1. PI Industries: This agrochemical company’s share price rose 9.9% and touched an all-time high of Rs 3,698.5 on Wednesday, post its Q2FY23 results. Net profit rose 46% YoY to Rs 334.8 crore, and PI Industries features in a screener for stocks nearing their 52-week high with significant volumes. 

According to its management, strong demand for crop protection products during the Kharif season owing to a normal monsoon, healthy reservoirs and price realisations helped the revenue grow by 31% YoY to Rs 1,770 crore. Revenue numbers beat Trendlyne’s Forecaster estimates by 7.9%, while net profit beat the estimates by 19.6%. The company has also revised its capex plan for FY23 upwards by Rs 50 crore to Rs 700 crore. 

According to Prabhudas Lilladher, the company’s margins are expected to grow from their current levels due to strong enquiries in the custom synthesis manufacturing (CSM) business and new launches in the domestic segment. The brokerage maintains its ‘Buy’ rating on the company with an upside of 20% (Rs 4,350). The company also features in a screener for stocks with improving book value for the past two years. 

2. Divi's Laboratories: This pharma company’s share price fell by over 10% in two trading sessions, and hit a new 52-week low after Q2FY23 results were announced on Monday. Divi’s Labs’ Q2 revenue dipped 6.7% YoY, while its net profit fell 18.6%. As a result, this drug maker features in a screener for companies that declared results in the past week with falling net profit YoY or QoQ. 

A 37% fall in the custom synthesis segment revenue, which contributes to over 40% of the top line, led to a drop in revenue growth. This steep fall was due to a decline in the sales of Molnupiravir (a drug used to treat Covid-19). However, the management said the company has onboarded several new clients in the past six months and it will support growth in the custom synthesis segment over the next four to six quarters. But ICICI Direct, in its brokerage report, reduced the target price and downgraded the stock to ‘Hold’ from ‘Buy’. The brokerage cited low revenue growth visibility in the custom synthesis segment after Covid as the reason for the rating downgrade. 

Despite weak Q2 results, a silver lining for Divi’s Labs is its revenue from the generic segment rising 34% YoY in Q2FY23. The management said it was looking at opportunities from patent expiries in 2023-25 in the generics space worth around $20 billion. In order to benefit from this opportunity, the drug maker had allocated capex worth around Rs 1,500 crore for the Kakinada greenfield project. The management added that it is still waiting for government clearance for the establishment with all licences and permissions in place. 

3. Jubilant Foodworks: This restaurant stock was among high-volume top loser stocks on Wednesday despite reporting a net profit rise of 9% YoY to Rs 131.5 crore in Q2FY23. Revenue for the company increased 16.6% YoY as new stores start generating revenue in Q2FY23. The company shows up on a screener of stocks with improving cash flow from operations over the past two years. However, analysts from ICICI Securities expected a better increase in revenue, given the price hikes and store expansions done by the company. 

Rising raw material cost remains a concern as gross margin fell 200 bps YoY to 76.2% in Q2. High inflation in commodities like flour, milk and milk products contributed to an increase in costs. Also, the company’s inability to pass on price hikes was a problem as these were lower than inflation rates. Besides, in its earnings call, the management maintains its stance on not introducing further price hikes and plans to mitigate the problem of rising expenses through internal cost cuts and maintaining its operating leverage. Ashish Goenka, CFO, says, “Currently, we are not looking at any further price increase but  would absorb some of these cost increases in our margins.”

Analysts expect the company’s growth story to continue but remain cautious given the high inflation scenario, no price hikes and less scope for improvement in margins in the short term. ICICI Securities and Prabhudas Lilladher maintain ‘Buy’ but have reduced their earnings estimates for the company. ICICI Sec cuts its earnings estimate by 2% after calculating revenue growth of 21% over FY22-24E, while Prabhudas Lilladher cuts FY23 EPS estimates by 7.8%. HDFC Securities, however, maintains a ‘Sell’ on the stock as it expects a slowdown in the company’s expansion plans. Jubilant also shows up on a screener where FIIs have decreased their shareholding by 1.1% QoQ in Q2FY23 but institutional holdings have increased their stake by 1.5%.

4. Britannia Industries:  This FMCG company is rallying following its Q2FY23 results. It hit an all-time high of Rs 4,237, rising for four consecutive sessions on Wednesday. Britannia reported a 28% YoY increase in net profit to Rs 493.3 crore in Q2FY23. It recorded its highest quarterly revenue of Rs 4,379 crore, up 21.4% YoY in Q2FY23.

Managing Director Varun Berry said, "An increase in distribution reach helped deliver a robust topline growth of 22% YoY, aided by mid-single-digit volume growth, as we record our highest quarterly revenue." The company’s revenue and net profit beat Trendlyne’s Forecaster estimates by 8.02% and 17.28% respectively. It also touched the market capitalisation mark of Rs 1 lakh crore on Monday.

Several analysts are positive about the company’s potential to perform strongly in the upcoming quarters. ICICI Securities upgraded its rating on the stock to ‘Add’ from ‘Hold’, with a target price of Rs 4,300. The brokerage is optimistic about Britannia’s market share gains and expects the company to foray into new segments.

Axis Direct also upgraded its rating to ‘Buy’ from ‘Hold’, with a target price of Rs 4,550. The brokerage remains positive about the company’s long-term prospects. Consensus estimates show 16 analysts recommending a ‘Strong Buy’ on the stock, with eight recommending ‘Buy’ and 10 recommending ‘Hold’.

5. JK Lakshmi Cement: After announcing its Q2FY23 results on November 3, this cement maker gained 13.4% till Thursday, despite its net profit declining 27.6% YoY. The company’s revenue, on the other hand, rose 13.6% YoY driven by higher realisations, which grew 17% YoY. The uptrend in the stock price is due to the company beating the street’s Q2 estimates on the back of lower-than-expected margin erosion and higher realisations. Operational efficiencies, better product mix and low-cost fuel inventory helped absorb the high input costs. This helped the company beat Trendlyne’s Forecaster profit estimates by 34.5% in Q2. Given this better-than-expected performance, the stock saw four broker target upgrades and one broker recommendation upgrade over the past month. 

As the company is focusing on improving production capacity, enhancing premium product sales and cost management, the street expects margin expansion and growth in profitability. According to Axis Direct, the company is well-positioned to capitalise on robust demand for cement in the coming quarters, amid the expectation of moderating cost pressures as commodity costs soften. 

The company aims to increase its consolidated cement production capacity to 16.4 million tonnes (MT) by FY24. To meet its target, it is expanding the production capacity of its subsidiary Udaipur Cement Works by 2.5 MT to 4.7 MT, with a planned spend of  Rs 1,650 crore. To enhance cost management, JK Lakshmi is aiming to increase its share of green power usage in the next 9-10 months. 

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