Considering the volatility in the markets, five analyst picks looks at stocks that outperformed the Nifty 50 over the past week and have a buy call from analysts in the past month. 

1. Bata India: Edelweiss maintains a ‘Buy’ call on this footwear company with a target price of Rs 2,365. This indicates an upside of 26%. The company outperformed the Nifty 50 index by 4.1% over the past seven days.

“Bata India's performance in Q4FY22 was better than expected on the margin front,” say analysts Kapil Jagasia and Praveen Sahay. Gross margin increased 450bps YoY to 57.6% and  EBITDA margins expanded 540bps YoY to 24.4%. According to the analysts, margins improved on account of price hikes, lower discounting and manufacturing efficiencies. In Q4FY22, revenue grew 13% YoY to Rs 665 crore (10% lower than analysts’ estimates) but profit was up 11.3% YoY to Rs 63 crore (25% higher than estimates).

“The management’s continuous focus on cost control measures, distribution expansion, and cash-rich balance sheet (Rs 1,092 crore as of March 2022) are key positives for the company,” Jagasia and  Sahay said. They further added that Bata’s strong market leadership, revival of formal footwear along with strong growth in casual portfolio and various distribution initiatives, would help it recoup its lost revenue in FY23.

2. Dr. Reddy's Laboratories: Axis Securities maintains a ‘Buy’ call on this pharmaceuticals company but has reduced the target price to Rs 4,500 from Rs 5,100, now indicating an upside of 3%. The stock outperformed the Nifty 50 index by 0.3% over the past seven days. 

In Q4FY22, the company reported revenue growth of 14.8% YoY (vs the brokerage’s expectation of 8%) to Rs 5,475 crore. Analyst Ankush Mahajan believes that it was “led by strong performance in geographies such as the US, India, and Emerging Markets.” Mahajan adds, “Dr. Reddy is currently investing in various businesses that may provide excellent growth in the long term.” According to him, the company is building a global pipeline of biosimilars, developing a new chemical entity for Immuno-oncology, and building up a neutraceuticals portfolio, vaccines, CDMO (contract development and manufacturing company), and digital healthcare platforms. However, Axis cautions that high inflation could decrease margins.

3. Container Corporation of India: Motilal Oswal maintains a ‘Buy’ on this warehousing and logistics company but has reduced its target price to Rs 710, indicating an upside of 6.9%. The stock outperformed the Nifty 50 index by 13.4% over the past seven days.

Analysts Alok Deora and Dhirendra Patro said, “Container Corp reported a weak operational performance in Q4FY22 with margin contracting 20.2% (versus estimate of 23.8%) due to higher provisions made towards employee costs and higher other expenses.” Volumes and revenue were in line with their estimates.  In Q4FY22, the company’s revenue grew 5% YoY to Rs 2,043 crore and total volumes remained flat YoY at 1.07 million twenty-foot equivalent units (TEUs). The analysts note that the company is planning a capex of Rs 8,000 crore over the next 3-4 years to be funded through internal accruals. “We expect volumes to pick up with commissioning of DFCs, thereby leading to 19% revenue CAGR during FY22-24,” they added. They also believe that with the pick-up in domestic volumes, EBITDA margin is likely to be stable at 23%, resulting in a 20% EBITDA CAGR over FY21-24.

4. Britannia Industries: Geojit BNP Paribas maintains a ‘Buy’ rating on this FMCG company’s stock with a target price of Rs 3,890, indicating an upside of 8.9%. The stock outperformed the Nifty 50 index by 1.1% over the past seven days. 

Analyst Vincent K.A. is positive about the company’s prospects. He adds, “Britannia has a robust portfolio and efficient distribution network”. In Q4FY22 net profit rose by 4.3% YoY to Rs 380 crore and revenue rose by 15.5% YoY to Rs 3,508.4 crore. The analyst noted revenues rose because of price hikes and an increase in volumes, adding that the number of rural distributors increased 13% YoY to 26,000 in FY22. However, EBITDA margins fell by 90 bps YoY to 15.7% due to input cost inflation in Q4FY22 and Vincent expects inflation in commodity prices to put pressure on margins in the near term. The management is expected to undertake price increases and grammage cuts to offset the pressure on margins. Geojit estimates the company’s profit to grow at a 16.8% CAGR over FY22-24.

5. Ashok Leyland: LKP Securities maintains a ‘Buy’ rating on this commercial vehicle maker with a target price of Rs 173, indicating an upside of 23.9%. This stock outperformed the Nifty 50 index by 4.4% over the past seven days. 

Analyst Ashwin Patil said “the company posted a superb set of numbers in Q4 with all the underlying parameters falling in place”. The company’s standalone net profit rose 3.7X YoY to Rs 901.4 crore and revenue 25% YoY to Rs 8,744.3 crore. Patil believes higher realisations were the main drivers of this growth which were up 13% YoY due to price hikes and a better product mix. Patil expects the company to maintain this growth momentum on pick up in CV (commercial vehicle) demand due to an increase in infrastructure projects. “New launches also should help Ashok Leyland to further improve sales and fill in the gaps within the portfolio,” Patil added. LCV (light commercial vehicles) and bus demand are expected to rise as Covid-19 restrictions are lifted. LKP expects the company’s profit to grow at a 106.5% CAGR over FY22-24.

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