along with bullish Momentum. Its price rose by 64.8% in the past quarter.

    Sunil Singhania adds Shriram Pistons & Rings to his portfolio

    The fund also purchased a minor stake in household appliances manufacturer Hindware Home Innovation. It now holds 4.4% of the company.

    Ashish Kacholia goes on a buying spree during the quarter

    Ashish Kacholia’s net worth rose by 8.8% QoQ to Rs 2,764.2 crore in Q3FY24. During the quarter, he added four new small-cap stocks to his portfolio. He acquired a 2% stake in Updater Services, a commercial services company, whose share price rose by 33% over the past quarter. He also added Brand Concepts to his portfolio, acquiring a 1.4% stake. The textile firm has risen over 3x in the past year. 

    Ashish Kacholia buys a 2% stake in Updater Services

    The marquee investor also added Tanfac Industries, buying a 1.2% stake in the commodity chemicals company. He reintroduced SG Finserve into his portfolio during the quarter and now holds a 1.1% stake. He reduced his stake in this financial services provider to below 1% in Q2FY24. 

    Kacholia increased his stake in Zaggle Prepaid Ocean Services to 2.2% by buying 0.5% during the quarter. He has maintained a stake in this IT software products company since its listing on the stock exchanges. He also bought an additional 0.1% stake in La Opala RG, taking his holding to 1.7% in the houseware products manufacturer.

    Vijay Kedia buys a minor stake in a mid-cap company

    Vijay Kedia’s net worth increased by 6.3% QoQ to Rs 1,475.6 crore in Q3FY24. His activity this quarter was limited to acquiring a minor stake in Vaibhav Global. He now holds a 2% stake in the online apparel and accessories company. Kedia has been a stakeholder in Vaibhav Global since before March 2017. It has risen by 275.8% in the past five years. Ashish Kacholia also holds a 1.2% stake in the company.

    Dolly Khanna expands her portfolio with multiple additions 

    Dolly Khanna’s net worth increased by 17.5% QoQ in Q3FY24 to Rs 422.9 crore. During the quarter, the investor added four new companies to her portfolio and increased stakes in six others. Among her new acquisitions, she bought a 1.2% stake each in hotels company Savera Industries and sugar stock Zuari Industries. These stocks rose by 47.5% and 98.3%, respectively, in the past quarter. Khanna also added construction and finance companies J Kumar Infraprojects and Ujjivan Financial Services by buying 1% and 1.1% stakes, respectively.   

    Dolly Khanna adds multiple stocks to her portfolio

    Khanna bought a 0.2% stake each in metals company Prakash Industries and textiles firm Deepak Spinners, taking her holdings in these companies to 1.2% and 1.8%, respectively. The ace investor added around 0.1% stakes each in sugar stock KCP Sugar & Industries (now holds 1.4%), fertilizer company Mangalore Chemicals (taking the current holding to 1.3%), and commodity printing firm Control Print (now holds 1.3%). She also increased her stake in Rajshree Sugars & Chemicals to 1.1%. With this, Dolly Khanna publicly holds 18 companies. 

    Porinju Veliyath increases stakes in three companies in Q3

    Porinju Veliyath’s net worth increased by 8.2% QoQ to Rs 225.9 crore in Q2FY24. During the quarter, while he has not added new companies to his portfolio, he increased investments in three existing holdings. After maintaining a 3.2% stake for two consecutive quarters, Porinju bought 1.6% in pharmaceuticals company Kerala Ayurveda. He currently holds a 4.8% stake in the company. Its stock price has risen by 172% in the past year.

    Porinju buys a 1.6% stake in Kerala Ayurveda

    In Q3FY24, Porinju also increased his stake in Aurum Proptech, an IT consulting & software firm, by 1%, raising his investment to 4.5%. This marks the third consecutive quarter where he has increased his stake in the company. During the quarter, Porinju also bought a minor stake in a small-cap metals company, P G Foils. He currently holds 1.1% of the company. He added P G Foils to his portfolio in Q2FY24. 

    1
    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    30 Jan 2024

    Chart of the week: Nifty PSE index rose 79% over the year, outperforming the benchmark index by a huge margin

    By Bhavani Eswar

    In a rare instance, India’s Prime Minister offered a stock market tip during a no-confidence motion in August 2023. Responding to opposition queries about loan write-offs by public sector lenders and LIC investments, PM Narendra Modi said, “There is a guru mantra for those interested in the share market – bet on stocks that the opposition raises concerns about.”

    Investors following this advice did pretty well. The Nifty PSE, which has twenty public sector enterprise (PSE) stocks, saw a remarkable performance. By December 2023, the index delivered 40% returns and surged by 79% over the year, based on price appreciation alone. This excludes the hefty dividends typically paid out by PSEs. 

    The trend has continued in 2024 so far, with the index rising 10.1% in January, according to Trendlyne’s share price history tool. In this edition of COTW, we look at the performance of the Nifty PSE index in 2023. 

    While 2023 was a stellar year for the PSE index, 2022 saw a modest rise of 12.3%. A key driver of 2023’s sharp rally was bullish economic sentiment, thanks to the government’s push for infrastructure capex, defence indigenisation, and Make in India initiatives. The relativeundervaluation of PSE stocks compared to their private counterparts also attracted investors to these fundamentally strong companies, taking the share of PSEs in the country’s overall market capitalisation to afour-year high of 13.3% (42 lakh crore).

    Defence and power-financing firms lead PSEs’ 2023 bull run 

    In 2023, the best-performing PSE stocks were the two largest power-financing NBFCs, REC and Power Finance Corporation (PFC) – both delivered over 100% returns. They reported an average loan growth of 20% on the back of healthy demand in the infrastructure and power sectors. In Q2FY24, REC achieved its highest-ever quarterly profit, an increase of 38.7% YoY due to improvingasset quality and efficient cost management.

