1. Metro Brands: This footwear manufacturer’s stock rose 8.5% on Tuesday, continuing its rally from Monday. The company is rising amid expectations of robust growth as demand for footwear picks up on the back of the economy recovering. The improving economic environment aided the company’s bottom line in Q1FY23. It was back in black on a YoY basis as it posted a net profit of Rs 104.8 crore, beating Trendlyne’s Forecaster profit estimates by 26.3%. Metro Brands’ stock rose more than 35% since announcing its Q1 results. This uptrend in the stock has enabled it to make it into this screener which lists companies in the overbought zone according to the money flow index.

The stock’s PE ratio is 73.7 and is currently trading at a PE neutral zone meaning it has traded 72.9% of the days below its current PE. However, its PE ratio is lower than Campus Activewear and Relaxo Footwear’s PE ratio of 121.5 and 111.3, respectively.  Both these stocks are currently trading in the PE sell zone.

Metro Brands CEO Nissan Joseph says the company’s profit has been improving over the last few quarters because of healthy traction on both offline and online channels, according to reports. The firm launched its presence on e-commerce back in 2010 which has enabled it to expand its presence online. Its online business has grown at a 79% CAGR over the past three years. Going forward, the management plans to add another 260 stores by FY25, a 40% rise from its base of 624 stores at the end of FY22. In FY23, the company plans to open 80-85 stores. According to Motilal Oswal, the company’s high store productively along with its robust cash flow generation will allow it to expand further in the coming quarters. 

2. Ambuja Cements: This cement stock is in the news for several reasons. Firstly, it hit a market cap of Rs 1 lakh crore last Thursday. The stock rose 2.7% in reaction to this. Then the Adani Group completed their acquisition of Holcim’s stake (63.15%) in the company and also announced a capex infusion of Rs 20,000 crore. The company plans to raise this amount by the issue of warrants to Harmonia Trade and Investment Ltd, a promoter group entity. It is yet to receive the board’s approval for this. The stock rose 9% in trade on Monday in reaction to this news. It also shows up on the screener of companies outperforming their industry, with Ambuja Cements outperforming the cement & cement products industry by 21% over the past three months.

However, after all the uproar, news broke on Wednesday of the company’s promoter entities Endeavour Trade and Xcent Trade and Investments pledging their entire stake to fund the acquisition of Holcim’s stake. The pledged shares will be used to raise debt from Deutsche Bank to fund the acquisition. The stock fell 5.7% in the trade as high debt levels are a cause of concern.

Despite this, Jefferies maintains a ‘Buy’ rating on the stock as it expects new leadership and capex plans to drive future growth. Axis Direct maintains a ‘Hold’ rating on the stock despite being positive on the robust capex plans announced by the company. Trendlyne’s consensus recommendation shows mixed reactions among analysts with 16 maintaining a ‘Buy’ and 12 maintaining a ‘Hold’ recommendation on the stock.

3. Persistent Systems: This IT services company held an investor meet on Tuesday and Wednesday where it reiterated double-digit revenue growth in FY23 and FY24 on the back of robust deal wins. However, this failed to enthuse investors and the company’s stock price continued to hover near its 52-week low. This could be because investors remain wary of a high inflationary environment amid slowing global economic growth that could lead to cost optimization by its clients. To add to this, the company derives over 85% of its total revenues from North America and Europe, where the inflation level remains at record levels amid a growth slowdown.

However, in the Q1FY23 earnings call, Persistent Systems’ management said that the demand environment continues to be robust, and is confident of strong growth in the coming quarters. According to Trendlyne’s Forecaster, revenue is expected to rise 6.9% QoQ in Q2. Notably, the company’s revenue has grown consistently over the past eight quarters.

Axis Direct, in its brokerage report released on Monday, kept its ‘Buy’ rating on Persistent Systems with an upside of 22%. The brokerage remains optimistic about the company’s future growth prospects given its robust order book, higher offshoring, presence across diversified geographies, and lower attrition. This company also shows up in the screener that lists companies with a high analyst rating with at least 20% upside. However, the stock is currently trading in the PE sell zone as the stock has traded 80% of the time below its current PE. 

4. Shree Renuka Sugars: This sugar company outperformed the Nifty 50 index by 23.5% over the past week. The surge comes after the firm announced its plans to double its ethanol production capacity after market hours last Friday. This positive price movement pushed the company into this screener which lists stocks with strong momentum with prices above short, medium, and long-term moving averages.

The firm is looking to expand its ethanol manufacturing capacity from 720-kilo litres per day (KLPD) to 1,250 KLPD by December 2022. The management expects to incur around Rs 700 crore on this capacity expansion, according to reports. The company is optimistic about the future prospects of ethanol as the Centre has set a target of blending 20% of petrol with ethanol by 2025, from the earlier target of 2030. The Centre wants to increase ethanol blending in petrol to reduce the country’s oil imports. With the current blending rate at 10%, SRS believes the new target provides vast opportunities to expand its footprint in the segment. According to reports, the ethanol segment is expected to receive investments worth Rs 10,000 crore in the coming years.

Chairman Atul Chaturvedi, believes another key positive of increasing ethanol production is that it allows the firm to hedge against volatility in sugar prices, according to reports. If the sugar prices rise the company will have the option of diverting cane juice into sugar and if ethanol demand is higher than usual, it can be diverted accordingly. 

5. Triveni Engineering & Industries: This sugar maker sold off its entire stake of 21.85% in its listed subsidiary Triveni Turbine for a consideration of Rs 1,609 crore in a bulk deal on Wednesday. The company also outperformed the Nifty 500 index by over 10 percentage points in the past week.

Rati Sawhney, who is the wife of the Chairman Dhruv Sawhney, picked up 10% of the stake sold by Triveni Engineering through an inter-se transfer. The remaining stake was bought by foreign institutional investors like Nomura, Plutus Wealth, Abu Dhabi Investment Authority as well as domestic mutual funds like SBI Mutual Fund and Aditya Birla Mutual Fund. According to the management, the aim behind this stake sale was to kick-start long-term succession planning, have a focused management process for its subsidiary, and exit its non-core business of electrical equipment. 

Notably, Triveni Engineering is managed by the elder son of Dhruv Sawhney, Tarun Sawhney while Triveni Turbine is managed by the younger son Nikhil Sawhney. Now, post this stake sale, there is no cross holding of Triveni Engineering in Triveni Turbine. Basically, the remaining promoter stake of 55.9% in Triveni Turbine is now entirely held by the Sawhney family individually and through an unlisted public company.

In accordance with Tarun Sawhney’s statement, it is highly likely that Triveni Engineering declares a special dividend for the shareholders in order to distribute a part of the sale proceeds. The company may also use a portion of this cash inflow in their upcoming distillery expansion project which involves an outlay of Rs 460 crore. Both these factors have cheered investors and led to the stock’s outperformance.

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