1. Kotak Mahindra Bank: This bank stock outperformed its industry by 5.8% over the past 90 days, but underperformed the Nifty Bank index over the last two years, according to a report by Goldman Sachs (GS). Still, this doesn’t concern the brokerage as it upgraded its rating on the stock to ‘Buy’ from ‘Neutral’. GS believes that the bank is well-equipped to utilize its excess capital to drive a higher return on equity (ROE.) If the bank can successfully utilize its retail assets it can touch the market capitalization of $100 billion by FY27, the brokerage says. HDFC Bank is the only other stock in this sector to achieve that milestone.

Apart from focussing on operating profits, asset quality and ROE, Kotak Mahindra is also working on technological upgrades for its systems. However, it will take 3-5 years for the company to completely reap the benefits of these upgrades. The Reserve Bank of India also fined the bank Rs 1.05 crore for a lapse in crediting the amount to a depositor within a stipulated time. The company had to issue a clarification regarding this in its BSE filing saying that the fine does not have ‘any adverse impact on the bank’. With its aim to improve operational process and better digital adoption by its customers, it will have to be careful to avoid such lapses in the future.

2. Sobha: This realty stock soared nearly 7% on the bourses on Thursday after it announced its operational update for Q1FY23. It was trading with 3.5X of its weekly average trading volumes on the bourses. The stock is performing well over the past month and is up 23.5%, outperforming the Nifty 500 index by 25.5%. The Q1FY23 operational updates show that its sales bookings increased 67.6% YoY to Rs 1,145.5 crore. The company also achieved its highest ever sales volumes during the quarter. The management expects to sustain this growth going forward in FY23. The company also announced the launch of three new residential projects in Bengaluru, with over 2 million square feet of saleable area.

Currently, with rising inflation, there are worries about rising construction costs. Reports suggest that realty companies are facing a rise in construction costs by 12-15%. In its quarterly update filing, the company says it will hike prices across its projects to mitigate the impact of rising costs.

With the RBI trying to control inflation by hiking its benchmark lending rate, home loans are more expensive than in the last two years. Although this did not have a detrimental effect on housing demand in Q1FY23, the trickle-down effect will take some time to show up, if the central bank keeps raising rates. According to sector reports from Motilal Oswal, the effect of interest rate hikes on demand will reflect only when home loan rates go beyond 8.5%.

3. Titan: This jewellery maker’s stock rose 5.7% on Thursday after it released its Q1FY23 business update. Titan’s sales jumped 205% YoY in Q1FY23 helped by a low base last year due to lockdowns. Despite the low base, its three-year sales CAGR remains healthy at 20.5%. This positive Q1FY23 business update comes after weak Q4FY22 results due to Omicron-induced lockdowns in January. The sharp rise in sales was led by the jewellery segment, which constitutes about 88% of the company’s total revenues. Sales from this vertical jumped three times YoY in Q1FY23 on the back of strong demand during Akshaya Tritiya festival in May, after two years of lockdowns during the same period.

The company posted growth across all verticals. While watches and wearables’ revenue rose 158% YoY eyecare sales increased by 176%. According to its FY22 annual report, Titan will continue to focus on network expansion across channels and segments to drive revenue growth.

With a good start to FY23, Trendlyne’s Forecaster estimates show that the average of consensus estimates revenue growth for Titan in FY23 is 18.3%. Brokerages are optimistic about the company and as a result, it shows up in this screener which lists stocks with high analyst ratings that have an upside of at least 20% from their current price.

4. Godrej Consumer Products (GCPL): This fast-moving consumer goods company’s stock rose by 5.7% on Wednesday after it announced its Q1FY23 quarterly update. This helped the company outperform the Nifty 50 index by 9.5% over the week and also outperform the personal products industry by 5.3% over the past month. The company expects to deliver double-digit sales growth in Q1FY23 on a high base in its India business. It derives 56.1% of its revenue from its India operations. The personal care segment led growth in the Indian business was driven by the personal wash and hair wash categories, the company said. GCPL’s revenue growth was also aided by price hikes, as the rural market recovery was weaker than the urban market, impacting volumes.

GCPL expects its Indonesian business’ sales volume to drop to high single-digits due to a high base last year in the hygiene segment. The Indonesian market contributed 13.8% of its revenue in Q4FY22. The other international regions like Africa, the USA, Latin America, and West Asia saw robust sales growth momentum and it expects double-digit sales growth in these regions. These markets contributed 32% to the company’s total revenue in Q4FY22.

The company expects a fall in its EBITDA margins and profit on a YoY basis in Q1FY23. It cites high input costs, elevated advertising expenses and a fall in sales volume in Indonesia. However, GCPL expects margins to improve going ahead as inflationary pressures are likely to reduce due to a correction in palm oil prices and crude oil. Prices of palm oil fell by 43% as of July 7 from its record highs in March. It also expects a recovery in demand and consumption in the coming quarters. 

5. Star Health & Allied Insurance Co: This health insurer’s stock rose 11.4% in trade on Thursday after the General Insurance Council released a monthly update for the general insurance industry. The stock was also the top gainer among Nifty 500 companies on Thursday. Star Health’s Q1FY23 gross direct premium written rose 13% YoY to 2,466.2 crore. Its June gross direct premium written rose 10.3% YoY to Rs 949.7 crore. However, the rise in stock price came despite the company’s market share in Q1FY23 falling by 40 bps YoY to 4.5% in the general insurance market. The rise in its stock price was also aided by Credit Suisse initiating coverage of the company with an ‘Outperform’ rating, according to reports. The brokerage said its view on the company’s prospects is because of its large agency network (5.5 lakh agents), continued expansion, and an attractive risk-reward ratio. The company’s retail health insurance is a high-growth industry and Star Health is well-placed to capture this growth as it is the largest player in the segment, the brokerage said.

The investor presentation shows the company’s market share in the retail health insurance industry at currently more than 30% in terms of gross premium. The health insurer has nearly three times more agents than its next largest competitor. Looking ahead, the company expects its retail health segment to grow at a 20-25% CAGR over the next FY22-25, led by an increased focus on tier-2 and tier-3 cities, doubling of bancassurance channel to 8% in FY23, and increasing the share of digital issuance. But with the insurance regulator planning to allow life insurers to sell health insurance products, the positive outlook for this health insurer needs to be cautious.

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