1. IDFC First Bank: This bank’s stock rose 4% on Monday during Muhurat trading after reporting robust results for Q2FY23. Its net profit rose 3.6X YoY to Rs 555.6 crore, beating Trendlyne’s Forecaster estimates by 19.5%. It also reported an increase in net interest income by 32% YoY and a drop in provisions by 11% YoY. The asset quality of the bank improved significantly as gross NPAs fell 109 bps YoY to 3.2%. The management says that NPAs in the retail and commercial segments have improved, contributing to the overall gain in asset quality. 

The stock makes it to the screener of companies with increasing net profit for the past four quarters. It also shows up on a screener which lists stock in the PE Buy Zone with a reasonable durability and rising momentum score. The stock also performed decently in the last 90 days as it rose nearly 60% and over 20% in the last month.

The bank also saw a rise in advances with credit card and gold loans growing by more than 100% in Q2FY23. V Vaidyanath, Managing Director & CEO of IDFC First Bank, says that the growth momentum for the bank is likely to continue and expects loan advances to grow by 20-25% for FY23-24. 

However, analysts maintain a diverse view of the stock. ICICI Securities downgraded its rating for the stock from ‘Buy’ to ‘Hold’ as the bank’s credit cost increased to 1.2% in Q2FY23 from 0.9% in Q1. Even though the management has plans to reduce credit costs to less than 1.5% in FY23, analysts at ICICI Securities remain sceptical. Motilal Oswal remains bullish on the stock with a ‘Buy’ rating. It expects loans to grow by 24% CAGR over FY22-24E. It also expects credit costs to moderate in the coming quarters. However, Trendlyne’s consensus estimates show a mixed view as five analysts recommend a ‘Buy’ while seven, a ‘Hold’ or ‘Sell.’

2. Dodla Dairy: This dairy company’s stock price rose nearly 5% in reaction to its strong Q2FY23 results. Dodla Dairy’s revenues increased by 22% YoY on the back of a gradual rise in selling prices coupled with strong demand for milk and value-added products during the festive season. With such strong Q2 results, Dodla comes up in the screener of companies that posted the best results in the past week in terms of YoY net profit and revenue growth. 

The company’s average milk procurement and sales rose over 10% YoY in Q2FY23. In addition, Dodla's revenue from exports registered a strong growth of 70.3% YoY in Q2, helping the company to diversify its geo mix. Exports revenue contribution rose over 200 bps YoY to 7.5% in Q2FY23. Dodla’s Q2 revenue growth beat its peers Hatsun Agro Products and Heritage Foods, which derive a majority of their revenue from milk products. In fact, according to Trendlyne’s stock comparison tool, Dodla beats both its peers comfortably in at least 24 out of 37 parameters, including quarterly revenue and net profit growth YoY. 

Dodla Sunil Reddy, the Managing Director of Dodla Dairy said the company was committed to strengthening its procurement network and continues to look for organic and inorganic growth opportunities. Post Dodla’s Q2 results announcement, ICICI Securities maintained its ‘Buy’ rating on the dairy company and raised the target price marginally to Rs 620, indicating an upside of 20%. 

3. United Spirits: This leading alcoholic beverages company posted a strong quarterly net sales growth of 17.7% to Rs 2,879.7 crore in Q2FY23. Net sales of the Prestige & Above segment were up 23.1%, driven by innovation and renovation in the previous quarters.The Popular segment’s net sales rose 1.7%. The company’s net profit was up substantially at Rs 553.1 crore, supported by the gain from its recent slump sale transaction. 

Its gross margin fell QoQ and was at 39.5% due to inflationary pressures. Motilal Oswal maintains its ‘Neutral’ call on the stock with a target price of Rs 880, as it expects gross margin pressures to continue. 

Hina Nagarajan, Managing Director and CEO at Diageo India, said the company had delivered a quarter of strong top-line growth and resilient bottom-line performance. She also said that the company is focused on maintaining the momentum while driving revenue growth management initiatives and ramping up productivity across the value chain.

ICICI Direct is optimistic and has a healthy outlook on United Spirits’ growth. It maintains its ‘Buy’ rating, with a target price of Rs 1,050.

Trendlyne’s forecaster expects the company’s EPS to grow by 4.7% in FY23. It makes it to the screener with companies having strong annual EPS growth.

4. Multi Commodity Exchange of India: The stock of this commodity derivatives exchange gained nearly 15% ever since it announced its Q2FY23 results on October 22. The stock was also among the top-10 index outperformers for the past week. The company’s net profit jumped close to 2X YoY, backed by a robust rise in topline.

The revenue growth for MCX India was mainly driven by a 5X jump in average daily notional turnover reported for the options segment. The options turnover also saw a strong sequential growth of over 60% in Q2FY23. Within the options segment, it was the energy division which drove the astronomical rise in daily turnover. Options on crude oil and natural gas are the main products within this division of MCX. The heightened volatility in oil and gas prices has shifted all the action here. In contrast, the average daily turnover for the futures segment fell both YoY and QoQ. According to the management, options are the future of all types of markets, be it equities or commodities. More and more traders are switching to an options contract, owing to higher margins required for a futures contract. Recognizing this trend, the company will launch a monthly options contract for gold soon. 

There is one major overhang that remains for this stock. MCX is set to shift to a new platform developed by TCS from January 2023. The new platform is currently in the user testing phase and mock trading will begin from November. The successful transition to this new platform is now critical for MCX, according to its management. MCX also renewed its contract with 63 Moons at ‘exorbitant rates’ to ensure smooth operations in the transition period. The impact of higher software costs will be visible in the next quarter. 

5. Hindustan Unilever (HUL): This FMCG company’s Q2FY23 net profit rose 22.2% YoY and revenue grew 16.1% YoY beating the street’s expectations. It beat Trendlyne’s Forecaster profit estimates by 7.9% and shows up on the screener for companies with increasing profits sequentially over the last four quarters. The management attributed its growth to price hikes and market share gains. Despite the robust performance, the stock has dropped nearly 5.1% till Thursday since announcing its Q2FY23 results on October 21.  

The downtrend in the stock’s price is mostly due to a contraction in its EBITDA margin and lower-than-expected volume growth. EBITDA margin fell 180 bps YoY to 23.3%, while volume rose by 4% YoY. Margin pressures persist as key commodity prices of crude oil, soda ash, and milk powder are 30-55% higher compared to last year, according to reports. A depreciating Indian rupee amid elevated commodity prices made matters worse. The only commodity to decline compared to last year was palm oil. To pass on the benefit of lower palm oil prices to its customers, the firm reduced the prices of its skin cleansing products in October. HUL expects this to improve volumes, but reports suggest volume growth is contingent upon demand recovery.

The management expects growth to be price-led in the near term, as commodity prices would remain volatile. The company plans to increase its advertising & promotion spending to drive volume growth. With its focus on premiumisation and market share gains, the firm expects margin expansion in the medium-to-long term. 

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