    Meanwhile, India’s largest power generation company, NTPC rose by 69.7% in 2023, driven by strong order inflows amid growing power demand. Coal India also rose by 58.2%, helped by a surge in thermal power generation and higher e-auction premiums. According to Union Power Minister Nitin Gadkari, power demand in India is likely to cross 400 GW by 2030. 

    Defence stocks like Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) have become investor favourites due to the potential in the Indian defence manufacturing industry, as the government emphasizes domestic procurement and defence exports. In 2023, HAL and BEL delivered returns of 93.8% and 69.7%, respectively. HAL’s strong performance is attributed to its strong order book of over Rs 83,000 crore and UBS expects the firm to benefit from upcoming defence orders worth above Rs 5,00,000 crore in the industry over FY24-28.

    Among the state-run oil firms, Indian Oil Corporation (IOC) rallied by 61.4% in 2023. Softer crude oil prices and the expansion of refinery and chemical projects fuelled this surge. Other oil companies like Bharat Petroleum and Oil and Natural Gas Corporation (ONGC) rose by 35.1% and 35.6%, respectively. ONGC aims to increase production to 50 million metric tonnes (mmt) from 40 mmt by FY28, driven by 23 ongoing projects with a total capex of Rs 60,000 crore.

    GAIL and Power Grid Corporation are among the top-performing utility (electric and non-electric) stocks, rising by 58.1% and 41.8%, respectively. GAIL benefited from low valuations, improved demand for gas, and pipeline expansion. A stable dividend yield of around 4% and a high dividend payout ratio of 83.3% aided Power Grid’s surge. LIC, despite a modest share price increase of 5.3% in 2023, surpassedSBI to become the most-valued PSE. LIC was listed in 2021.

    PSEs to continue paying hefty dividends 

    Apart from the stellar price performance in 2023, PSEs are set to pay over Rs 50,000 crore in dividends to the government for the third consecutive year. The index has maintained a dividend yield of 3.1%, thanks to a consistent dividend policy and improved profitability. This resulted in nine out of the twelve companies considered in the analysis maintaining a dividend payout ratio of over 25%. However, power financer REC and insurance firm LIC were among those with lower divided payments, affected by mandatory capital requirements from regulatory bodies.

    A key factor driving the prices of PSE stocks is the expectation of the current government’s return in the 2024 elections. Despite recent gains, the government is likely to miss its disinvestment targets for the fifth consecutive year, as it faces issues like procedural delays and political and employee opposition. However, the 2021 public sector enterprise policy, which ensures government majority ownership in strategic sectors, has piqued investor interest in PSE stocks.

    Typically, PSE stocks are overlooked by investors due to their underperformance compared to private counterparts. The Nifty PSE index’s P/E is currently trading at a discount of 35.7% to its all-time high P/E of 15.4 recorded in 2017. The recent Offer For Sale (OFS) by the government to sell a 2.5% stake in NHPC received a good response from retail investors (subscribed 1.4x), reflecting the changing perception towards PSE stocks. This, along with the gains of 2023, indicates a  growing appreciation for the potential of PSE stocks.

    3
    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    29 Jan 2024
    5 stocks to buy from analysts this week with net profit growth

    5 stocks to buy from analysts this week with net profit growth

    By Bhavani Eswar

    This week we take a look at the stock picks from analysts with YoY growth in net profit during Q3FY24.

    1. Route Mobile:

    HDFC Securities maintains its ‘Buy’ rating on this internet software and services company with a target price of Rs 1,950, indicating an upside of 24.2%. In Q3FY24, the company's net profit grew by 28.3% YoY to Rs 105.7 crore, with revenue of Rs 1,043.8 crore. Analyst Amit Chandra says, “Route reported muted revenue growth in a seasonally strong quarter due to a slowdown in ILD (International Long Distance) volumes and a delay in deal ramp-up.” 

    Chandra believes that ILD billable transactions were affected for two months in Q3FY24 due to cost-saving initiatives by large e-commerce and OTT players. But according to the analyst, Vodafone Idea’s (VI) SMS firewall deal holds a revenue potential of $100 million. He believes that the management has revised the growth guidance for FY24 down to 15-20% from the initial 20-25% due to the ILD slowdown and a shift in VI’s deal timelines (from Q3FY24 to Q1FY25). 

    Chandra also expects a revival in ILD volume, new wins in the domestic market, and contributions from the VI deal to aid growth in FY25. He estimates the company to report a revenue CAGR of 10% over FY24-26.

    2. IDFC First Bank:

    Axis Direct maintains its ‘Buy’ call on this bank with a target price of Rs 100, indicating an upside of 19.8%. In Q3FY24, the bank’s net profit grew 18.4% YoY to Rs 715.7 crore, while net interest income improved 30% YoY. Analysts Bhavya Shah and Dnyanada Vaidya say, “The bank reported robust loan growth momentum (up 25% YoY) in Q3FY24, driven by consumer and auto loans, and rural finance, with significant growth across segments.” 

    They note that IDFC First Bank’s deposits growth of 43% YoY was driven by retail deposits, which supported asset growth and repayment of legacy borrowings. The analysts expect the deposits to remain healthy and continue to outpace the growth in advances. They expect opex to remain high in the near term due to the management’s focus on branch expansion, digitalisation and marketing investments.

    Shah and Vaidya forecast stable margins and expect the bank to maintain its growth momentum. They predict a credit and deposit growth of 24% and 33% CAGR respectively, over FY24-26. 

    3. ICICI Bank:

    KR Choksey maintains its ‘Buy’ call on this bank with a target price of Rs 1,250. This indicates an upside of 23%. The bank’s net profit grew 25.7% YoY to Rs 11,052.6 crore in Q3FY24, while its net interest income increased by 13.4% YoY to Rs 18,678.6 crore in line with the brokerage’s estimates. Analyst Karan Kamdar says, “The bank maintained resilient performance in Q3FY24, with healthy credit offtake across all segments.” 

