This week, we look at five analyst picks that outperformed the Nifty 50 and have a fresh buy call.

1. Jubilant Foodworks: IDBI Capital maintains a ‘Buy’ call on this quick service restaurant operator with a target price of Rs 766. This indicates an upside of 42.8%. The company outperformed the Nifty 50 index by 2.3% over the past seven days.

“Jubilant Foodworks has reported in-line results for 4QFY22. Revenue grew 13%YoY (to Rs 1,157.9 crore in Q4FY22) led by 5.8% like-for-like growth. Delivery drove revenue growth while dine-in was impacted due to Omicron,” say analysts Varun Singh and Chetan Mahadik. The company’s profit grew 17.3% YoY to Rs 122.3 crore during the quarter. 

According to the analysts, in Q4FY22 the company added 80 Domino's stores (the highest ever, totaling 230 in FY22) along with 4 Popeyes stores, 1 Dunkin store, 1 Hong Kong Kitchen store, and 1 Ekdum store. The analysts are also positive about the appointment of the new CEO Sameer Khetarpal.

2. Dixon Technologies (India): Axis Securities maintains a ‘Buy’ rating on this electronics contract manufacturer with a target price of Rs 4,450, indicating an upside of 21.6%. The company outperformed the Nifty 50 index by 5.7% over the past seven days.

“Dixon reported a consolidated revenue of Rs 2,953 crore in Q4FY22, down 3.9% QoQ but up 40% YoY, led by strong growth in the mobiles and home appliances segment,” says analyst Hiren Trivedi. In Q4FY22, net profit grew 37% YoY to Rs 63 crore. The analyst further added, “Dixon continues to focus on new client acquisition and product addition to aid its top line growth, backward integration, and increasing own design manufacturing revenues.”

Trivedi believes that the company will continue to benefit from its strong order book and execution capabilities to improve its operations. He also thinks that the company will enter into new product segments while deriving benefits from the PLI scheme in multiple segments. He expects the company’s revenue and profit to grow at a CAGR of 38% and 52% respectively, between FY 22-24

3. Timken India: ICICIdirect has a 'Buy' rating on this industrial product manufacturer’s stock, with a target price of Rs 2,810. This indicates an upside of 15.4%. The company outperformed the Nifty 50 index by 22.6% over the past seven days.

“It (the company) has state-of-the-art manufacturing plants in Jamshedpur in Jharkhand, and Bharuch in Gujarat,” said analysts Chirag Shah and Yash Panwar. “Timken India reported an excellent set of numbers in Q4FY22, with revenues better than our expectation due to exceptional performance on the industrial segment side,” they added. Revenue for Q4FY22 came in at Rs 667.4 crore, up 40.4% YoY (versus the brokerage’s estimate of Rs 553.7 crore). In Q4FY22, the company registered a profit of Rs 121.3 crore (versus the brokerage’s estimate of Rs 68.1 crore), up 129.2% YoY, and EBIDTA margin was 26.9% against 18.3% in the consecutive quarter previous year (versus the brokerage’s estimate of 19.9%). The analysts believe that the surprise in the margin came due to higher gross margins, lower employee costs, and other expenses.

4. Vedant Fashions: ICICI Securities initiates coverage on this branded apparel company with a ‘Buy’ rating and a target price of Rs 1,200, indicating an upside of 11.1%. This stock outperformed the Nifty 50 index by 10% over the past seven days.

Analysts Krupal Maniar and Harsh Mittal say that “first-mover advantage, scale efficiencies and no discounts on Manyavar allows Vedant Fashions to enjoy a significantly higher gross margin compared to most other listed brands”. They added that the company enjoys a higher gross margin of 75% on the net end customer sales than most other listed brands, which have a gross margin between 45-60%. The higher gross margin results in higher profitability and superior free cash flow generation for the company.

The analysts believe the asset-light business model followed by the company will continue to drive profitability. The company outsources a substantial portion of manufacturing and distribution, which enables it to reduce input costs, thereby improving profitability. The analysts expect Vendant’s profit to rise at a 23% CAGR over FY22-25.

5. Mahindra & Mahindra: Motilal Oswal maintains a ‘Buy’ rating on this automaker’s stock with a target price of Rs 1,150, indicating an upside of 11.4%. This stock outperformed the Nifty 50 index by 6.9% over the past seven days.

“Mahindra & Mahindra’s Q4FY22 performance was above our estimate, as a strong recovery in the auto business made up for weakness in the tractor business,” say analysts Jinesh Gandhi, Vipul Agarwal, and Aniket Desai. They noted that the outlook for the tractor business is improving but it is the auto business that will drive growth over the next couple of years. They expect the growth in the auto business to be driven by new launches in the SUV (sport utility vehicle) segment and cyclical recovery in the LCV (light commercial vehicle) segment.

The company is the biggest player in the SUV market with a 17.8% market share, and expects a 16% volume CAGR in passenger utility vehicles over FY22-24. The analysts estimate the company’s revenue to grow at a 19.5% CAGR over FY22-24.

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