1. Tanla Platforms: This internet software services company’s stock is down almost 57.7% over the past three months. The stock crashed 20% on the bourses on Tuesday locking into the lower circuit after a dismal Q1 performance and hit a 52-week low of Rs 731. The company’s profit fell both on a sequential (28.6%) and YoY basis (3.9%) to Rs 100 crore, and hence shows up in the screener of companies that declared results in the past week with declining net profit.

Although both profit and margins are down in Q1FY23, the CEO’s message remains positive because of upcoming projects in its platform segment in Q2FY23. He also talks about the problems faced in Q1FY23 - the company’s margins were hit because of internal and external factors of pricing issues with select customers and the fall of the euro against the US dollar.

Brokerages like YES Securities and HDFC Securities maintain a ‘Buy’ rating on the stock. They believe that the seasonally weak quarter will not impact revenue growth for FY23. HDFC Securities expects the Platform business to drive revenue CAGR of 35% for Tanla. The management is positive of maintaining the margin in the range of 19%-20% in Q2 and Q3FY23.

The company also believes that their recent deals with VI and Truecaller will begin to show results by the next quarter which will boost revenue and ease out margins. Right now, the stock is underperforming its industry by 42% in the past 90 days. It’ll be interesting to see how the company bounces back in the next quarter given the fear of recession looming around in the American and European economies.

2. Craftsman Automation: This auto ancillary company’s stock touched a 52-week high on Wednesday, two days after its Q1FY23 results. The stock outperformed the Nifty 50 by over 15% in the last one month alone.

Craftsman Automation’s net profit rose nearly 2.4X to Rs 55.6 crore led by its revenue rising over 55% YoY to Rs 677.1 crore in Q1FY23. Although there was a low base in Q1FY22, a healthy revival in demand from OEMs (original equipment manufacturers) also helped boost its profit. In fact, the company’s Q1FY23 revenue beat Trendlyne Forecaster’s estimates by 8%. Craftsman manufactures critical engine and transmission components, especially for the medium and heavy commercial vehicle segment. Though it does cater to the two-wheeler and passenger vehicle segment as well, more than 70% of its annual revenue comes from commercial vehicles (54%) and tractor makers (18%).

Listed commercial vehicle (CV) makers like Ashok Leyland, Eicher Motors and Mahindra & Mahindra crossed pre-pandemic wholesales levels in Q1FY23. However, Tata Motors’ CV wholesales were still at 75% of the pre-Covid figure, although they rose 2X on a YoY basis in Q1FY23. Based on these positive trends in wholesales and a rebound in industrial activity, Crisil recently upgraded the credit rating of Craftsman’s long-term loans to A+ from A, while its outlook remained ‘stable’. Consensus estimates from Trendlyne’s Forecaster shows that revenues of this company may grow close to 20% in FY23, in line with the management’s commentary. It’s no surprise that the consensus among analysts is a ‘Strong Buy’ for this auto component player.

3. Zomato: This restaurant aggregator and food delivery company’s stock fell over 23% in two days at the beginning of the week after the one-year lock-in period on the shares held by its pre-IPO (initial public offering) investors ended. The lock-in period applies to institutional investors who were allotted shares just before the IPO. Though the stock recovered about 8% of its losses by Thursday, it is down 73% from its all-time high of Rs 169 seen on November 16, 2021, and trades below its IPO issue price of Rs 76.

The company is backed mainly by private equity and venture capital funds and has no listed promoter. A diverse shareholding could’ve contributed to the sell-off after the one-year freeze on pre-IPO investors’ holding ended. The sell-off continued on Tuesday with Zomato's pre-IPO investor Moore Strategic Ventures selling its entire stake for Rs 187 crore.

Despite a sharp fall in Zomato’s share price, foreign brokerages like Jefferies and Credit Suisse maintain a positive outlook on the company, according to reports. Both brokerages’ target price for the stock indicates an upside of over 100%. Credit Suisse maintained its ‘outperform’ rating with a target price of Rs 90 as it believes the company is on a “clear road” to profitability with its existing customers driving the food business. However, investors continue to reassess the profitability timeline post its acquisition of Blinkit for Rs 4,447 crore in July. Zomato’s Q1Y23 results are to be declared on Monday and may throw some light on the company’s road to profitability.

4. Tata Steel: This steel maker’s stock was very volatile and closed 2.3% lower on Tuesday after it announced its Q1FY23 results. Elevated coking coal prices and the export duty on steel impacted the overall performance of the company in Q1. Its net profit fell 12.8% to Rs 7,765 crore as raw material costs rose 56.7% YoY. Revenue, on the other hand, grew 18.8% YoY to Rs 63,430 crore driven by higher steel realisations in India and Europe. Even though the company’s profit fell YoY, it managed to beat Trendlyne’s Forecaster profit estimates by 26.1%.

The silver lining in Q1 for the company was its European business achieving its highest quarterly EBITDA of 621 million pounds (or Rs 6,037 crore), up more than 2X YoY. This made up for the 39% YoY fall in the Indian business’ EBITDA. The margin expansion was driven by long-term contracts and a healthy product mix.

This is surprising considering the European business dragged the overall performance of the company for many quarters. EBITDA per tonne jumped nearly 4.3X YoY to Rs 28,220. In India, even though its steel deliveries marginally fell due to a reduction in exports, revenue per tonne rose 11.4% QoQ aided by a robust marketing network.

Going forward the management expects the rest of FY23 to be challenging for the Indian steel industry due to the Russia-Ukraine war, elevated input costs and imposition of export duty. However, sales volumes and margins are expected to improve from H2FY23 onwards as demand may improve  and rising raw material costs ease, the management added. The company anticipates a rise in demand from H2FY23 as the monsoon season ends. It expects a revival in the automobile sector and the Centre’s increased spending on infrastructure to boost steel demand.

5. Navin Fluorine International: This chemical company rose 11.1% on Monday after announcing its Q1FY23 results. The surge in its stock price was mainly due to the company’s Q1FY23 EBITDA margin expanding 110 bps YoY to 24.9%. Margins improved due to price hikes and a change in the product mix towards high-margin products. The company’s net profit grew 33.1% YoY to Rs 74.4 crore and revenue rose 21.7% YoY to Rs 397.5 crore. 

However, it missed Trendlyne’s Forecaster revenue and profit estimates by 6.4% and 3.9%, respectively. The revenue growth was driven by the speciality chemicals and high-performance products (HPP) segments. The HPP segment involves mostly the production of refrigerant gas and inorganic fluorides. The company also shows up on this screener that has companies outperforming their industries over the past 90 days. 

The company’s margin expansion beat the street’s expectation, according to Edelweiss. Its margin rose amid concerns over margin pressure faced by chemical companies in India due to rising fuel costs. Surprisingly, the company’s specialty chemicals and HPP segments derive a majority of their revenue from the Indian market. According to the company, repeat orders drove the speciality chemicals segment’s revenue growth, and higher volume and better realisations drove the HPP segment’s revenue growth.

Going forward, the management expects strong demand for fluorine-based specialty chemicals in FY23. Motilal Oswal expects the demand for fluorine from the pharmaceutical and agriculture industries in the coming quarters. The company plans to expand its product portfolio through capacity expansion and new product launches to meet rising demand over the long term.

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