    Kamdar believes that the net interest margins have been contracting and predicts this trend to continue for the next two to three quarters on the back of an increase in the cost of funds, led by the transmission lag impact. ICICI Bank’s management expects the mortgage, corporate, and auto segments to drive growth in the coming quarters. 

    The analyst projects an 18.7% CAGR in profits, 18.1% CAGR in advances, and 16.8% growth in operating profits over FY24-26. He remains optimistic about the company, citing healthy business momentum that is expected to yield healthy earnings growth and superior return ratios.

    4. PNB Housing Finance:

    Motilal Oswal maintains its ‘Buy’ rating on this housing finance company with a target price of Rs 1,025, implying an upside of 29.5%. In Q3FY24, the firm’s net profit grew by 25.8% YoY to Rs 338.4 crore (15% below the brokerage’s estimate), while net interest income (NII) declined 19% YoY to Rs 595 crore (11% below the brokerage’s estimate). Analysts Abhijit Tibrewal, Gautam Rawtani, and Nitin Aggarwal attribute the NII decrease to a gradual shift towards retail business. The firm’s net interest margin also fell by 45 bps to 3.5% YoY in Q3FY24. The analysts expect borrowing costs to decline and margins to improve after the credit rating upgrade.  

    The analysts anticipate recoveries from the written-off pool of loans “in both wholesale as well as retail segments, and expect write-backs to continue for the next three to four quarters starting from Q4FY24.” They expect margins to improve through higher yields and lower borrowing costs and see credit costs remaining flat at 35 bps. The company is projected to deliver a profit CAGR of 28% over FY24-FY26.

    5. Rossari Biotech:

    Edelweiss maintains its ‘Buy’ rating on this specialty chemicals company with a target price of Rs 926, indicating an upside of 21.5%. In Q3FY24, its net profit grew by 33.9% YoY to Rs 34.4 crore, with revenue of Rs 467.3 crore. Analyst T Ranvir Singh says, “Rossari Biotech’s overall earnings were lower than our estimate due to weaker sales.”

    Singh expects the company’s investment to increase Dahej’s capacity by 60.6% to 53,000 mtpa, which will boost revenue from the home, personal care and performance chemicals (HPCC) segment. The HPCC segment contributed 77% to total revenue in Q3FY24. He also sees growth opportunities in Rossari Biotech’s ventures in agrochemicals, oil and gas, chemicals, and silicon oils.

    The analyst expects margins to remain stable in Q4FY24 and expand in FY25 and FY26 on the back of softer raw material prices in the near term, and the introduction of high-margin value-added products. He expects a revenue CAGR of 16% over FY24-26.

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

    (You can find all analyst picks here)

    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    25 Jan 2024
    Five Interesting Stocks Today

    Five Interesting Stocks Today

    1. South Indian Bank:

    This banking stock surged by 8.3% on January 18, as its net profit grew by 197.2% YoY to Rs 305.4 crore in Q3FY24. Its revenue also increased by 15% YoY to Rs 2,184.1 crore during the quarter, helping the company appear in a screener of stocks with rising revenue for the past four quarters (QoQ). This led to net profit and revenue beating Trendlyne’s Forecaster estimates by 7.6% and 24%, respectively. The stock has also risen by 18.8% over the past week, featuring in a screener of stocks with high volume and high gain.

    The revenue boost was on the back of improvement in the treasury, corporate and retail banking segments. However, the bank’s net interest margin (NIM) declined by 33 bps YoY due to higher cost of funds. This rise in cost was driven by loan growth (up 11% YoY) outpacing the 9% increase in deposits. The bank was also hit by a 201 bps YoY decline in the CASA ratio. 

    The company’s Director and CEO, PR Seshadri, said, “Our cost of funds continues to rise as deposits are repricing, bringing cost of deposits to 5.2%, up from 4.3% in Q3FY23.” 

    Post results, Anand Rathi maintains its ‘Buy’ rating on the stock with a target price of Rs 39 per share. This indicates a potential upside of 12.2%. The brokerage is optimistic about the bank’s profitability prospects, citing reduced stress from the legacy book. It expects the company’s net profit to grow at a CAGR of 18.9% over FY23-26.

    2. Steel Strips Wheels:

    This auto parts and equipment firm rose 5.8% on Friday following its Q3FY24 results announcement. Its net profit has increased by 35.8% YoY to Rs 60 crore and revenue grew by 18.3% YoY. The net profit beat estimates by 25%, aided by lower taxes. The company appears in a screener of stocks with increasing quarterly profits for the past four quarters. According to Trendlyne’s Technicals, the stock has risen by 5.8% in the past month.

    The firm’s revenue growth was driven by higher volumes and realizations, with strong domestic automotive sales contributing to this increase. Currently SSWL has a 45% market share in passenger vehicles and 30% in the two-wheeler segment, 

    Steel Strips Wheels has a big capacity boost coming. It expects a capacity increase of 64.1% by Q4FY25, following its recent acquisition of AMW Autocomponent, an auto-component manufacturer. With rising domestic demand, growing exports, and a shift towards premium alloy wheels, the company forecasts a 10% CAGR in wheel sales in FY24-26.

    The management maintains its FY24 sales volume growth guidance at 15% YoY, with revenue projected to grow by 23.4% YoY, driven by increased volumes. EBITDA margins are expected to increase, owing to the increasing share of premium alloy wheels. Aluminum knuckles launched in September 2023 are expected to contribute 6% of revenue by Q4FY24. Demand from the US and Europe contributed 15% of revenue in 9MFY24, as existing customers are shifting away from China. Exports are predicted to generate around Rs 600 crore in revenue in FY24. 

