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26 Dec 2024

Five stocks to buy from analysts this week - December 26, 2024

1. Awfis Space Solutions:

ICICI Securities maintains its ‘Buy’ rating on this consumer services company with a target price of Rs 1,049, indicating an upside of 44.7%. Awfis Space Solutions provides workspace rentals and enterprise workspace design and building services. The company has a pipeline of 150,649 seats, with over 110,000 operational as of September 2024. Analysts Adhidev Chattopadhyay and Saishwar Ravekar expect a modest increase in seat prices (4-5% like-to-like) over FY25–27, with steady occupancy of around 71% in its operational portfolio during this period, as new centres typically take 6-12 months to fully mature.

The analysts highlight that workspaces are increasingly integrating flexible office spaces into their portfolios as part of “Core + Flex” strategies. According to a survey, ~30% of respondents plan to expand their presence in flexible office spaces over the next 12 months. Chattopadhyay and Ravekar said, "We estimate the company will achieve a 31% revenue CAGR over FY25–27, driven by seat expansion. Additionally, we expect EBITDA margin to rise to 14.6% by FY27, up from 9.2% in FY24, as the non-seat revenue increases and cost-optimisation initiatives in existing centres take effect."

2. Oberoi Realty:

Axis Direct initiates a ‘Buy’ rating on this realty company with a target price of Rs 2,560, indicating an upside potential of 10.2%. Oberoi Realty is a major real estate developer in Mumbai, active in residential, retail, hospitality, and social infrastructure projects, and in the luxury and ultra-luxury real estate market.

The analysts Eesha Shah and Preeyam Tolia highlight that the company plans to expand into key markets such as Delhi NCR, where rising demand for premium properties is an opportunity for high-end projects. The company has around 17.2 million sq ft of upcoming projects in MMR and Delhi region. The analysts note that the company has completed over 35 projects and holds a portfolio of ~30 Mn sq ft of ongoing and future developments. The company is expected to achieve a pre-sales CAGR of 25% between FY25-27.

Shah and Tolia expect a CAGR of 17.8% in net sales and 20.2% in net profit over FY25-27. Additionally, they also expect collections to grow at a CAGR of 20% over the same period.

3. PNB Housing Finance:

Motilal Oswal reiterates its ‘Buy’ rating on this housing finance company with a target price of Rs 1,160, indicating an upside potential of 36.4%. Analysts Abhijit Tibrewal, Nitin Aggarwal and Raghav Khemani highlight that the company is shifting its loan mix toward higher-yield emerging and affordable housing segments. These segments now account for 23% of its portfolio, up from 18% in March 2023.

This shift is driven by leveraging the Credit Linked Subsidy Scheme (CLSS) scheme under the Pradhan Mantri Awas Yojana (PMAY), which is expected to improve yields and expand net interest margins (NIMs). The analysts also note that the company plans to open 15 new branches in the affordable housing segment during FY25. Further, they target to add around 50 new branches every year from FY26 onwards.

Tibrewal, Nitin Aggarwal and Raghav Khemani believe the company is well-positioned to navigate the headwinds in net interest margin (NIM) growth and further offset it with an improvement in product mix. They expect the firm's revenue to grow at a CAGR of 26.6% over FY25-27, with the loan book expanding at ~18% CAGR and net profit at ~23% CAGR over the same period.

4. Bharat Forge:

Geojit BNP Paribas upgrades its rating to ‘Buy’ on this industrial products manufacturer with a target price of Rs 1,558. This indicates an upside of 18.6%. In H1FY25, the company's revenue grew 2% YoY to Rs 7,795 crore, while net profit increased significantly by 32.1% to Rs 598 crore. EBITDA margin improved by 190 bps to 17.8%, driven by a favorable product mix and strong domestic business performance.

Bharat Forge’s (BFL) capital expenditure (capex) for the first half of the year totalled Rs 820 crore, primarily focused on US operations and investments in the EV business. Analyst Antu Thomas expects the EV segment to achieve EBITDA break-even in the next two to three quarters, despite the current slowdown in Europe.

The company secured new orders worth approximately Rs 646 crore in H1, contributing to a total order book of Rs 2,200 crore, primarily from defence. Thomas expects continued growth in the defence order book, which should help expand margins, along with long-term improvements in overseas operations strengthening BFL’s stability.

5. Lumax Auto Technologies:

Sharekhan reiterates its ‘Buy’ rating on this small cap auto parts & equipment manufacturer with a target price of Rs 767, indicating an upside potential of 23.6%. Lumax Auto Technologies (LATL) has entered the CNG segment by acquiring a 60% stake in Greenfuel Energy Solutions for Rs 153.1 crore.

The analysts say that this acquisition will provide access to the growing green fuels market, including CNG, hydrogen, and related technologies. The deal is expected to generate annual revenue of Rs 300-350 crore with a CAGR of 25-30% for the next few years. They also highlight that LATL’s order book has reached Rs 1,050 crore in Q2FY25, with 40% dedicated to EV models.

The analysts believe the company is focusing on increasing content per vehicle, pursuing joint ventures and acquisitions to introduce new product categories, and strengthening partnerships with original equipment manufacturers (OEMs). LATL is also investing in research and development for advanced technologies such as autonomous driving assistance, electronics integration, and Human-Machine Interface. As a result, they expect a CAGR of 12.9% in revenue for FY25-27.

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

(You can find all analyst picks here)

The Baseline

24 Dec 2024

Chart of the Week: Biggest wealth destroyers over the past year

By Aditi Priya

Over the past year and despite the volatility in recent months, the Indian equity market has delivered impressive returns, with the Nifty 500 index gaining 17.6% in 2024.

Foreign outflows increased recently due to high equity valuations and muted Q2 results in India. Foreign investors were lured elsewhere by US Fed rate cuts and recent China stimulus, contributing to an 8.1% decline in the Nifty 500 over the past quarter.

Finance Minister Nirmala Sitharaman said on December 17, “This is only a temporary blip, and healthy growth will return in the coming quarters.” She added that India’s GDP growth has averaged 8.3%, making it the world’s fastest-growing major economy.

While the Indian equity market still managed to post strong gains in the past year, the gains were unevenly distributed. Some companies surged ahead, while others struggled due to challenges such as regulatory investigations (Vodafone Idea, Rajesh Exports), sector-wide downturns (banking and finance), or significant business losses (Honasa Consumer, Tanla Platforms), leading to a loss of investor wealth.

In this edition of Chart of the Week, we spotlight the underperformers – companies that saw significant declines in their share prices, lagging behind the index and leaving investors disappointed.

126 companies from the Nifty 500 have made it to the ‘Wealth Destroyers’ screener in 2024. The banking and finance sector struggled the most, contributing 28 names to the list. Among them are CreditAccess Grameen, RBL Bank, Ujjivan Small Finance Bank, IndusInd Bank, and Equitas Small Finance Bank. The software and services sector followed, with 11 companies making it to the screener including Tanla Platforms, Tata Technologies, Happiest Minds, Tata Elxsi and Birlasoft.

A canceled merger and rising competition weigh on Zee Entertainment

Media company Zee Entertainment, witnessed the sharpest decline of 52.9% this year within the Nifty 500 universe, topping the wealth destroyer screener. It has been a tough year for the company, with the main setback being the cancellation of its proposed merger with Sony Group’s India unit, which cited concerns over fund diversion and weak corporate governance.

Additionally, the joint venture between Reliance Industries and Walt Disney, announced on February 28, merged Viacom18 and Star India, has created a media giant valued at Rs 70,352 crore. This has intensified competition, making it more difficult for Zee to grow its market share. The company also reported mixed results in Q2FY25, with revenue and operating profit falling nearly 19% and 3% YoY, respectively. However, net profit saw a 70% YoY increase driven by a 20.3% reduction in expenses through effective cost management. But the previous year's net profit was affected downward by a one-time charge of Rs 120 crore, which did not recur this year. The net profit this Q2 rose mainly due to reduced expenses and the absence of last year's one-time charge, and operating profit declined.

Multiple banking and finance companies feature in the Wealth Destroyers

CreditAccess Grameen, one of India’s largest non-banking finance company-microfinance institutions (NBFC-MFI), saw the sharpest decline of 49.2% in 2024 in share price within the banking and finance sector. This came after its Q2FY25 results highlighted increasing delinquencies in the microfinance space, slower disbursements, and higher provisions. Gross NPA rose by 1.7 percentage points YoY to 2.4%, while net NPA increased by 0.5 percentage points YoY to 0.8%, signaling a decline in asset quality.

