1. Dr. Lal Pathlabs: This diagnostic company’s stock rose close to 11% in the past week till Thursday despite its weak Q1FY23 results. Both revenue and net profit fell YoY in Q1FY23 mainly due to a high base in Q1FY22 as the company benefited from Covid testing revenues. As a result, it features in this screener which lists companies that posted a YoY fall in quarterly revenue and net profit.

Revenue fell 17.1% YoY to Rs 502.7 crore in the June quarter while the net profit declined by 56%. However, what cheered investors could be the 25% YoY growth in non-Covid revenue and the bounce back of preventive tests, which contributed to 21% of the total sales. Managing Director Om Manchanda said that the bundling of tests, especially in the preventive segment, led to a higher number of tests per patient (2.6 tests per patient). He further added that bundling may lead to lower revenue per test, but the realization per patient rises with the increase in number of tests per patient.

The diagnostic labs space has intense competition with companies across different industries entering the segment. Due to this, a rise in marketing and IT costs led to a 7.8 percentage point YoY fall in EBITDA margin to 23.4% in Q1FY23. Although the management expects the EBITDA margin to go lower in the short term, it expects it to revert back to its pre-Covid level of 25% in FY23.           

2. Escorts Kubota: This tractor maker’s stock fell nearly 6% on Monday due to its disappointing Q1FY23 results and July wholesales. Its Q1 net profit fell over 20% YoY despite its revenue rising.

Escorts Kubota’s Q1FY23 profit fell due to a four percentage point contraction in its EBITDA margin to 10%. Its market share in the tractors space also declined by over 2% sequentially led by its mainstay markets like Uttar Pradesh and Bihar. In its recent earnings call, the company’s management said the loss of market share was mainly among price sensitive buyers. Escorts hiked prices by 12-13% in the last 18 months and it looks like this led to customers switching to lower end brands. This is probably visible in Escorts Kubota’s July tractor wholesales number falling to 18%. Then there is the uneven distribution of India’s monsoon that may play spoilsport for tractor makers. Although Escorts' management believes that the southwest monsoon will soon catch up, it expects the tractor industry’s growth at just 3-5% YoY in FY23, down from its earlier forecast of 6-8%.

3. IDBI Bank: This bank’s stock was one of the top gainers on Wednesday as it surged 13% and was trading 3.5X its weekly average trading volumes. It also outperformed the Nifty 500 by 24.4% over the past. The bank’s net profit rose 25% YoY to Rs 756.4 crore because of a fall in provisions while its net interest income fell marginally during the quarter.

The bank’s gross and net NPA ratios in Q1FY23 were 19.9% and 1.2%, respectively, compared to a gross NPA of 22.7% and a net NPA of 1.6% in Q1FY22. The management is positive about the asset quality of the bank and expects NPAs to further decrease. It expects recoveries from insolvency and bankruptcy processes to be close to Rs 4,000 crore in FY23.

There is also the impending stake sale by the Centre in the bank. This has been on the table for a while, and the Centre hopes to conclude the stake sale by FY23. Both Life Insurance Corporation of India and the Centre will sell their stakes as part of the planned strategic stake sale . But any new majority owner in the bank will have to contend with the Reserve Bank of India’s rule that a bank’s promoter must bring down their stake to 26% over a period of time.

4. Godrej Properties: This real estate developer’s stock had a topsy-turvy week. After the company announced land acquisition in Mumbai on Monday the stock started trading higher. And then came its stellar Q1FY23 results on Tuesday. But the market wasn’t enthused and the company’s stock fell 7% over the next three days.

The company performed well, with a surge in net profit by 2.5X YoY to Rs 140.5 crore, but investors were more focused on another event. The Managing Director and CEO Mohit Malhotra resigned and will leave the company on December 31. The management assured investors that the change in leadership will not hamper business development and that there will be a smooth transition. The management also increased the sales guidance for FY23 to Rs 10,000 crore and declared that the company’s sales may grow 20%. But the stock’s reaction shows investors are still concerned about the change of guard at the top. 

5. Lemon Tree Hotels: This hotel company is in the black after nine consecutive quarters of losses, yet it fell by 3.5% after its Q1FY23 results were announced on Wednesday. The company’s revenue grew more than 4.5X YoY to Rs 192 crore, driven by robust demand from corporate travellers. It posted a net profit of Rs 13.9 crore compared to a loss of Rs 40.1 crore in Q1FY22, despite increasing input costs. It beat Trendlyne Forecaster’s revenue and profit estimates by 14.8% and 51.1%, respectively.

The rise in demand for travel led to the company’s average room rate (ARR) rising to Rs 4,822 in Q1FY23 which was higher than its ARR in the pre-Covid quarter of Q1FY20.  Its EBITDA margin rose by 16 percentage points to 48% compared to 32% in Q1FY20 (pre-Covid). The management said that cost optimization measures led to its margins beating pre-Covid margins. However, the company’s occupancy rate of 65.1% in Q1FY23 was lower than its peers like EIH and Chalet Hotels which had occupancy rates of 72% and 78%, respectively.

As social restrictions began to ease around Q3FY22, demand for travel started to pick up. Since then, the promoters’ pledged shares are down by half since Q3FY22 to 14.7% at the end of Q1FY23. This coincided with Lemon Tree’s stock rising 42.2% over the past seven months.

The management expects the leisure travel and corporate travel segments to continue to gain traction in FY23. They believe customer preference is shifting toward branded hotels, which should bode well for the company.

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