    Axis Direct notes that the AMW plant acquisition, a growing alloy wheels order book, product diversification, and 2W motor hub-wheels expansion position the company well to meet increasing demand, especially from the US and Europe. The brokerage maintains a ‘Buy’ rating on the stock.

    3. UltraTech Cement:

    This cement and cement products company has risen by 19.7% in the past quarter. In Q3FY24, it reported an 8% YoY increase in revenue to Rs 16,740 crore and a 68% YoY increase in net profit to Rs 1,777 crore, marginally surpassing Trendlyne Forecaster estimates. UltraTech posted a moderate volume growth of 6% YoY at 237.3 million tonnes per annum (MTPA), impacted by elections in four major states and fiscal challenges in Bihar and West Bengal. 

    The volume growth in Q3FY24 was supported by a 2% QoQ hike in cement prices.  According to Crisil, cement prices are expected to increase by 1-3% in FY25 to Rs 400-405 per bag on the back of government initiatives in the affordable housing segment. During the earnings call, the management guided capacity utilization to increase to 80-85% in Q4FY24 from 77% in Q3FY24 due to an uptick in cement demand.

    In Q3, UltraTech’s fuel cost declined by 19% YoY on a tonne basis, owing to an 8.4% drop in Brent crude prices in 2023 and a 25% reduction in the consumption price of petcoke. With fuel costs accounting for around 25-30% of total expenses for cement firms, UltraTech expects a further 7-8% decrease in fuel costs over the next six months. The firm also appears in a screener of companies benefiting from low crude oil prices.

    The firm expanded into the Jharkhand market in Q3 by acquiring the 0.5 MTPA grinding assets of Burnpur Cement. Its current capacity stands at around 130 MTPA and the management aims to increase this to 200 MTPA by 2028 through an investment of 13,000 crore. It also revised its capex guidance to Rs 9,000 crore per annum each for FY24 and FY25, up from Rs 7,000 crore. Axis Securities maintains its ‘buy’ rating on the stock and expects the firm’s profit to grow at a CAGR of 31% over FY23-26.

    4. Mahanagar Gas:

    This utilities company hit its all-time high of Rs 1,387 on Tuesday and has risen by 9.4% in the past week, after announcing its Q3FY24 results. Its net profit for the quarter has increased by 84.3% YoY to Rs 317.2 crore, despite a 5.3% YoY fall in revenue to Rs 1,771.8 crore. It beat Trendlyne Forecaster’s net profit estimate by 8.4%. Profit and EBITDA increased due to a 25.6% YoY drop in raw materials cost.

    The company’s EBITDA margins improved by 13.1% points YoY, despite reducing the selling price of CNG by Rs 3/kg during the quarter. The increase in price realisation was helped by a 22.5% decrease in input CNG prices, while the selling price saw only a marginal decline. 

    Going forward, a fall in cheap government-administered (APM) gas supply will lead to increased use of HPHT gas (which has low margins), potentially moderating margins. The company appears in a screener for stocks with improving cash flow for the past two years.

    Mahanagar Gas announced an interim dividend of Rs 12 per equity share for FY24 and set the record date as February 5, 2024.

    Vahan data from December 2023 shows a 25% YoY increase in CNG vehicle registrations. The company is poised to benefit from the government's aim to raise the share of natural gas in the energy mix from 6% to 15% by 2030. The firm’s offer of free fuel cards worth Rs 20,000-5,00,000 for new or retrofitted CNG vehicles may have helped drive Q3 conversions. An uptick in CNG vehicle registrations is also expected to benefit the company in the coming quarters.

    HDFC Securities reiterates its ‘Buy’ call on Mahanagar Gas on the back of its attractive valuation. The analysts estimate volumes at 3.6 million metric standard cubic meters per day for FY24 and expect volume growth of 8.9% CAGR over FY24-26.

    5. Tata Elxsi:

    This IT software & services company fell 5.2% on January 24 as its Q3FY24 net profit missed Trendlyne’s Forecaster estimates by 1.1%. In addition, its EBITDA margin contracted by 40 bps QoQ to 29.5% during the quarter due to increased employee benefit expenses and other costs.  However, Tata Elxsi’s Q3FY24 net profit grew by 3.2% QoQ to Rs 206.4 crore on account of a deferred tax credit of Rs 4.4 crore. 

    The company’s revenue has increased by 3.7% QoQ due to growth in the EPD (Embedded Product Design) segment, which accounts for 85% of total revenue). This segment consists of transportation, media & communication, and healthcare verticals. 

    During the quarter, the revenue of Tata Elxsi’s transportation vertical (which contributes around 37% of total revenue) grew 2.7% QoQ due to deal wins. The healthcare vertical (which accounts for around 14% of total revenue) increased by 4.6% QoQ. According to  Manoj Raghavan, CEO and MD, “Our healthcare business is on track to achieve about 20% of the overall revenues of the company by 2026.” Meanwhile, the media & communication vertical’s revenue growth remained muted at 0.6% QoQ. 

    Morgan Stanley maintains its ‘Underweight’ rating on Tata Elxsi with a target price of Rs 7,500. According to the brokerage, the company’s Q3 performance fell short of its expectations, particularly in the EPD segment. The EPD segment’s media & communication vertical faces challenges due to lower discretionary spending from clients, and cost pressures. 

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

    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    24 Jan 2024
    5 stocks to buy from analysts this week with high upsides

    5 stocks to buy from analysts this week with high upsides

    1. Federal Bank:

    HDFC Securities maintains its ‘Buy’ rating on this bank with a target price of Rs 190. This implies an upside of 32.6%. In Q3FY24, the bank’s net profit grew by 25.3% YoY to Rs 1,006.7 crore. Analysts Krishnan ASV, Deepak Shinde, and Akshay Badlani attribute its highest-ever quarterly earnings in Q3FY24 to healthy loan growth (18% YoY) and non-core earnings from a stake sale in its subsidiary. 