In fact, the Nifty Bank index, with an 8% return in 2024, has notably underperformed the broader Nifty 500 index. Banks such as AU Small Finance Bank, Axis Bank, IndusInd Bank, and IDFC First Bank have significantly contributed to this underperformance, appearing on the wealth destroyer screener. IndusInd Bank has faced a sharp 40.1% decline over the past year. This was due to increased stress in microfinance loans, failure to meet its full-year loan growth target, and a surge in bad loans in the microfinance segment. Similarly, AU Small Finance Bank and IDFC First Bank have dropped nearly 30% in 2024, while Axis Bank has recorded a smaller decline of 0.9% during the same period.

In addition to these big names in the sector, small finance banks and institutions with high exposure to unsecured loans also struggled. RBL Bank faced asset quality concerns due to rising NPAs and regulatory challenges, which eroded investor confidence and sharply reduced its share value by 40.1% over the past year. The gross NPA ratio rose by 0.2 percentage points QoQ to 2.9%, while the net NPA increased by 0.1 percentage points QoQ to 0.8%.

Ujjivan Small Finance Bank saw a 41.5% drop in 2024, with net profit for Q2FY25 declining by 29% to Rs 233 crore. This decline was due to deteriorating asset quality and higher expenditures. The bank's gross NPA ratio increased to 2.5% in Q2FY25, up from 2.4% a year earlier, while the net NPA stood at 0.6%, compared to 0.1% previously.

Equitas Small Finance Bank saw a 38.6% decline in its stock price over the past year. Weak quarterly results in FY25 and higher provisions to address stress in its microfinance portfolio drove this drop.

Regulatory issues and weak financials trigger sell-off in Vodafone Idea and Rajesh Exports

Vodafone Idea's share price dropped over 45% in 2024 due to regulatory challenges and ongoing profitability concerns. The Supreme Court’s decision on Adjusted Gross Revenue (AGR) added financial pressure, requiring the company to pay significant dues. The company is also struggling with a shrinking customer base, lagging far behind Reliance Jio and Airtel, and rising costs, leading to doubts about its long-term financial health.

Similarly, Rajesh Exports, a gems and jewellery company, saw its stock decline by 36.3% over the past year, struggling with multiple challenges. The company faced regulatory compliance issues, including missing documents in earnings filings and tax-related controversies. The company also faced allegations of ambiguous transactions and lapses in disclosures, leading to accusations of misleading financial reporting.

In addition, Rajesh Exports has struggled with declining revenues and thin profit margins since Q2FY24, making it difficult for the company to generate sustainable profits.

The Baseline

20 Dec 2024

Five Interesting Stocks Today - December 20, 2024

1. Avenue Supermarts (DMart):

This department stores chain has declined by 7.6% over the past week, and touched a new 52-week low of Rs 3,399 on Friday. This comes after Goldman Sachs cut the target price on the stock to Rs 3,425 per share, highlighting that Avenue Supermarts’ (DMart) competitive moat is facing increasing pressure amid a rise in quick commerce players. The average target from analysts on the company according to Trendlyne’s Forecaster is Rs 4,442, so Goldman Sachs’ outlook on the business is now especially negative.

The DMart operator is known for offering the lowest prices on branded fast-moving consumer goods. However, the company has had to increase its discounting efforts to sustain its pricing advantage. In December, DMart increased its discounts to 25% over the maximum retail price to counter competitive pressures from Q-commerce players like Zepto, Zomato’s Blinkit, and Swiggy Instamart.

Q-commerce players’ advantages are discounted pricing and 10-minute delivery. This has pressured DMart's growth in metro cities, as consumers in the region now prefer smaller, frequent purchases. Analysts believe the overlap between convenience-seeking consumers and DMart's value-focused shoppers is higher than expected, likely impacting its growth trajectory further.

During Q2FY25, Avenue Supermarts’ revenue grew by 14.4% YoY to Rs 14,444.5 crore. Net profit increased by 5.8% YoY to Rs 659.6 crore. However, revenue growth was slower compared to the previous quarters. The management highlighted that like-for-like (LFL) sales declined to 5.5% during the quarter, driven by slower growth in metro areas. Q-commerce's rising popularity has impacted these markets, which account for 47% of DMart’s revenue. Commenting on this, Neville Noronha, the CEO and MD, said, “We are clearly seeing the impact of online grocery formats on our stores and operations in metro cities”.

Goldman Sachs notes that DMart’s growth prospects are strongest in smaller cities beyond the top 10, where competition is less intense. However, its slower expansion approach may hinder its ability to be the first to market. The brokerage also lowered its earnings estimates for DMart for FY25 by 4.2% to reflect slower revenue growth.

2. Lupin:

This pharmaceutical company rose 3% on December 19 after receiving FDA approval for its drug application for Emtricitabine and Tenofovir Alafenamide tablets. These drugs are used together to treat human immunodeficiency virus (HIV) and as a pre-exposure to reduce the risk of HIV-1 infection. The market size for these drugs was valued at $3.5 billion in 2023 and is projected to grow to $6.2 billion by 2033.

Lupin rose 5.5% in the past month following two key developments. The company acquired trademarks for three anti-diabetes brands—Gibtulio, Gibtulio Met, and Ajaduo to strengthen its diabetes portfolio in India. Additionally, Lupin received tentative approval from the US FDA for its Sitagliptin and Metformin Hydrochloride tablets. These tablets help manage blood sugar levels in adults with type 2 diabetes. It had an estimated annual sales of $1.1 billion in the US as of September 2024.

In Q2FY25, in-licence products made up 12% of Lupin’s sales, down from 15% in Q2FY24. Analysts expect that as the share of in-licensing products decreases, Lupin’s margins and profitability will improve, particularly in India. The company’s EBITDA margin stood at 19% in FY24 and increased to 23% in Q2FY25, driven by product launches like Mirabegron. CEO Vinita Gupta said, “We have achieved higher margins despite a nearly 190bps QoQ increase in our R&D spend. We expect EBITDA margins to range between 22-23% for H2FY25 and aim for a margin of 23-25% in the medium term.”

Gupta highlighted that Lupin has a pipeline of over 20 respiratory and 40 injectable products in development in the US. This is expected to push complex generics above 50% of total sales in the next few years. This signals a growing moat for Lupin, from more sales in advanced, harder-to-make medicines. Gupta is confident of achieving its FY25 double-digit revenue growth target in the US markets.

BOB Capital Markets maintains its ‘Buy’ rating on this pharma stock with a target price of Rs 2,438, suggesting a potential upside of 13.4%. The brokerage expects the proportion of in-licence sales to decrease to 10% by FY26, down from 12% in Q2FY25, with margins in the India business improving. It anticipates Lupin’s sales to grow at a 9% CAGR and net profit at 19% over FY25-27, driven by a strong product pipeline for the US market.

3. KFIN Technologies:

Thisfinancial services provider surged 15.8% over the past week following theannouncement that it has joined BlackRock’s Aladdin Provider network in a bid to make its offerings for asset managers more standardised and efficient. This collaboration will enable KFintech to offer enhanced fund administration and accounting services to clients.

If we look at the revenue mix as of Q2 FY25, around 70% of the revenue comes from the domestic mutual fund business, which is up 39.4% YoY. As of September 30, KFintech had a market share of 32.4% in India’s asset management services industry, as it serves 6 of the top 10 asset management companies.

Given the heavy reliance on Indian markets, CFO, Vivek Mathur,said, “We continue to de-risk the domestic business by expansion in the international market.” The company witnessed the highest revenue growth of 44% YoY from the services provided in the international market and other investor solutions. The firm saw an average AUM growth of 27.5% YoY in this segment. They also aim to capture 100% of the market opportunity in Thailand as there is no competition. The company has also won service contracts from funds in Malaysia and a trust in the Philippines.

Forecaster estimates revenue and net profit growth to be over 35% for Q3. The company stands to benefit from the ‘financialization’ trend of Indians moving money from savings into investments. MD & CEO, Sreekanth Nadella, expects this trend to continue to play out into the coming quarters and years.

Jefferies maintains a ‘Buy’ rating on KFintech as they believe that the firm offers a long-term opportunity. They are optimistic about the opportunities in international business as the company receives licenses to operate in the Southeast Asian markets.

4. HG Infra Engineering:

Thisconstruction & engineering company rose 3.4% on Monday after its wholly-owned subsidiary, HG Chennai-Tirupati (II) Highway Private Ltd,secured an order worth Rs 862.1 crore from the National Highways Authority of India (NHAI). The project is for building 4-lane and 6-lane highways in Andhra Pradesh.

Last week, the companyreceived a letter of acceptance (LoA) for a Rs 763.1 crore project from the Ministry of Road Transport and Highways (MoRTH). This project focuses on upgrading National Highway 227B, in Uttar Pradesh, to a two-lane road.

