1. APL Apollo Tubes: The stock of this structural steel tube maker gained over 9% ever since it released its business update for Q2FY23 on October 1, 2022. It also touched a 52-week high on Thursday and has outperformed the Nifty 500 index by over eight percentage points in the past week.

APL Apollo Tubes reported its highest-ever sales volumes in Q2FY23 which were at 6.02 lakh tonnes. The volumes jumped over 40% YoY and sequentially in Q1FY23 led by the ‘Apollo Structural’ product category. Within this category, general structures grew the fastest in this quarter. As a result, share of the value-added segment in APL’s overall volumes fell to 54% in the quarter from 61% in Q1FY23. The management’s medium-term goal is contrary to the actual result. It aims to raise the share of value-added products in its sales volumes to 75% by FY25. Nevertheless, the volume numbers for Q2FY23 are impressive as the company had seen its volume fall by more than 20% QoQ in the previous quarter. This was on account of distributors reducing their stocks as a response to falling steel prices. Back then, the company was confident of clocking one million tonnes of sales in H1FY23. It has comfortably exceeded that target despite Q2FY23 being a seasonally weak quarter for construction given the monsoon season.

Given the rising applications of steel tubes for construction of airports, warehouses and high-rise buildings, the company aims to clock a volume CAGR of over 30% between FY22 and FY25. Its targeted sales volumes are at four million tonnes for FY25. Its upcoming facility of 1.5 MTPA in Raipur will enable APL Apollo to achieve this growth target. In fact, the company may generate additional volumes of 30 to 40 lakh tonnes from the Raipur plant in FY23. The outlook for APL Apollo is promising with the government’s thrust on infrastructure development. 

2. Angel One: This brokerage company’s stock rose over 12% on Tuesday after it released its monthly business update. Angel One’s client base rose 77.4% YoY to 1.15 crore in September. In addition, a jump in average daily turnover (ADTO) of Futures and Options (FnO) and commodities segments helped the overall ADTO to increase by 116.4% YoY. With such a rise in share price after the business update, Angel One comes up in a screener that shows companies whose share price is trading above their short, medium, and long-term moving averages. 

The sharp rise in the FnO ATDO could be due to the volatile nature of the markets. This bodes well for the company as it has a higher dependence on FnO income. Overall, the top five brokerages account for around 58% of the overall NSE active clients with Angel one’s market share at about 9%.

Though the company posted strong numbers, investors will have to note that trading enthusiasm slows down when markets are in a downturn. This remains a key risk for Angel One. This is reflected in its gross client acquisition, which fell both YoY and QoQ in September. Active users in the industry also fell both in July and August indicating a slowdown. However, the company’s share price is rising ahead of its Q2FY23 results, which is scheduled to be released on October 13. 

3. VIP Industries: This luggage manufacturer rose more than 7% in intra-day trade on Monday and over the past month, it gained over 18.9% till Thursday. The uptrend in the stock’s price comes on the back of a robust business outlook. The rise in demand for travel this festive season is expected to augur well for the company given its dominant position in the organised luggage industry. The firm commands a market share of 45% in the industry, according to reports. Another key positive for the company has been its focus on increasing revenue from its own manufacturing. In-house manufacturing contributed 64% of revenue in Q1FY23, up from 35% in Q1FY20. 

Along with improving its manufacturing capabilities, the firm has sharply reduced sourcing finished goods from China in Q1FY23 to 11% from 40% in FY20, according to ICICI Direct. This helps it reduce its exposure to forex fluctuations and disruptions in the supply chain. Over the past year, the company has risen over 40.4% till Thursday and made it to this screener with stocks that have had high returns consistently over the past 5 years.

The management has targeted annual revenue of Rs 2,000 crore in FY23, given a recovery in demand and a fall in some key raw material prices, according to reports. Trendlyne’s Forecaster estimates its revenue to grow 32.9% YoY to Rs 1,921.3 crore in FY23, coming in close to the company’s intended target. At the end of FY22, the company had 376 exclusive brand outlets, and by the end of FY23, it aims to increase its retail store network to 500. The firm hopes to achieve this target by expanding into smaller towns in India, and most of these outlets will be opened through a franchise model.

4. Avenue Supermarts (DMart): This retail chain company rose more than 3% on September 30 after brokerage Prabhudas Lilladher increased its target price for the stock by 16.7% to Rs 5,118. The stock also shows up on a screener where brokers upgraded recommendations and target prices in the past three months. Three brokers upgraded their recommendations while five brokers increased their target price for the stock.

Prabhudas Lilladher feels that the stores opened by DMart during the pandemic will deliver gains in FY23. It also believes that the company’s current strategy of ‘Everyday Low Prices’ will drive sales in this festive season, beating inflation woes. It also expects ‘Dmart Ready’ - a new venture by the company into door-to-door delivery service - to clock growth in FY23 as its sales almost doubled in FY22. One view of the new venture is that despite heavy competition in this segment, DMart has not structured its model on heavy discounts which generally burns cash flow, resulting in losses. The brokerage expects DMart’s top line to grow by 38% YoY and net profit to increase by 46% in Q2FY23.

The company recently gave out its quarterly business update. Its revenue is up 35.8% YoY to Rs 10,384.6 crore in Q2FY23. This number is almost double (Rs 5,218.1 crore) of revenue generated in Q2FY21. Although revenue growth is slightly down because of lower rural demand and rising inflation, some segments like apparel and general merchandise are seeing a surge. The company also plans to open more stores and expand geographically in FY23. Analysts expect that Avenue Supermarts’ EBITDA will break even by FY25 if it scales up at a faster pace. 

5. Blue Dart Express: This logistics company touched its all-time high of Rs 9,640 on Tuesday and rose 9.2% in the past week till Thursday. The stock started its uptrend after the company announced an increase in shipment prices by 9.6% on September 28, effective from January 1, 2023. The management said the price hike will be taken to offset rising input costs, high inflation, and rising interest rates. The surge in share price comes on the back of expected volume growth and market share gains. This is due to its 54% market share in the organised air express market and the ability to deliver to 98% of pin codes in India. The company also shows up on a screener which lists stocks with rising cash flow from their operations in the last two years.  

The company has been able to maintain its gross margins at 36% in FY22, despite  elevated aviation turbine fuel (ATF) prices. Its ability to pass on prices and a 30% surge in volumes during FY22 aided in maintaining its margin, according to Motilal Oswal. Looking ahead, the management wants to expand its ground express segment and increase the segment’s contribution to total revenue from its current levels. This is because it expects the growth in this segment to be 2X the growth in the air express segment, mainly due to cost differential in services. The management also plans to scale up its services in e-commerce as well, as it sees this segment driving growth in the long term.

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