    The analysts note a decline in the Federal Bank’s CASA ratio due to intense competition for low-cost deposits. They believe that the bank’s differentiated fintech ecosystem partnerships will gain market share in relatively high-yield segments and drive business productivity. They think the bank is highly likely to achieve the targeted RoA of 1.4% over FY24-25.

    The bank’s Gross Non-Performing Assets (GNPA) ratio has been stable at 2.3%, with a healthy Provision Coverage Ratio of 70% in Q3FY24. As a result, the analysts have lowered their credit cost forecasts. They note, however, that ongoing investments in technology and branch expansion will increase operating costs in the medium term.

    2. IIFL Finance:

    Motilal Oswal gives a ‘Buy’ rating to this financial services company with a target price of Rs 800, indicating an upside of 24.7%. In Q3FY24, the company’s net profit grew by 29.6% YoY to Rs 490.4 crore, while its revenue increased by 23% YoY to Rs 2,694.4 crore. Analysts Abhijit Tibrewal, Gautam Rawtani and Nitin Aggarwal believe that the company’s net interest income improved by 45% YoY due to lower assignment and fee income. They say, “IIFL has morphed into a franchise with a robust distribution network, strong co-lending presence, and superior digital loan origination and underwriting capabilities.” 

    The analysts note that urban affordable housing growth in metro and tier-1 cities has been slow, but the management expects demand improvement over the next few quarters. Currently, IIFL Finance’s AUM stands at Rs 77,400 crore, up 34% YoY. The analysts believe that the company can effectively leverage fintech partnerships to deliver a 25% AUM CAGR over FY24-FY26. It is also projected to deliver RoE of over 20% in the medium term.

    3. HDFC Bank:

    KR Choskey maintains its ‘Buy’ rating on this bank with a target price of Rs 1,950, implying an upside of 35.1%. Post announcement of Q3FY24 earnings, the stock fell 8.4% on Wednesday. The bank's slower deposit growth (1.9% QoQ) and contraction in net interest margins (which dropped by 70 bps YoY) were major reasons.  Analyst Unnati Jadhav says, “HDFC reported mixed performance growth in Q3FY24, with healthy operating performance and stable margins but moderation in deposit growth.” She notes that credit growth has outpaced deposits, leading to increased borrowings. She attributes the 60.9% YoY loan book growth to Rs 24 lakh crore to the retail and commercial & rural banking (CRB) segments. 

    There is some silver lining in the results, according to the analyst. Jadhav states that the strong performance in the CRB segment has been led by its deep rural penetration, as the bank now has a presence in 2,10,000 villages, as against 60,000 last year. HDFC Bank’s operating income grew by 25.8% YoY in Q3FY24, led by a 31% YoY increase in non-interest income. This growth, according to the analyst, contributed to an improved cost-to-income ratio. She expects a CAGR of 22.5% in net interest income and 25.3% in profit over FY24-26.

    4. Ethos:

    Axis Securities initiates a ‘Buy’ coverage on this specialty retail company with a target price of Rs 3,050, indicating an upside of 30.6%. Analysts Preeyam Tolia and Suhanee Shome say, “Our confidence in Ethos' future is grounded in the company's robust and consistent performance over the past several quarters.”

    The analysts are optimistic about Ethos as it is foraying into the fast-growing certified pre-owned (CPO) segment due to the shortage of new luxury watches, with the Indian CPO market expected to reach Rs 900 crore by CY25. They view the asset-light CPO model with lower capex as a step in the right direction. They also believe Ethos' expansion into other fast-growing luxury segments such as luggage and jewellery could be its next growth driver.

    Tolia and Shome expect the company’s EBITDA margin to improve on the back of a better product mix, store expansions, and operating leverage. They predict a robust CAGR of 35% in revenue and 42% in profit over FY24-26. They also note that the recent fundraising of Rs 175 crore through qualified institutional placement and a cash balance of Rs 180 crore as of H1FY24 provide a financial foundation for Ethos' expansion.

    5. Biocon:

    Sharekhan upgrades its rating on this biotech company to 'Buy' with a target price of Rs 332, indicating an upside of 22.9%. Analysts at Sharekhan say, "Biocon Biologics is improving its performance, led by the acquisition of Viatris and its successful integration into Biocon Biologics for 120 countries." However, they expect this operational performance to be offset by higher finance costs due to the debt incurred during the $1 billion Viatris deal. 

    The analysts see Biocon as well-placed to commercialise and realise the entire gains of its multiple products in the launch pipeline and the transition of Viatris. They foresee new customer additions driving volume growth, boosting the company's performance in European markets and increasing its global market share. With Biocon's debt having risen post the Viatris acquisition, analysts anticipate the company to divest its non-core assets to reduce these liabilities. 

    The analysts also express optimism regarding the robust opportunities in the biosimilars segment as some key global brands are set to lose patent exclusivity soon.

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

    (You can find all analyst picks here)

    2
    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    24 Jan 2024
    5 stocks to buy from analysts this week with high upsides

    5 stocks to buy from analysts this week with high upsides

    By Abhiraj Panchal

    1. Federal Bank:

    HDFC Securities maintains its ‘Buy’ rating on this bank with a target price of Rs 190. This implies an upside of 32.6%. In Q3FY24, the bank’s net profit grew by 25.3% YoY to Rs 1,006.7 crore. Analysts Krishnan ASV, Deepak Shinde, and Akshay Badlani attribute its highest-ever quarterly earnings in Q3FY24 to healthy loan growth (18% YoY) and non-core earnings from a stake sale in its subsidiary. 