Despite the huge order book of Rs 16,985 crore inQ2FY25, HG Infra Engineering’s net profit declined 16% YoY to Rs 80.7 crore, due to high cost of materials. However, net profit beat Trendlyne’sForecaster estimates by 25.1%. Its revenue for the quarter also fell 5.5% YoY to Rs 902.4 crore. Regarding the fall in revenue, Harendra Singh, Chairman and Managing Director of the company said, “Progress of highway (construction) was slowed down due to erratic and good rainfall during the monsoon.” However, the management expects revenue to grow 17-18% in the upcoming quarters.

Commenting on the order book, Harendra Singhsaid, “We are targeting an order inflow of between Rs 11,000-12,000 crore for FY25.” In H1FY25, the companyreported an order inflow of Rs 6,280 crore, reflecting over 2X YoY growth, leading the order book to grow by 56% YoY. The company appears in ascreener of stocks with high analyst ratings and a potential upside of at least 20%.

Geojit BNP Paribas has a ‘Buy’ rating on HG Infra Engineering with a target price of Rs 1,791. The brokerage expects a CAGR of 16.8% in revenue, 15.7% in EBITDA, and 18.3% in net profit over FY25-27. They also expect the order book to grow at a CAGR of 31% over the same period.

5. Coromandel International:

This fertilizer company has risen by 4% in the past week. On December 17th, the company entered into a partnership with Mahindra Group’s ‘Krish-e Partner’ to provide drone spraying services for Indian farmers. Along with this, on December 5th, the company signed a strategic research agreement with the US-based International Fertilizer Development Center (IFDC) to address agricultural challenges with next-generation fertilizers, that improve nutrient efficiency and reduce environmental impact.

CRIN posted a nominal 6.6% YoY increase in revenue in Q2FY25, however it reported a 12.3% YoY decline in net profit to Rs 664.1 crore due to rise in raw material prices and lower government subsidies. The company however beat the Trendlyne Forecaster estimates for revenue by 12.7% and the net profit estimate by 2.7% due to a rise in net manufacturing volumes by 6% YoY to 1.1 MMT. It appears in a screener of stocks having strong momentum.

The company’s management highlights the improving monsoons in India, contributing towards demand appreciation of fertilizers. On this aspect, the company’s MD & CEO, S. Sankarasubramanian, said, “The monsoon has been good at 108% of the long-term period average and we have witnessed a strong Kharif season. Actually, our south markets received 114% of the normal rains. Northeast monsoon which is likely to bring rains to Rayalaseema and Coastal Andhra has started on a strong note, and we do expect a very strong Rabi season.”

The company has maintained its EBITDA per ton guidance of Rs 4,500-5,000 per ton for manufactured fertilizer (NPK and DAP) for FY25. On the guidance front, S. Sankarasubramanian adds, “Our enhanced value addition and increased intermediate capacities help us maintain margins despite significant global commodity price volatility. By boosting our captive manufacturing of phosphoric and sulfuric acid, we can absorb price shocks and subsidies. If market conditions improve, margins are expected to rise.”

Motilal Oswal has maintained its ‘Buy’ rating on CRIN with a target price of Rs 2,000. The brokerage expects the company’s fertilizer business to show strong growth with improved margins YoY in H2FY25. Additionally, the crop protection business is expected to recover and maintain growth momentum. It also adds that the Agrochemical prices have bottomed out globally and are expected to rise in the next calendar year, as Chinese suppliers won't be able to sustain the low prices for long.

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

The Baseline

20 Dec 2024

Five trends that will make 2025 very different from 2024 | Screener: Sector outperformers of 2024

We are cursed with short attention spans, so we tend to prioritize the most recent events. Social media and smartphones have made this attention problem even worse - as I am constantly reminded, when I return from the grocery store with everything except the item I went there for.

Investors have been pretty downbeat recently about the stock market's performance, so it took a glance at the Nifty50's share price history to give me some perspective on what the year was actually like. The index had a pretty strong first half in 2024, compared to the previous years. The trendline changed sharply only in October, when the decline shook up portfolios and the investor mood.

What about 2025? 2024 has sometimes felt like a holding pattern, with elections in the India and the US, wars without end, and inflation keeping consumers quiet. Early signals suggest that 2025 will be different.

In this week's Analyticks:

Five trends that will make 2025 unlike 2024
Screener: Stocks that outperformed their sectors over the past year

1) What happens in the US will not stay in the US - especially under Trump

President-elect Donald Trump is a noisemaker who writes messages in ALL CAPS, throws threats at countries ("100% tariffs!") and nominates messy, troubling characters to key administrative roles, like conspiracy-theorist Kash Patel to the FBI and vaccine-opponent Robert F Kennedy to be the Health Secretary. Trump has also signalled a broad change in US international policy, with his focus on"America First".

One of the things Trump promised this week was "reciprocal tariffs" on US trading partners: “If they tax us, we tax them the same amount." This has big implications for India, since US is India's second-biggest trading partner, and many American goods face high import duties in India. India's average tariffs have risen from 5% in 2014 to 17% now, which is higher than other Asian countries that trade with the US.

Overall, Biden has been better than Trump for India's trade with the US. So this relationship may get shaky if Trump follows through on his trade threats.

2. Oil will be cheaper in 2025 - maybe by a lot

A big, once-in-decades change is happening in the oil market: the OPEC cartel's power is dwindling, with its market share falling fast. “There is more fear about 2025's oil prices than there has been since years - any year I can remember, since the Arab Spring,” one oil analyst noted. OPEC countries are set to raise their pumping targets gradually in 2025, bringing more oil to the market. But 90% of the increase in oil supplies in 2025 are set to come from non-OPEC countries like US, Brazil and Canada, limiting OPEC's pricing power.

The oil surplus could hit 1.6 million barrels per day by the second half of 2025, bringing prices lower, especially if demand from China, the main oil consumer, stays weak.

Brent futures point to a continued downward trend in oil prices, and some analysts are especially pessimistic - Citi analysts expect Brent price to average $60 per barrel next year, while others predict $40 per barrel.

3. Not so green: Coal will come out of the shadows in 2025

There is much talk these days about the green economy: increasing renewables is non-negotiable to bring down emissions. But coal, the dirtiest fuel, is not going anywhere and may even hit record highs in 2025, thanks in part due to India.

Despite countries like the UK banning coal entirely, coal demand was at a record in 2024, according to the International Energy Agency, and is still growing.

India is expected to consume more coal than the European Union and the US combined in 2025. But the main driver of coal consumption is China, which consumes 30% more coal than the rest of the world put together. It will take until 2027 for India's power generation from renewables to have real impact.

4. The consumer story will be back in the headlines in 2025

2024 was an especially difficult year for the Indian consumer, with high inflation and high interest rates depressing spending, and the overall consumer mood. From FMCG to paints to consumer durables, CEOs noticed "a muted response" across Indian consumer markets. Another worrying signal was slow growth in the average salary bill at India's listed companies in the September quarter.

2025 however is expected to see a recovery, with inflation trending downward, as food prices come down from recent highs. If inflation stays within RBI's target range, interest cuts should come as early as February 2025.

S&P Global predicts healthy growth in Indian consumption spending, with spending on goods, already at $1.29 trillion, set to ramp up steadily.

5. 2025 will be a volatile year

The Nifty Vix is going to see some upheaval. Analysts across the board are predicting volatilty thanks to rising geopolitical risks: a trade war is a possibility between the US and China, and a change in government is likely in Canada, Germany and Australia. There has also been a swing to the political right globally, and that is coming with deregulation across industries. Cooling inflation could also drive rate cuts across the board.

Overall, the momentum looks for now, to be in India's favour. China is in the crosshairs, giving India an opportunity in global markets. Oil prices are trending lower, more good news for us, an oil importer.

But there are as always, unpredictables - another regional crisis could flare up (say China-Taiwan), US-India relations could worsen, a bad monsoon could trigger more inflation.

Changes are afoot. As that double-edged promise goes: it is going to be an interesting year.

Screener: Relative Outperformance versus sector over one year

General Industrials & Consumer Durables stocks rise the most in the past year

As we near the end of 2024, we take a look at the top-performing stocks over the past year relative to their sector. This screener shows Nifty 500 stocks whose share price over one year rose faster than its sector.

The screener is dominated by stocks from the banking & finance, automobiles & auto components, food, beverages & tobacco, realty, and pharmaceuticals & biotechnology sectors. The most notable stocks in the screener are Jyoti CNC Automation, GE Vernova T&D India, Motilal Oswal Financial Services, Dixon Technologies (India), Oracle Financial Services Software, Godfrey Phillips India, Kaynes Technology India, and Anant Raj.

