1. IRB Infrastructure Developers: This road construction company’s stock rose 6.6% on Monday after announcing its Q1FY23 results. Its net profit jumped more than 5X YoY to Rs 363.2 crore and revenue rose 18.4% YoY. Higher traffic volume and a tariff hike of 10% led to robust growth in toll collections, which aided profit growth. However, the company’s profit was mainly boosted by an arbitration award of Rs 419 crore it received from the National Highways Authority of India. It received 75% (Rs 308 crore) of the compensation but recognised the entire amount as revenue in Q1FY23. This helped the company beat Trendlyne Forecaster’s revenue and profit estimates by 22% and 107.7%, respectively. According to the management, the arbitration award had a net impact of Rs 270 crore on the net profit. The boost in revenue by the arbitration award, and the resultant surge in profit, also helped the company to make it into this screener that lists companies with sequentially rising profits for the past three quarters.

The board of directors approved the transfer of the Vadodara Kim expressway project to the IRB InvIT Fund (trust) for a consideration of Rs 342 crore. This transaction will reduce IRB Infra’s debt by Rs 955 crore. Even though there was no new order wins the management sees healthy revenue visibility for the next three financial years.

2. Hindustan Aeronautics (HAL): This aerospace company’s stock rose 8.1% and touched its 52-week high on Monday. This comes on the back of a strong business outlook given recent deal wins, according to reports. The stock is up 29.7% over the past month. The stock reacted positively to reports suggesting that the company is working on the development of AI-driven advanced multi-role drones for use in high-altitude areas. The company plans to conduct flying tests in the middle of next year and produce 60 drones in the first phase of the project. In July, the company also signed a contract worth $100 million with Honeywell for the supply and manufacture of 88 engines for the Hindustan Trainer Aircraft. The company shows up on a screener with improving cash flows and a good durability score.

According to the company’s annual report, its order book stood at Rs 82,000 crore at the end of FY22. The management expects a rise in orders as the Centre’s defence budget increased by 9.8% YoY for FY23. The company also plans to foray into civil aviation for both manufacturing and maintenance, repair, and overhaul, or (MRO) opportunities going forward.

3. Zensar Technologies: This IT services company’s stock fell 7.3% on Monday and hit a 52-week low post its Q1FY23 results. This is despite Zensar Technologies’ revenue rising sequentially for the past five quarters till Q1FY23. Investors were left disappointed due to the 300 bps QoQ fall in its EBITDA margin to 11.2%, in addition to the 43% QoQ fall in net profit fall in Q1. An increase in the cost of delivery, and lower utilisation hurt the company’s EBITDA margin even without wage hikes in Q1. Add to this the 28% attrition (up 20 bps QoQ), and its clearer why investors might be fretting.

With all these factors at play, the management’s original guidance to reach an EBITDA margin in the mid-teens in FY23 was pushed forward to Q2FY24. This probably led to the sharp sell-off on Monday. This stock features in a screener that lists stocks that are near the oversold zone according to the relative strength index, or RSI.

However, brokerages like HDFC Securities and ICICI Securities maintain a positive outlook on the company on the back of strong revenue growth across all verticals. While HDFC Securities’ target price indicates a 36% upside, ICICI Securities’ indicates an upside of about 20%. However, the macroeconomic slowdown in the US (71% of total revenue) may lead to slow top-line growth.

4. Delhivery: This logistics company’s stock was trading up from June 27 - July 24 until it started falling and slumped 6.6% on Wednesday after it reported a widening in its net loss to Rs 399 crore in Q1FY23 compared to Rs 129.5 crore in Q1FY22. The stock has seen choppy waters since it listed on May 24, falling 2% on listing day. But this coincided with weakness in the broader market as foreign investors were selling Indian shares, which brought the Nifty 50 to 16,000 levels.

After that, the stock rose in June and July, till the company announced its Q1FY23 results. The management attributed the widening loss to integration issues with Spoton (which it acquired in August 2021). The third phase of integration took longer than expected. Going forward, the management says the company is well-capitalized to carry out its expansion plans. But analysts aren’t enthused as ICICI Securities downgraded the stock to a ‘Sell’ from ‘Hold’. It believes that Delhivery will not be able to 'deliver' in the cross-border freight and parcel industry anytime soon, given the competition from Chinese players.

5. JSW Energy: This power company’s stock rose 3% on Wednesday after it announced that its renewable energy arm, JSW Neo Energy, will buy Mytrah Energy’s 1.75 GW renewable portfolio. JSW Neo will pay Rs 10,531 crore to buy these solar and wind power assets. This sent JSW Energy’s stock higher by 3% on Wednesday, but the stock gave up some of these gains on Thursday.

This acquisition will help JSW Neo Energy to achieve its goal to have a power generation capacity of 10 GW by 2025, up from 4.8 GW currently. Moreover, once the company completes its under-construction project of 2.5 GW by June 2023, 65% of its generation capacity will be renewable power.

Mytrah Energy was on the lookout for buyers for its renewable assets since 2021 due to working capital concerns. In fact, around 205 MW of its capacity is not in operation due to pending dues from power distribution companies in Telangana and Andhra Pradesh. JSW Energy will also take over a considerable portion of debt of this company i.e., Rs 9,132 crore. Its net debt rose 11% QoQ to Rs 7,720 crore in Q1FY23. Moreover, management is most likely to fund a large part of the deal value through debt, according to reports. Hence, its net debt-to-EBITDA ratio is set to rise to 4X from 1.75X currently, after the acquisition is completed. Understandably, the market is on a wait and watch mode on this highly leveraged deal.

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