    The analysts note a decline in the Federal Bank’s CASA ratio due to intense competition for low-cost deposits. They believe that the bank’s differentiated fintech ecosystem partnerships will gain market share in relatively high-yield segments and drive business productivity. They think the bank is highly likely to achieve the targeted RoA of 1.4% over FY24-25.

    The bank’s Gross Non-Performing Assets (GNPA) ratio has been stable at 2.3%, with a healthy Provision Coverage Ratio of 70% in Q3FY24. As a result, the analysts have lowered their credit cost forecasts. They note, however, that ongoing investments in technology and branch expansion will increase operating costs in the medium term.

    2. IIFL Finance:

    Motilal Oswal gives a ‘Buy’ rating to this financial services company with a target price of Rs 800, indicating an upside of 24.7%. In Q3FY24, the company’s net profit grew by 29.6% YoY to Rs 490.4 crore, while its revenue increased by 23% YoY to Rs 2,694.4 crore. Analysts Abhijit Tibrewal, Gautam Rawtani and Nitin Aggarwal believe that the company’s net interest income improved by 45% YoY due to lower assignment and fee income. They say, “IIFL has morphed into a franchise with a robust distribution network, strong co-lending presence, and superior digital loan origination and underwriting capabilities.” 

    The analysts note that urban affordable housing growth in metro and tier-1 cities has been slow, but the management expects demand improvement over the next few quarters. Currently, IIFL Finance’s AUM stands at Rs 77,400 crore, up 34% YoY. The analysts believe that the company can effectively leverage fintech partnerships to deliver a 25% AUM CAGR over FY24-FY26. It is also projected to deliver RoE of over 20% in the medium term.

    3. HDFC Bank:

    KR Choskey maintains its ‘Buy’ rating on this bank with a target price of Rs 1,950, implying an upside of 35.1%. Post announcement of Q3FY24 earnings, the stock fell 8.4% on Wednesday. The bank's slower deposit growth (1.9% QoQ) and contraction in net interest margins (which dropped by 70 bps YoY) were major reasons.  Analyst Unnati Jadhav says, “HDFC reported mixed performance growth in Q3FY24, with healthy operating performance and stable margins but moderation in deposit growth.” She notes that credit growth has outpaced deposits, leading to increased borrowings. She attributes the 60.9% YoY loan book growth to Rs 24 lakh crore to the retail and commercial & rural banking (CRB) segments. 

    There is some silver lining in the results, according to the analyst. Jadhav states that the strong performance in the CRB segment has been led by its deep rural penetration, as the bank now has a presence in 2,10,000 villages, as against 60,000 last year. HDFC Bank’s operating income grew by 25.8% YoY in Q3FY24, led by a 31% YoY increase in non-interest income. This growth, according to the analyst, contributed to an improved cost-to-income ratio. She expects a CAGR of 22.5% in net interest income and 25.3% in profit over FY24-26.

    4. Ethos:

    Axis Securities initiates a ‘Buy’ coverage on this specialty retail company with a target price of Rs 3,050, indicating an upside of 30.6%. Analysts Preeyam Tolia and Suhanee Shome say, “Our confidence in Ethos' future is grounded in the company's robust and consistent performance over the past several quarters.”

    The analysts are optimistic about Ethos as it is foraying into the fast-growing certified pre-owned (CPO) segment due to the shortage of new luxury watches, with the Indian CPO market expected to reach Rs 900 crore by CY25. They view the asset-light CPO model with lower capex as a step in the right direction. They also believe Ethos' expansion into other fast-growing luxury segments such as luggage and jewellery could be its next growth driver.

    Tolia and Shome expect the company’s EBITDA margin to improve on the back of a better product mix, store expansions, and operating leverage. They predict a robust CAGR of 35% in revenue and 42% in profit over FY24-26. They also note that the recent fundraising of Rs 175 crore through qualified institutional placement and a cash balance of Rs 180 crore as of H1FY24 provide a financial foundation for Ethos' expansion.

    5. Biocon:

    Sharekhan upgrades its rating on this biotech company to 'Buy' with a target price of Rs 332, indicating an upside of 22.9%. Analysts at Sharekhan say, "Biocon Biologics is improving its performance, led by the acquisition of Viatris and its successful integration into Biocon Biologics for 120 countries." However, they expect this operational performance to be offset by higher finance costs due to the debt incurred during the $1 billion Viatris deal. 

    The analysts see Biocon as well-placed to commercialise and realise the entire gains of its multiple products in the launch pipeline and the transition of Viatris. They foresee new customer additions driving volume growth, boosting the company's performance in European markets and increasing its global market share. With Biocon's debt having risen post the Viatris acquisition, analysts anticipate the company to divest its non-core assets to reduce these liabilities. 

    The analysts also express optimism regarding the robust opportunities in the biosimilars segment as some key global brands are set to lose patent exclusivity soon.

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

    (You can find all analyst picks here)

    2
    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    24 Jan 2024

    Chart of the Week: Sectors outperform the index, with a little help from the government

    By Akshat Singh

    While markets have turned volatile in recent weeks, the Nifty 50 index has had a strong year,  rising by 19.7%, and touching its all-time high of 22,124.2 on January 16. Of the 29 sectors on Trendlyne’s dashboard, 27 have outperformed the Nifty 50 index. Except for chemicals & petrochemicals and FMCG, all major sectors surpassed the index by a good margin. Sectors like general industrials, durables, shipping, construction & engineering and fertilizer are also set to benefit from government outlays in FY25.

    In this edition of Chart of the Week, we look at the top-performing sectors over the past year on Trendlyne’s sector dashboard.