Jyoti CNC Automation shows up in the screener after rising by 333.8% over the past year, outperforming the general industrials sector by 157.5 percentage points. This industrial machinery stock was listed on the exchange on January 16, 2024, and is the best-performing IPO during the year. Its stock price surged on the back of its revenue and net profit growing YoY in Q1 and Q2 of FY25. In Q2FY25, the company’s revenue grew by 45.6% YoY to Rs 441.7 crore. Its net profit increased by 348.2% YoY to Rs 75.9 crore, driven by a reduction in inventory and employee benefits expenses.

Motilal Oswal Financial Services also appears in the screener after rising 225.5% over the past year, outperforming the banking & finance sector by 201 percentage points in the same period. This capital markets stock’s price surged on the back of strong results. Its revenue and net profit have grown YoY for the past six consecutive quarters. The company also issued three bonus shares for every share owned by the shareholders on June 10, helping the stock price surge 10.6% during the month.

You can find some popular screeners here.

The Baseline

19 Dec 2024

Five stocks to buy from analysts this week - December 19, 2024

By Divyansh Pokharna

1. Triveni Engineering & Industries:

Sharekhan maintains a ‘Buy’ rating on this sugar stock with a target price of Rs 582. This indicates an upside of 23.3%. Triveni Engineering & Industries (TEIL) has approved a composite scheme involving the merger of Sir Shadi Lal Enterprises (SSEL) with itself. Following this, the gear and defence business, Triveni Power Transmission (TPT), will be demerged and listed as a separate entity. Analysts believe that this restructuring will enhance shareholder value in the long run.

Both TEIL and SSEL are involved in the production of sugar and alcohol/ethanol. The proposed merger aims to consolidate all sugar, ethanol, and alcohol operations into one entity.

The demerged power transmission business represents 4.8% of TEIL’s total turnover. As of September 2024, the business had an order book of Rs 345 crore. The management is focusing on R&D to improve efficiency and meet global standards. They expect higher order bookings from the defense segment in the coming years.

Analysts are forecasting strong growth in the distillery business due to expanded capacity. They believe that higher minimum selling prices (MSPs) and rising international sugar prices will keep sugar realizations stable, leading to an improved EBITDA margin from 12% in FY24 to 12.5% by FY27.

2. Max Healthcare Institute:

Axis Direct initiates its ‘Buy’ rating on this healthcare facilities firm with a target price of Rs 1,315, indicating an upside of 10.2%. Max Healthcare is a leader in the Delhi-NCR and Mumbai regions, operating over 2,900 beds and holding a strong presence in oncology. Its oncology segment is valued at Rs 1,400 crore and holds nearly 20% market share. The company also has the highest average revenue per occupied bed (ARPOB) of Rs 76,000 and an occupancy rate of 75% compared to its peers.

Max Healthcare plans to add 3,000 beds to its network over the next three years, representing 70% of its current capacity. The company has already invested Rs 1,700 crore for capex. Analysts Ankush Mahajan and Aman Goyal estimate an additional investment of Rs 5,000 crore for this expansion and believe the company’s cash flow will be sufficient to cover the costs.

The company’s EBITDA has grown from Rs 332 crore in FY21 to Rs 1,806 crore in FY24, with the EBITDA margin increasing from 9.2% to 26.5%. Mahajan and Goyal write, “We expect the margins to remain stable in the range of 27-28%, as the new beds from brownfield expansions will take time to become operationally profitable.”

3. ICICI Bank:

Motilal Oswal maintains its ‘Buy’ rating on this bank with a target price of Rs 1,550, indicating a potential upside of 14.1%. ICICI Bank achieved a deposit growth of ~20% YoY in FY24, supported by its digital banking and extensive branch network. Analysts Nitin Aggarwal, Dixit Sankharva, and Disha Singhal highlight the bank’s focus on profitable growth, backed by a retail deposit-driven balance sheet. Despite competition on deposit rates, it manages rates to handle outflows, keeping its credit-deposit (CD) ratio at ~85%.

ICICI Bank has a comfortable current CD ratio and is focusing on monitoring its liquidity coverage ratio (LCR). Analysts highlight that the bank is working to maintain a healthy balance between giving out loans and attracting deposits in tough market conditions. They also see a strong potential for growth in fee income, particularly through transaction banking. Additionally, ICICI is reportedly exploring opportunities to expand its NRI segment.

Analysts Aggarwal, Dixit, and Singhal note that ICICI Bank is expected to maintain healthy loan growth, stable asset quality, and competitive return ratios. Margins may face short-term pressure due to potential rate cuts and rising funding costs. However, strong deposit inflows and a low CD ratio support its growth prospects.

4. Shriram Pistons & Rings:

Emkay maintains its ‘Buy’ rating on this industrial machinery manufacturer with a target price of Rs 2,950. This indicates an upside potential of 36.6%. Shriram Pistons & Rings’ (SPRL) subsidiary, SPR Engenious, has entered into an agreement to acquire a 100% stake in TGPEL Precision Engineering for Rs 220 crore. This acquisition will enable the company to expand its product portfolio beyond internal combustion engine (ICE) powertrains, and is expected to be completed by December 2024.

The analysts Chirag Jain, Jaimin Desai, Nandan Pradhan, and Omkar Rane note that TGPEL manufactures high-precision injection molds with two facilities in Uttar Pradesh. It has presence in both automotive and non-automotive segments (Electrical, Consumer Goods, Medical), with clients that includes Denso, Continental, Motherson, Havells, Polycab, Dabur, Gilette, etc. The acquisition strengthens SPRL’s diversification strategy into non-engine parts, following its previous acquisition of Takahata Precision India in February 2023.

Jain, Desai, Pradhan, and Rane believe the acquisition, though small (around 4% of SPRL sales), is important strategically and represents another step in diversifying away from engine parts. They expect revenue to grow 10% in FY25 and 12% in FY26.

5. Apeejay Surrendra Park Hotels:

IDBI Capital initiates a ’Buy’ rating on this small cap hotel company with a target price of Rs 245, indicating an upside potential of 31.1%. The company operates 34 hotels with 2,410 rooms across metros and emerging cities under five brands and has plans to expand to 61 hotels in over 45 cities, totaling 5,048 rooms by FY29.

Analyst Archana Gude highlights that ASPHL outperformed the industry with a 92% occupancy rate in FY24, significantly higher than the industry average of 70%. Its retail food and beverage brand, Flurys, has expanded from 19 outlets in FY17 to 95 as of H1 FY25, with plans to reach 120 by FY25 and add 40 stores annually. This asset-light and scalable business model is expected to improve ASPHL’s growth potential and overall business prospects.

Gude expects ASPHL’s net sales to grow at 11% annually from FY25 to FY27, driven by 8% growth in the hospitality segment and 32% in Flurys. EBITDA is projected to grow at 11% per year from FY24 to FY27, while profit after tax is expected to rise by 26% annually during the same period.

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

(You can find all analyst picks here)

The Baseline

17 Dec 2024

Chart of the week: The best performing IPOs of 2024

By Aditi Priya

India’s IPO market has witnessed remarkable growth in 2024, with an impressive surge in both the number of listings and the capital raised. India has overtaken China in the world’s largest investable stock benchmark. India’s share of the free float in the MSCI All-Country World Index has risen to 2.3%, exceeding China’s 2.1%.

Angel One Wealth highlighted that while the global IPO market peaked in 2021, India has stood out over the past year with strong public listings, thanks to significant demand, domestic inflows, and the outperformance of sectors like utilities, automobiles and consumer durables. BSE IPO Index, with a 33.1% YoY gain, has significantly outperformed the benchmark BSE 500 Index, which gained 19.9%.

As of December 17, 319 companies have collectively raised Rs 1.6 trillion through SME and mainboard IPOs. This figure has already surpassed the 238 IPOs recorded in 2023. In terms of funds raised, 2024 reflects an 184% increase compared to 2023, during which Rs 578.9 billion was raised. The total number of mainboard IPOs this year stands at 79, with more additions expected by the year-end.

This week’s chart of the week highlights the best-performing IPOs of 2024. It also explores which sectors saw the highest number of mainboard IPOs and which investor group is driving the IPO boom in India.

Consumer durables sector leads with top-performing IPOs

Out of the 79 mainboard companies listed so far, 57 are trading above their issue price, with an average current gain of 44.6%. Companies such as KRN Heat Exchanger & Refrigeration, Platinum Industries, Bharti Hexacom, Orient Technologies, and Diffusion Engineers have seen their stock prices more than double since listing.

On the other hand, companies like Hyundai Motor, ACME Solar Holdings, Capital Small Finance Bank, and Ceigall have been trading below their issue prices. Notably, Hyundai Motor, the largest IPO in India’s history, raised Rs 27,870 crore but debuted 7% below its issue price.

The average listing gain of mainboard IPOs stands at 26.8%, slightly below 2023's average of 28%. The metals and mining sector recorded the highest average listing gain at 71.7%, while the cement and construction sector recorded the lowest, of 10.6%.

When looking at valuations, five out of the top 10 performing companies are overvalued compared to their sector P/E. These companies include Jyoti CNC Automation, KRN Heat Exchanger, Premier Energies, Enviro Infra Engineers, and EPACK Durables. On the other hand, companies like Platinum Industries, Bharti Hexacom, Gala Precision, Orient Technologies, and Diffusion Engineers are undervalued relative to their sector P/E.

The best-performing mainboard IPO of the year is Jyoti CNC from the general industrials sector. The company specializes in manufacturing and supplying computer numerical control (CNC) machines. The company’s client base includes ISRO, Bharat Forge, Bosch Limited, and others across aerospace, automotive, and industrial sectors. Since its listing on January 16, the company's stock has surged over 333% due to a robust order book and strong H1FY25 results. The IPO, with an issue size of Rs 1,000 crore, was priced at Rs 331 per share, listed at a 31.2% premium. The company, with a P/E of 104.2, is trading significantly above the sector average P/E of 67.8, indicating that it is overvalued by approximately 53.7% compared to its sector.

Interestingly, three companies (Premier Energies, Waaree Energies and EPack Durables) in the top 10 IPOs have delivered the highest returns since their listing, are from the consumer durables sector. These companies benefitted from policies like ‘Make in India’, industry diversification, investments in new technologies, and increasing global demand for industrial products. Premier Energies debuted with an 86.6% premium, while Waaree Energies listed with a 55.6% premium.

EPack Durables was listed at a 9.4% discount on January 30 but has since gained over 110% from its issue price. The company specializes in manufacturing a variety of domestic appliances, including room air conditioners, induction stoves, mixer grinders, water dispensers, and components. With a P/E ratio of 97.4, it is currently trading well above the sector average of 71.9.

The banking and finance sector recorded the highest number of mainboard IPOs (9) in 2024, followed by the diversified consumer services sector. A total of nine companies from the banking and finance sector launched IPOs, including Bajaj Housing Finance, Aadhar Housing Finance, Manba Finance, Go Digit General Insurance, and Northern Arc Capital.

The sector's IPOs showed mixed performance, with companies like Bajaj Housing Finance, Aadhar Housing Finance, and Manba Finance delivering positive returns, while others like Northern Arc Capital, Jana Small Finance Bank, and Akme Fintrade posted negative returns. The average listing gain for this sector’s IPOs is 22.2%, while the average current gain is 15.9%.

In the diversified consumer services sector, companies such as Awfis Space Solutions, TBO Tek, Medi Assist Healthcare Services, Stanley Lifestyles, Entero Healthcare Solutions, GPT Healthcare, Suraksha Diagnostic, and LE Travenues Technology posted an average listing gain of 21.8%, with current gains reaching 39.1%. Entero Healthcare, the largest IPO in the diversified consumer services sector with an issue size of Rs 1600 crore, listed at an 8.6% discount. However, the company has since gained 16.6%. With a P/E of 89.5, which is higher than the sector’s P/E of 72, the company is overvalued by 24.3%.

Institutional plays: QIBs fuel the IPO boom with the highest subscription rates in 2024

The IPO boom in India this year was primarily driven by qualified institutional buyers (QIBs) with a median subscription rate of nearly 61 times, with the highest subscription in KRN Heat, which delivered the second-highest returns. KRN Heat was subscribed 253x by QIBs, 431.6x by HNIs, and 98x by retail investors, leading to an overall oversubscription of 214.4x.

High net-worth individuals (HNIs) have a median subscription rate of nearly 48x. The metal and mining sector saw the highest subscription rates, with an average of 142x. Vibhor Steel Tubes, in particular, saw high demand, with HNIs subscribing 721.3x, qualified institutional buyers (QIBs) subscribing 178.7x, and retail investors subscribing 188.2x, resulting in a total subscription of 298.9x, the highest among all IPOs.

Retail investors have a median subscription rate of 13.6x, with the highest demand seen in BLS E-Services. This IPO was subscribed 237 times by retail investors, 300 times by HNIs, and 123 times by QIBs.

The Baseline

13 Dec 2024

Five Interesting Stocks Today - December 13, 2024

1. CEAT:

Thistyre manufacturersurged over 10% on Monday following the acquisitionannouncement of Camso's Off-Highway tyres (OHT) business from Michelin in an all-cash deal, valued at approximately $225 million (Rs 1,909 crore).

The acquisition of Camso is expected to strengthen CEAT's position in the OHT market, which currently contributes around 15% of revenues, and widen its customer base. The acquisition also provides CEAT with access to a global network of over 40 international OEMs and premium OHT distributors.

InQ2 FY25, the company’s revenue increased 8% YoY, but net profit declined by 41.4% on a YoY basis. Even though revenue was in line with Forecasterestimates, net profit missed estimates by 16.4%, due to higher raw material prices in rubber and crude. However, based on Trendlyne’sindustry dashboard, Ceat has outperformed other major players in the auto tyres space over the past month and quarter.

Gross margins declined by 194 bps on a QoQ basis and by 587 bps on a YoY basis in Q2. MD & CEO, Arnab Banerjee,said, “The raw material prices escalated at a very steep rate of 6% (in) Q2 over Q1. It's very difficult to pass on the entire increase through finished goods in such a short period.” CEAT took price hikes across the board in September, and management hints at a further 1.5-2% hike for passenger, truck, and bus tyres.

Given that Camso is a tier-one brand, CFO Kumar Subbiah expects this acquisition to be margin accretive. Camso's off-highway construction equipment tyre and tracks business clocked revenue of around $200 million in 2023 and at the same run rate, Ceat’s revenue from the off-highway tyre business should double once the merger is complete.

2. Zen Technologies:

This defence company has risen by 14.9% in the past week after it made a push into the US defence market. Zen Technologies announced a partnership with Applied Visual Technology (AVT) Simulation, a provider of customized training systems, in Florida. The collaboration should boost simulation and training solutions for defence and security forces.

The company received an Indian patent on November 26 for its tank simulator, the T90 Containerized Crew Gunnery Simulator (T90 CGS). This system enables instructors to customize training scenarios, from basic skill tests to more complex exercises that involve the entire crew working together.

Chairman and MD Ashok Atluri said, "We expect a sizable revenue from this new technology, potentially contributing 5-10% of our revenues over the next three years." He added that the company has demonstrated the product to the US government, though it may take a couple of years before any deals materialize. However, the company expects opportunities in other countries to come sooner. Speaking about the market size, Atluri said, "Our estimates indicate that the market for tank simulators in India is around Rs 4,000 crore and nearly $1 billion overseas."

In Q2FY25, the company’s net profit surged 4.1X YoY to Rs 62.7 crore, while operating revenue grew 3.6X YoY to Rs 241.8 crore, surpassing Trendlyne Forecaster estimates by 26.7% and 20.8%, respectively. As of Q2, the company had an order backlog of ~Rs 960 crore, with an order pipeline of Rs 3,500 crore. The management expects to receive Rs 1,200 crore in orders during H2FY25.

Motilal Oswal retains its ‘Buy’ call on Zen Technologies with a target price of Rs 2,400. This indicates a potential upside of 10.7%. The brokerage is positive about Zen's partnership with AVT Simulation. It anticipates 67% and 65% CAGR in revenue and net profit over FY25-27, driven by increased order inflows and better working capital management.

3. Bajaj Finance:

This NBFC company has risen 4.8% in the past week, following its investor day on December 10. During the event, Bajaj Finance outlined its long-term strategy and its plans to transition into a FinAI company.

Under its 2025-29 long-range strategy (LRS), Bajaj Finance aims to grow its customer base to approximately 20 crore and double its retail credit market share to 4-5%. This is a big jump from the company’s current customer base, which stood at 9.2 crore in H1FY25. It also plans to enhance its market presence and increase from 4,245 locations so far in FY25 to over 5,200 by FY29.

The NBFC also unveiled plans to evolve into BFL 3.0, a FinAI company – powered by fintech and AI, over the next 4-5 years. Bajaj Finance will deploy AI across all its processes, which will help improve efficiency, reduce costs, and enhance customer engagement. Commenting on this, Manish Jain, the CEO said, “We are currently implementing 29 GenAI use cases across 25 workstreams, which is expected to drive cost savings of around Rs 150 crore annually in FY26. You will see this adoption accelerating rapidly in the coming months”.

In addition, the company highlighted three megatrends in focus - Green Finance, Multi Cloud, and Zero Trust. Bajaj Finance will extend financing for solar and EV products to retail and MSME customers, starting Q4FY25, and targets Rs 2,000 crore of green finance by FY26.