    Telecom and realty sectors double money for investors

    Let’s start with the telecommunications equipment sector, which rose by 150.4% over the past year. The sector got a boost from the government's initiatives to export homegrown 4G and 5G technologies to attract investments and strengthen foreign ties, especially with African and Pacific countries. The Cellular Operators Association of India (COAI) has also submitted recommendations for various regulatory levies for the telecom sector in the 2024-25 budget. Top performers include ITI, Avantel, and GTL Infrastructure, with respective annual gains of 357.1%, 238.8%, and 52.2%. 

    The realty sector is another star performer with a 106.2% rise in the past year. It is expected to continue its robust performance into 2024, driven by expected rate cuts and sustained demand. According to reports, the Prime Minister’s ‘housing for all’ scheme will continue to benefit buyers. Top performers in this sector include Signatureglobal (India), Prestige Estates, and D B Realty, which rose 192.8%, 190.6%, and 170.8% in the past year, respectively. 

    Centre’s capex and subsidies boost general industrial and fertilizer sectors

    The general industrial sector has risen by 91% over the past year. This surge is linked to the government allocating 3% of India's GDP as capital expenditure for this sector in the previous Union Budget. While the upcoming general elections might lead to a moderation in capital expenditure, Motilal Oswal suggests it is likely to remain high. Top performers in the sector include GE T&D India, Jindal Saw, and Suzlon Energy with annual gains of 452.9%, 320.9%, and 318%, respectively.

    The fertilizers sector also rose by 86.1% in the past year. Analysts project the fertilizer subsidy bill to hit Rs 2 trillion in 2024, having already consumed 63% of its total capacity by November 2023. The top performers in the sector were The Fertilizers and Chemicals Travancore, Gujarat State Fertilizer & Chemicals, and National Fertilizers. They have risen by 161.1%, 152.1%, and 71.3% in the past year, respectively. 

    The transportation sector surged 78.3% in the past year, driven by the shipping industry. Cochin Shipyard, Mazagon Dock Shipbuilders and Garden Reach Shipbuilders & Engineers rose by 244%, 208.2% and 85.5%,  during the period. The growth can be attributed to strong order books from domestic and offshore clients, and the government’s push for defence funding. 

    Railway stocks set to benefit from Union Budget 2024-25, PLIs drive consumer durables sector

    The cement & construction sector rose by 71.7% in the past year, helped by the government's focus on capital spending in railways, roads, and defence. This trend is expected to continue at a moderate pace. Top performers in this sector include Ircon International, Rail Vikas Nigam and Texmaco Rail & Engineering, with annual gains of 339%, 317.4% and 270.7%, respectively.

    Next, we have the consumer durables sector with a 70.3% rise. According to HDFC Securities, 2024 will likely see a rise in demand for high-quality products made locally with advanced features and sustainable designs. CRISIL forecasts an 8-10% growth in the sector this year, driven by a preference for premium products in urban areas. The white goods PLI scheme, with an allocation of Rs 6,238 crore spanning from 2021 to 2029, also supports this growth. Top performers of the sector include HBL Power Systems, Kaynes Technology India and Apar Industries. They have risen by 391.8%, 239.9%, and 219.6%, respectively, in the past year. 

    Lastly, the metals & mining sector rose by 64.5% in the past year due to an uptick in real estate and infrastructure activities. India's finished steel consumption reached a five-year high in H1FY24 on the back of increased construction activities and high demand from the automobile sector. According to Fitch, India’s steel consumption for FY24 is expected to grow by 12%. However, higher Chinese imports have kept prices under pressure. In response, the government is developing a PLI 2.0 scheme to boost steel production. Top performers in this sector are Electrosteel Castings, Sandur Manganese & Iron Ores, and Gujarat Mineral Development Corp with annual gains of 279.8%, 241.4% and 205.8%, respectively, in the past year

    Copy LinkShare onShare on Share on Share on
     
    logo
    The Baseline
    20 Jan 2024
    The Indian stock market in an election year | Screener: Stocks announcing result dates with high revenue estimates

    The Indian stock market in an election year | Screener: Stocks announcing result dates with high revenue estimates

    By Shreesh Biradar

    2024 looks to be a nail-biter of a year, with India's general election coming up. In fact, more than 50 nations are holding elections in 2024, with 4 billion people - half the world's population - voting. The results of elections in the US, India, the Eurozone and Russia will be closely watched. 

    Vladimir Putin is of course, likely to be re-elected in the Russian election. One would argue that Putin should be worried about the impact of 315,000 Russians dying in the Ukraine war, and a weak economy. But since people opposing Putin usually end up with jail terms or "fall" out of windows, he doesn't have much real competition.

    In the US, opinion polls this early in the election cycle are usually inaccurate. But right now Donald Trump has the lead over Biden, despite the many legal cases he faces this year. In India, surveys suggest that PM Modi will be the voters’ choice. 

    Strategists at Goldman Sachs expect higher foreign inflows into India post elections: 

    The Modi-led government is using the Ayodhya temple inauguration to woo Hindu voters, and may also announce new benefits for rural votebanks in the upcoming budget. Rural voters could see a hike in minimum support prices (MSPs), or a boost in employment programs.

    In India, the average return of the Nifty 50 one year before the elections is 29.1%, and one year after is 12% (averaged over the past five general elections).

    Nifty50 has risen 20% on average in the six months before elections, over the past five general elections

    But India’s runaway stock market needs to face up to slowing consumption. Lower capex by India Inc. compared to government spending, and slowing foreign direct investment have also increased uncertainty over market reaction in an election year.

    In this week’s Analyticks:

    • The election impact: How will the Indian market perform in an election year? 
    • Screener: Rising stocks that have announced result dates, with strong Forecaster estimates for revenue and EPS in Q3FY24

    Let’s get into it.


    Populist giveaways may not have a big impact on the stock market

    Recent state elections have seen a range of populist moves, from free travel for women to interest waivers for agricultural loans. To lock in the rural vote, the Modi-led government may announce something additional this year, similar to the 2019 direct benefit transfer of Rs 6,000 per farmer per year.