Bajaj Finance’s net profit had surged 80.8% YoY to Rs 5,613.7 crore in Q2FY25. Revenue increased 27% to Rs 14,491.8 crore, driven by higher assets under management (AUM). The company’s AUM reached Rs 2.8 lakh crore in Q2, a rise of 28% YoY. Bajaj Finance projects an AUM of Rs 4 lakh crore for FY25, and analysts believe it is well-positioned to achieve the target.

Anand Rathi maintains its ‘Buy’ rating on Bajaj Finance with a target price of Rs 7,905. The brokerage believes the company is well poised to achieve its long-range targets due to its strong execution skills, robust customer base, and strong tech architecture.

4. Metropolis Healthcare:

Thishealthcare services company rose 2.6% on December 9 after its board approved theacquisition of a 100% stake in Delhi NCR headquartered Core Diagnostics, for Rs 246.8 crore. Core Diagnostics specialises in oncology testing, offering 1,300 tests and serving more than 6,000 specialty prescribers.

The managementbelieves the acquisition will strengthen the company’s specialty portfolio, including therapy monitoring and cancer confirmatory tests, enhancing its presence in the Rs 4,000-5,000 crore oncology diagnostics market, which is expected to grow at a CAGR of 17.5% from FY25-28. With this acquisition, Metropolis’ revenue contribution from oncology isexpected to grow to 10% from 4%, while specialty contribution will inch up to 41% from 37%. Core Diagnostics’ average revenue per test (ARPT) is Rs 2,300 which is 4.5 times than that of Metropolis Healthcare.

Surendran Chemmenkotil, CEO of Metropolis Healthcaresaid, "With the majority of Core’s revenue coming from Northern and Eastern India, this acquisition provides an opportunity to connect with leading hospitals in these regions." After the merger, Metropolis’ oncology sales team is set toincrease by 3.6 times to 130.

InQ2FY25, Metropolis Healthcare reported a net profit growth of 31.2% YoY to Rs 46.5 crore. Revenue increased 14% YoY to Rs 352.9 crore during the quarter, driven by a 7% growth in number of patients to 3.4 million and a 6% rise in revenue per patient to Rs 1,025. Commenting on the results, Chemmenkotilsaid, “We aim to achieve double-digit volume growth by focusing on our B2C segment and specialty tests while expanding our network to 1,000 towns in the next 12 to 18 months.”

Post the announcement of the acquisition, ICICI Securitiesmaintained its ‘ADD’ rating on Metropolis Healthcare with a target price of Rs 2,335. The brokerage expects an earnings CAGR of 32% over FY25-27 with revenue CAGR at 18.6%. It also expects EBITDA margin to remain in the range of 26-28% over FY26-27.

5. Kalpataru Projects International:

This construction & engineering company has risen by over 4% in the past week. On December 9th, the company and some of its international subsidiaries, secured new orders worth Rs 2,174 crore. These include an elevated metro rail project and a residential building project in India, along with orders in the Transmission & Distribution (T&D) sector both domestically and internationally. Speaking on the newly received orders, the company’s MD & CEO, Manish Mohnot, said, “With these orders, our YTD order inflow stands over Rs 16,300 crore, more importantly; nearly 85% of order intake till date is from our T&D and building & factories (B&F) business.”

KPIL posted a 41% YoY rise in net profit to Rs 125.5 crore in Q2FY25, and a 9.2% YoY increase in revenue due to segment wise revenue jumps in Urban Infra and T&D. The company however missed the Trendlyne Forecaster estimates for revenue by 1% and the net profit estimate by 9.7% due to weaknesses in railways and water segments on the back of delay in tendering and execution activities. It appears in a screener of stocks which have high momentum scores.

The company’s order book as of Q2FY25 stands at Rs 60,631 crore, out of which its T&D business and B&F business contributes the most at 37% and 22%, respectively. Sharekhan analysts estimate that India’s total capital expenditure in infrastructure sectors till FY25 will be around Rs 111 lakh crore. This substantial investment in infrastructure is expected to create strong growth opportunities for the company.

Manish Mohnot, CEO & managing director of the company, said, “Margins are improving due to the new, higher-margin order book secured over the last two years, with positive impact expected for the next 6-8 quarters. We foresee growth and margin improvement over the next two years and are confident in meeting our commitments. Despite challenges in the water business, mainly related to collections in some states, we remain focused on long-term growth.”

Sharekhan has maintained its ‘Buy’ rating on KPIL with a revised target price of Rs 1,570. The brokerage notes that the company’s Q2FY25 standalone performance was slightly weak on margins and profitability, though sales met expectations. It expects improvement driven by a strong order book, better JV & subsidiary performance, and reduced promoter pledges, all of which could act as key re-rating catalysts.

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

The Baseline

13 Dec 2024

The winners and losers of 2024 | Screener: Consistent share price gainers over five years

By Swapnil Karkare

It's December, which means that analysts are scrambling over each other to predict the market's path for the next year. Morgan Stanley for instance, forecasts that the Sensex will touch 1,05,000 in 2025.

Morgan Stanley was quite gung-ho about the Sensex in December 2023 as well, and predicted 86,000 for 2024. The index only briefly flirted with the 86,000 level this year but then tumbled.

Humans are bad at guessing the future. In 1924 for example, people predicted that food would be unaffordable in 2024 - "milk will be served with a medicine dropper and an egg will be the price of a woman’s love.” So at least Morgan Stanley has been a bit more accurate.

The market saw a lot of volatility this year. Financial and industrial stocks surged while auto and FMCG stocks tanked. Signs of the economy slowing down and a sell-off by foreign investors led to a correction in September.

But certain stocks emerged as the clear winners of 2024, even as others struggled. This saw different company CEOs saying very different things about the 2025 outlook. For example PB Fintech, one of the top gainers, has been quite optimistic, saying, “We are not seeing any signs of a slowdown yet.” On the other hand, Asian Paints, one of the top losers, has been more guarded, with CEO Amit Syngle stating, “We are being cautious about demand because we feel that other consumer industries have seen challenging demand conditions.”

Why are some companies still doing well, while others struggled? We take a closer look at the top winners and losers in the Nifty 200 index.

In this week's Analyticks,

The top ten: Winners and losers of 2024
Screener: Consistent Highest Return Stocks over Five Years

The Fundamentals vs. Valuations struggle

Fundamentals matter! Investors pay especially close attention to company financials in volatile markets. As a result, companies with strong fundamentals (reflected by Trendlyne Durability Scores above 60) saw skyrocketing prices.The laggards tended to have poor durability scores.

Even after market corrections, fundamentals have continued to drive stock performance—for instance, the rise of BSE Ltd. and the fall of Bajaj Auto.

However, stretched valuations among top gainers hint at either peaking prices or a TINA (There Is No Alternative) problem within sectors. Investors may be piling into these stocks due to a lack of better options, despite high valuations.

Let us dive into the top gainers and losers of 2024. Within each top ten list, we look more closely at the top five winners and losers.

Top Gainers: These stocks got a boost from strong financials, and a booming sector story

Oracle Financial Services Software

Oracle has benefitted from a surge in technology spending by banks – a 7% increase among the top 5 US banks, which are embracing GenAI. Oracle generates 90% of its revenue from product licenses, including solutions like Oracle FLEXCUBE Universal Banking.

It reported 18% YoY growth in revenue and a 38% YoY jump in net profits in Q2FY25. Oracle Corp, its parent company in the US, has also outperformed major tech giants like Microsoft, Apple, and Salesforce this year.

PB Fintech

PB Fintech, the parent company of Policybazaar and Paisabazaar, has shifted towards Unit Linked Insurance Plans (ULIPs). This pivot, along with strong insurance renewals have helped it beat challenges in the credit business. Revenue increased 47% YoY in H1FY25.

Revenue from new businesses - such as corporate insurance, an agent aggregator platform, and the UAE retail insurance - surged 87% YoY in Q2FY25. The company has secured the account aggregator (NBFC-AA) license from the RBI, adding another growth lever.

Dixon Technologies

Dixon Technologies has evolved from manufacturing LED TVs to becoming a one-stop shop for electronics manufacturing services (EMS) in India. It manufactures mobile phones, refrigerators, wearables, and lighting products and is now venturing into laptops and IT hardware manufacturing. Its big-name partners include Xiaomi, Samsung, Apple, Nokia, Motorola, Panasonic, Acer and Bosch.

With revenue growth of more than 200% YoY in H1FY25, Dixon's mobile and EMS division is the fastest-growing segment. It is one of the key beneficiaries of the government’s Production-Linked Incentive (PLI) scheme. Its revenue has surged from over Rs. 12,000 crore in FY23 to nearly the same in Q2FY25 alone.

Rail Vikas Nigam Ltd. (RVNL)

RVNL has won some coveted railway projects, including the Nagpur metro, infrastructure work in the Central zone, an EPC contract in Maharashtra, and much more. It has expanded internationally through projects in Saudi Arabia, Botswana, Dubai, Uzbekistan and the Maldives.

The company's inclusion in the MSCI India Index has attracted foreign investors, increasing FII shareholding from 2% to 5% last year. However, its revenue and profit have declined by 13% YoY and 26% YoY in H1FY25, raising doubts over its ability to keep the rally going.

Cochin Shipyard

The government's push for indigenous defence manufacturing has given Cochin Shipyard a big boost, with defence contracts making up 70% of its order book. It can now build and repair larger vessels such as LNG carriers and new-generation aircraft carriers.

It booked solid growth in revenue and net profits of 26% YoY and 30% YoY in H1FY25. It has a total order book of Rs. 22,500 crore, a shipbuilding pipeline worth Rs. 7,800 crore, and mid-stage proposals valued at Rs. 30,000 crore.

Top Losers: The backbenchers of 2024

Vodafone Idea

Having Vodafone Idea in your portfolio feels like a recipe for heartburn. Each year, the company sees a rollercoaster of highs and lows, where brief moments of optimism are interrupted by more challenges. The company's debt pile of over Rs. 2 lakh crore has been worsened by negative equity. From 22.75 crores in September 2023 to 21.25 crores in September 2024, its subscriber count has reduced year after year.

Brokers highlight that the financial position will become more vulnerable once AGR dues become payable from FY26 onwards. According to Kotak Institutional Equities, the company is staring at a cash shortage of Rs. 10,400 crore over FY25-27 and Rs. 74,000 crore during FY28-32.

IndusInd Bank

The banking sector faces pressures from rising stress in unsecured lending and microfinance portfolios. IndusInd Bank pushed microfinance loans aggressively in recent quarters, and these now account for 9% of IndusInd’s loan book as of September 2024. The gross NPAs in this segment have jumped from 5.16% in Q1FY25 to 6.54% in Q2FY25. That has led to a 39% YoY drop in net profit of Q2FY25.

The bank faces a long road to recovery. Although other banks are also stretched, the impact on credit costs for IndusInd is higher (140 bps vs. 50-60 bps), according to Macquarie Capital. Analysts expect microfinance stress to remain high even in Q3.

Asian Paints

A once-star consumer play is struggling with weak demand, rising raw material costs, and unseasonal rainfall, which have impacted the paint industry and affected revenues, margins and profits.

Rising competition within the paint industry has also eroded the market share of Asian Paints. Sales and profits have been declining year-on-year for the last three quarters. FIIs have been exiting from this stock gradually, from over 20% in FY22 to 17% in FY23 to 15% in September 2024.

Bandhan Bank

Despite impressive revenue growth averaging 22% YoY, Bandhan Bank's asset quality problem has raised its ugly head again, with gross NPAs rising from 3.8% in Q4FY24 to 4.7% in Q2 FY25.

Impressive loan book growth has delivered over 30% YoY net profit growth in the last four quarters. However, weakness in its microfinance portfolio and governance-related issues have taken a toll on the stock prices. Recently, ICRA downgraded the non-convertible debentures (NCDs) to AA- from AA.

Adani Total Gas

Adani Total Gas saw a steady 5-10% YoY revenue growth over the past year. However, after four consecutive quarters of double-digit net profit growth, the company's Q2FY25 net profit increased by a modest 7%. Due to limited availability, the government has reduced the allocation of Administrative Price Mechanism (APM) gas to City Gas Distribution (CGD). Adani Total Gas has seen a 13% reduction in its allocations, which will affect its financials.

The controversies have also left it limping. The Hindenburg report and the US bribery case have negatively impacted Adani Group stocks, discouraging foreign investors. Foreign shareholding has declined from 17% in September 2022 to 13% in September 2024.

2024 was a sector story

In 2024, sectors such as insurance, chemicals, construction materials, FMCG and private sector banks have lagged the index, especially after recent market corrections. But sectors like durables, industrials, financial services, realty, healthcare, technology, and public sector banks have shown resilience and growth.

Improving capital expenditure spending has raised the growth outlook across some industries. A stronger US economy and the China plus one strategy has raised the export potential for Indian manufacturers in pharma, chemicals and IT. However, depressed demand and stagnant incomes have put pressure on consumer, microfinance and auto.

2025 comes with a new US administration, continuing chaos in the Middle East, and a new RBI governor. Can Sensex touch 1,05,000 next year, or will the predictors be crying into their cups? We shall see.

Screener: Consistent Highest Return Stocks over Five Years

Electrical equipment stocks have the highest price growth in five years

The Indian stock market has been facing pressure for a few months now due to an increase in inflation, global conflicts, and high foreign institutional investor (FII) selloff. This week, we ook at stocks that have given consistently high returns over the last five years. This screener shows stocks which saw the highest performance in the past 5 years while also rising in the past one or two years.

The screener majorly consists of stocks from the heavy electrical equipment, electric utilities, industrial machinery, iron & steel products, and IT consulting & software industries. The most notable stocks appearing in the screener are CG Power & Industrial Solutions, Elecon Engineering, HBL Power Systems, RattanIndia Enterprises, Mazagon Dock Shipbuilders, BSE, Jupiter Wagons, and Suzlon Energy.

CG Power & Industrial Solutions has the highest 5-year price change of 6,461.3% among Nifty 500 stocks in the screener. This heavy electrical equipment company has continued to rise by 75.3% over the past year despite poor market conditions. It has recovered from a sharp decline in revenue and net profit during the Covid lockdown and has achieved its pre-Covid levels of Rs 8,152.2 crore and Rs 1,427 crore, respectively in FY24. On the other hand, it has posted a net loss during FY16-20 which rose sharply to first a net profit of Rs 1,427 crore in FY24. Consistently falling raw material costs and the company’s efforts to reduce procurement and production expenses helped in net profit growth.

Elecon Engineering comes in next with a 4,167.4% growth in its stock price over the last five years. This industrial machinery stock has continued to grow by 41% in the past year. It has given a moderate revenue CAGR growth of 9% over the last five years due to the effect of the lockdown, however, over the past three years, its CAGR growth has rebounded to 23.6%. Similarly, its net profit gave a net profit CAGR of 38.4% over the last five years compared to a CAGR of 83.4% over the past three years. The company took strong measures to curb expenses during the Covid period which has helped it to achieve its highest operating profit margin of 24% in FY24, contributing to net profit growth.

You can find some popular screeners here.

The Baseline

12 Dec 2024

Chart of the Week: Banking & Finance sector sees the biggest shifts in public & FII shareholding

By Aditi Priya

Looking at Q2FY25 shareholding data, some companies stand out with significant increases in public shareholding and foreign institutional investments (FIIs). More retail investors are actively participating in the market, marking a big shift in how Indians invest. The total number of demat accounts in India has surged to 18.2 crore as of November 2024 increasing by 34.8% YoY. This represents an addition of 31.7 lakh demat accounts in November.

Retail investors were net buyers in the Indian equity market, even during the market correction in October and November. A report by Motilal Oswal says that India is set to grow strongly in the next decade, driven by favourable demographics and rising income. “Over the next decade, the demographic dividend will accelerate,” the analysts wrote, “with over 100 million people joining the workforce and about 100 mn households entering the middle-income class.”

In this chart of the week, we analyze companies where public shareholding has increased or decreased the most over the past quarter and examine the reasons behind these changes.

Retail investors and FIIs have been favouring stocks from the banking and finance sector. In this sector, retail investors have increased their stakes in companies like RBL Bank, Ujjivan Small Finance Bank, Equitas Small Finance Bank, and Angel One. Meanwhile, FIIs have raised their holdings in stocks such as Indian Energy Exchange, Nuvama Wealth, and PNB Housing Finance.

Outside banking, sectors like cement & construction and software & services have seen a rise in public shareholding. Retail investors have reduced their stakes in FMCG, media, realty, and general industries.

RBL Bank & GMR Airports see public shareholding jump in Q2FY25

RBL Bank (RBL) witnessed a 7.5 percentage points QoQ increase in public shareholding by retail investors during the second quarter as Foreign Portfolio Investors (FPIs) reduced their stake to 13.6% from 27.1% in June. The bank reported a 19.9% YoY growth in revenue in Q2FY25, with net interest income rising by 9% YoY and deposits by 20% YoY.

The cement & construction company, GMR Airports saw a 5.5 percentage points QoQ increase in its public shareholding. FPIs have reduced their stake in the company by more than 10 percentage points.