    Speculation is that the announcement could include free electricity for rural voters, or an increase in the size of subsidized agricultural loans (currently agricultural loans up to Rs 3 lakh have an interest subsidy of up to 4% per annum if promptly repaid). 

    The one thing common across pre-election budgets has been an increase in the minimum support price (MSP) of crops. The government typically increases MSPs for Rabi and Kharif crop just before the election.  The National Rural Employment Guarantee Act (NREGA) has also increased its budgetary estimate pre-election in the past ten years.

    One would expect these populist moves to push up the budgetary deficit for the economy, but this has not been true in the last decade. India has exceeded its budgetary estimates only four times in the past ten years (FY09, FY12, FY20 and FY21). 

    India’s actual revenue expenditure is less likely to shoot budgetary estimate in 2024

    One reason is that any MSP increase puts more money in the hands of rural folks, boosting rural consumption. Food inflation might see a spike as a result. But if the inflation impact is not major, the overall benefits overshadow the downside.

    Since government spending in rural areas has declined by 3% (April 23-November 23), the government may announce additional incentives for rural voters in the FY25 budget. The market could see a knee-jerk negative reaction to these populist moves. But in the long run, these announcements don't break the bank and usually deliver positive returns.

    Cuts are coming: US Fed expected to cut rates in April, RBI in May

    Interest rate cuts are expected across the globe this year. But the timing of interest rate cuts in India is still unclear. 

    According to Bloomberg and HSBC, the first round of interest rate cuts by the US Fed is expected to be around April-May, and big cuts are likely only after June. The interest rate cuts will be absorbed by the consumer just before the US presidential election in November.  This will be followed by rate cuts by the European Central Bank as the European Parliament heads into elections in November.

    The RBI usually cuts Indian interest rates after rate cuts by the US Fed. With India’s general election planned for May 2024, it will be interesting to see if RBI jumps the gun and cuts interest rates pre-election and before the Fed. But Morgan Stanley expects RBI to cut interest rates only in May or June. 

    Interest rate cuts just before elections are considered a populist move. Will this government risk pushing the RBI to do this, opening the door to higher inflation? Investors will be watching this closely.

    India's market valuations don’t match reality

    The revenue and profit growth of Nifty 50 companies have seen a mismatch in the past couple of quarters. Revenue growth has been moderate, while profits have been strong. A report by Sharekhan expects Nifty 50 firms' revenue to increase by 6% YoY in Q3FY24, while profits are expected to surge 11% YoY. 

    The tepid growth in revenues indicates slowing consumption and the impact of the global slowdown on India's economy. Companies have battled this with premiumization of products, along with a cut-down in capex spending, which has helped profits grow.

    The growth in profits has pushed the Nifty 50 to new highs, with investors ignoring the underlying problem of weaker revenues. Indian indices are trading at expensive valuations compared to historical averages.

    India’s Sensex is trading at a 27% premium compared to its historical average

    India’s stock market valuations are among the highest in the world right now. The Sensex is currently trading at 24 PE, a premium of 27% from its 10-year average. Most other emerging economies' benchmark indices are trading below their historical averages (except for Taiwan and Hong Kong).

    The recent runup in Indian indices could limit the positive reaction from the stock market, if a single party gets a clear win. The optimism with a single party mandate could also be subdued with a Modi win, as the Modi led government has now been in power for the past 10 years. However, a hung assembly could definitely spook markets.

    According to Chris Wood, the global head of equity strategy at Jefferies LLC, Nifty 50 is expected to see a 25% correction if the Modi-led government fails to get a clear mandate. Markets are mostly pricing in a Modi or Modi-coalition victory, so there is not much remaining upside for that outcome. A more confusing election result would be a different story.


    Screener: Rising stocks have announced their result dates with strong Forecaster estimates for revenue and EPS in Q3FY24

    Craftsman Auto leads in Forecaster estimates for revenue YoY growth in Q3

    As the result season begins, we take a look at stocks that have risen the most over the past year and quarter, with high Forecaster estimates for growth in Q3FY24. This screener shows rising stocks over the past quarter and year which have announced their result dates. These stocks also have high Forecaster growth in revenue and EPS in Q3FY24, and 'Strong Buy' or 'Buy' broker consensus rating.

    The screener is dominated by stocks from the automobiles & auto components, banking & finance and software & services sectors. Major stocks that appear in the screener are Craftsman Automation, CreditAccess Grameen, Nippon Life India Asset Management, Endurance Technologies, Tata Motors, Equitas Small Finance Bank, Intellect Design Arena and Motherson Sumi Wiring India. 

    Craftsman Automation has the highest Forecaster estimates for YoY revenue growth at 55.7% in Q3FY24. The stock has risen by 11.2% over the past quarter and 45.8% in the past year. According to Motilal Oswal Financial Services, growth in the aluminium products segment and in the passenger vehicles’ original equipment manufacturing segment will drive revenue growth for this auto equipment manufacturer.

    For CreditAccess Grameen, Trendlyne’s Forecaster expects its revenue to grow 42.5% YoY in Q3FY24. The stock rose by 22.3% over the past quarter, while it gained 92.9% in the past year. HDFC Securities believes that the NBFC is delivering strong profitability and revenue growth in a volatile asset class which will help in improving its cost of funds in the medium term.

    You can find more screeners here.

    Signing off,

    The Trendlyne Team

    1
    Copy LinkShare onShare on Share on Share on
     
    more
    loading
    Logo Trendlyne

    Stay ahead of the market

    Company

    PrivacyDisclaimerTerms of Use Contact Us

    Resources

    Blog FAQsStock Market Widgets

    Copyright © 2025 Giskard Datatech Pvt Ltd