Ujjivan Small Finance Bank (SFB) saw a 4.9 percentage points QoQ increase in public shareholding during the past quarter, bringing total public holding to nearly 73%. FPIs sold 2.3 percentage points stake while mutual funds and insurance companies sold marginal stakes. In Q2FY25, the bank reported a 15.2% YoY revenue growth, with deposits increasing by 17% and the CASA ratio improving 26% to 25.9%. On November 27, Ujjivan SFB announced the sale of a stressed loan portfolio, including written-off loans worth Rs 270.4 crore (as of September 30, 2024). The sale reflects a positive move as it reduces the burden of non-performing assets, improving financial stability.

Equitas Small Finance Bank and Angel One also witnessed a nearly 4.5 percentage point QoQ increase in public shareholding. In case of Equitas, mutual funds like Franklin India, Nippon life india, Invesco india and Dsp Mutual Fund have reduced their stake marginally. Similarly, in Angel One, Nippon Life India trustee growth fund, Motilal Oswal Large and Midcap Fund and FPIs have reduced their stakes.

Public shareholding moves in contrast with FII holdings

The screener reveals another interesting trend - an increase in public shareholding often coincided with a decrease in FII stakes, and vice versa, in Q2FY25. Sterling and Wilson is the only company where public shareholding, DII, and FII holdings all increased in the past quarter as the promoter holdings reduced by over 7 percentage points. The company posted a 113% YoY net profit growth, and a 37% YoY revenue growth in Q2FY25.

In the banking and finance sector, public shareholding decreased in Indian Energy Exchange, Nuvama Wealth, and PNB Housing Finance, while FII holdings rose. Nuvama Wealth saw a 6.7 percentage point QoQ drop in public shareholding, offset by a 7.1 percentage point QoQ rise in FII holdings. The company's promoter group (Pagac Ecstasy) marginally reduced its stake by 0.5 percentage points, while funds like Smallcap World and Morgan Stanley increased their holdings. This shift likely reflects institutional confidence in the company’s growth prospects.

PNB Housing Finance also saw a 13.7 percentage points QoQ decrease in public shareholding, while the FIIs increased their stakes by 4.3 percentage points over the past quarter. The Government of Singapore and the Monetary Authority of Singapore increased their stake by 5 percentage points and 1.3 percentage points respectively while Asia Opportunities v reduced its stake by 3.7 percentage points. Mutual funds like HSBC Small Cap fund, Nippon India Small Cap Fund, Aditya Birla Sun Life PSU equity fund and Hdfc Large and Mid cap fund have also increased their stake along with the FIIs.

Honasa Consumer, a personal products company, witnessed a 5.4 percentage point QoQ decline in public shareholding during the past quarter. At the same time, FPIs increased their stake significantly by over 5 percentage points. Mutual funds also raised their holdings, marginally, by 0.3 percentage points.

The Baseline

11 Dec 2024

Five stocks to buy from analysts this week - December 11, 2024

By Ruchir Sankhla

1. Tata Power:

Motilal Oswal reiterates a ‘Buy’ rating on this electric utilities company with a target price of Rs 509, indicating an upside potential of 17%. Analysts Abhishek Nigam and Preksha Daga note that Tata Power plans a capex of Rs 1.5 lakh crore over the next five years, approximately three times the capex incurred over the last five years. As part of this, the company has revised its annual capex guidance for FY26-27 to Rs 25,000-26,000 crore, up from the earlier range of Rs 22,000-23,000 crore.

The analysts highlight that the company expects to double its transmission and distribution capacity to 10,500 circuit kilometers (cKm) by FY30, up from the current 4,633 cKm. The operational green capacity target for 2030 has been increased to 23 GW from the earlier 20 GW. Meanwhile, the under-construction pipeline has significantly expanded to 10 GW, up from 3.7 GW previously.

Nigam and Daga note that the management plans to double its EBITDA and net profit to Rs 30,000 crore and Rs 10,000 crore by FY30, respectively. They expect a CAGR of 7.3% in net sales, 6% in EBITDA over FY25-27.

2. Supreme Industries:

Sharekhan retains its ‘Buy’ rating on this plastic products manufacturer with a target price of Rs 5,700, indicating an upside potential of 15.8%. In Q2FY25, the company reported a net profit decline of 15% YoY to Rs 206.6 crore. Revenue decreased 1.4% YoY to Rs 2,288 crore during the quarter. Regarding the results, analysts said, “Earnings were hit by the sharp fall in PVC prices, weak infrastructure demand and extended monsoons.”

Analysts note that the company is entering the gas piping market with an initial capacity of 3,000 tonnes per month, set to begin sales in the current quarter. The annual market size for gas pipes is estimated at 1 lakh tonnes. The company's total capital expenditure plan stands at Rs 1,500 crore. Plastic pipes capacity is set to increase to 8.4 lakh tonnes by FY25, up from 7.4 lakh tonnes in FY24.

Analysts mention that the management expects a revenue/net profit CAGR of 16%/18% over FY25-27. The brokerage notes healthy demand outlook and incremental capacity additions are likely to drive an 18% net earnings CAGR over FY25-27.

3. Dhanuka Agritech:

Axis Direct recommends a ‘Buy’ rating on this agrochemicals manufacturer with a target price of Rs 1,760, indicating an upside potential of 9.7%. Analysts Sani Vishe and Shivani More highlight that the company has recently shifted its outlook from negative to positive for FY25. The business has a portfolio of approx. 90 products and a pan-India distribution network with around 6,500 distributors and dealers, along with 80,000 retailers.

In Q2FY25, Dhanuka Agritech’s revenue grew 5.9% YoY to Rs 654.3 crore, but missed Forecaster estimates by 1.3%. Analysts attribute the miss to around Rs 100 crore in sales returns from Q1 due to continuous rainfall in the months of August and September, which delayed the spraying of insecticide. However, with good reservoir levels and favorable groundwater conditions, Rabi acreages are expected to improve.

Initially, the management had anticipated a 100 bps YoY decline in margins for FY25. However, this outlook has now been revised to a 100 bps improvement, driven by positive market response to new product launches like Purge, LaNevo, and MYCORe SUPER.

Vishe and More expect that the company will deliver strong top-line and margin growth in FY25, driven by a robust product mix, improving prices, and a strong Rabi season. They expect the firm's revenue to grow at a CAGR of 17.3% over FY25-27.

4. Uno Minda:

Geojit BNP Paribas upgrades its rating to ‘Buy’ on this auto parts manufacturer with a target price of Rs 1,209. This indicates a potential upside of 13.4%. Uno Minda reported a 17.2% YoY revenue growth to Rs 4,245 crore in Q2FY25, driven by new customer additions in the 2-wheeler (2W) and 4-wheeler (4W) segments and leveraging its client base. EBITDA margin improved by 28 bps to 11.4%, supported by a superior product mix. The company’s management expects margins to remain in the 11-12% range in FY25, considering the ongoing capex and expansion efforts.

The automotive industry saw a 9% YoY increase in production volumes for Q2FY25, driven primarily by the 2W segment, which saw a 12.5% rise, reaching 62.6 lakh units. Analyst Saji John said, "The channel inventory correction has shown signs of improvement over the past two months, and we expect the auto industry to deliver stronger volume growth in the second half of the fiscal year compared to the first."

The company is working on increasing its kit value across all segments by expanding capacity and forming partnerships, despite the slow growth in the EV market. It has partnered with Hyundai Mobis to manufacture automotive speakers and secured a significant order for EV charging solutions from a Japanese original equipment manufacturer (OEM). John expects a revenue CAGR of 24% and a net profit CAGR of 23.7% over FY25-27.

5. Sonata Software:

Emkay initiates a ‘Buy’ rating on this IT solutions provider with a target price of Rs 780, indicating an upside of 16.3%. The company’s international IT services business achieved a 26% revenue CAGR over FY21-24 and a 4.3% quarterly growth over the past 10 quarters. While revenue growth slowed in the last three quarters due to macro uncertainty, analysts Dipesh Mehta and Kevin Shah view this as a “temporary setback”. They expect strong growth as market conditions improve, with increased consumer spending anticipated in CY25.

Sonata Software has a long-standing partnership with Microsoft. Mehta and Shah believe the partnership gives SSOF an opportunity for growth within the Microsoft ecosystem. Sonata expects AI services to contribute 20% to the company’s revenue in the next three years.

Sonata aims for a revenue of $1.5 billion by FY27. The company’s focus on building a large-deal team has led to consistent growth in deals worth over $5 million, increasing from 10 in FY23 to 14 in FY24, and 6 in H1FY25. Analysts expect the company to return to top-quartile revenue growth as demand stabilizes.

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

(You can find all analyst picks here)