1. Larsen & Toubro: This construction and engineering company reached an all-time high of Rs 2,110 today as it closed a $107 million three-year loan from Sumitomo Mitsui Banking Corp. The company’s subsidiary, L&T Energy Hydrocarbon, secured two offshore contracts worth Rs 1,000-2,500 crore in total on Monday. The contract is India’s first order to decommission offshore facilities from British Gas Exploration and Production India. 

The company’s infrastructure business, L&T Construction, also won an order worth Rs 1,000-2,500 crore from Greenko Group on November 24. It is for the construction of an off-stream pumped storage project in Madhya Pradesh. Larsen & Toubro also acquired the entire stake held by Chiyoda Corp in L&T-Chiyoda, a joint venture between the two companies, on November 22. 

According to Sharekhan, the company’s H1FY23 performance was strong despite cost pressures in its core business, and supply chain challenges. L&T also has a rich order intake in the domestic and international markets. The brokerage maintains its ‘Buy’ rating on the company with a target price of Rs 2,390. This indicates a potential upside of 15.8%. The company features in a screener of stocks with high Trendlyne momentum score. 

2. Apollo Tyres: This tyre stock rose more than 4% in trade after it announced Q2FY23 results. While its net profit rose 11.9% YoY to Rs 194.5 crore, its standalone net profit fell 9.9% YoY to Rs 80.8 crore. This was caused by a 9.9% YoY increase in raw material costs, which also pulled its EBITDA margin down by 61 bps YoY to 12%. The company’s management, however, expects raw material costs to ease from Q3FY23.

Apollo Tyres’ revenue rose by 16.8% YoY in Q2 driven by price hikes, which were in the range of 5-12%. Decent performance in the European markets helped drive revenue growth for Apollo Tyres, despite these markets facing high energy prices. The management expects replacement demand in domestic markets to improve, especially in the OEM (original equipment manufacturers) segment. The stock also shows up in a screener with increasing revenue for the past two quarters.

Reports suggest that easing crude oil prices and correction in rubber prices bode well for tyre stocks. Rubber and crude oil consist of nearly 60% of the raw material cost as a percentage of sales and a fall in prices would significantly bring down raw material costs. Apollo Tyres rose 6% in trade on Monday and touched an all-time high on Thursday in hopes of low costs and improving margins in H2FY23. The stock rose nearly 9% in the past month and 11% in the past week.

Trendlyne’s consensus recommendation has 20 analysts suggesting a ‘Buy’ on the stock. Reliance Securities maintains a ‘Buy’ as it expects the company’s volumes to grow in FY23-24 on the back of increasing demand from OEMs and EBITDA margins to be around 13.1% in FY23E. However, the stock is in the PE Sell Zone as it is trading below its current PE valuation. 

3. Zomato: This internet software company saw a series of senior-level exits in the past month. Zomato fell over 4% after its co-founder Mohit Gupta resigned from his post on November 18. Although the company rose 6.5% in the past month, it has fallen by 57.8% from its 52-week high of Rs 157.9. Recent reports on the company's plans to lay off 3% of its workforce in order to scale down costs and turn profitable have likely weakened the investor sentiment. 

In the recently ended quarter, Zomato’s net loss narrowed to Rs 250.8 crore, as against Rs 429.6 crore in Q2FY22. Brokerage firm Ambit is optimistic about the company’s growth and has a ‘Buy’ rating on the company with a target price of Rs 94. It says that Zomato's market share in the food delivery space rose to 55% in H1CY22. The brokerage expects the entire enterprise (including Blinkit) to turn profitable in approximately four years, by FY27.

Motilal Oswal also recommends a ‘Buy’ rating on the stock. The brokerage says that the acquisition of Blinkit has been positive for the company and it has not lost market share in the last quarter.

Meanwhile, Alipay Singapore Holding sold a 3.15% stake (26.2 crore shares) in Zomato for Rs 1,631.4 crore in a bulk deal on Wednesday. In another deal, Camas Investments picked up a 1.18% stake (9.8 crore shares) worth Rs 607.6 crore in the company. 

4. Rail Vikas Nigam: This rail infrastructure construction company gained 84.6% in the past month. With improving investor sentiment, the stock’s momentum score has steadily risen since mid-October. The uptrend comes on the backdrop of a strong business outlook for the company. Its robust Q2FY23 performance, order wins, and a rise in government capital expenditure on railway infrastructure has fuelled the street’s optimism surrounding the stock. 

Rail Vikas Nigam’s net profit in Q2 rose 36.5% YoY to Rs 381.2 crore and beat Trendlyne’s Forecaster estimates by 37.6%. The stock also has a Trendlyne consensus recommendation of ‘Strong Buy’ and shows up in a screener which lists companies with improving cash flow and high durability.

The company has been trying to diversify its order book and bag non-railway infrastructure projects as well. Between September and November, the company won four infrastructure contracts, of which three were non-railway projects. It won an international contract from the Indian government for the construction of a harbour in the Maldives for Rs 1,544.6 crore. It also won contracts worth Rs 484.2 crore from the Ahmedabad Municipal Corporation for the construction of canals. Overall, the company had an order book of Rs 55,000 crore at the end of Q2 and the management aims to increase it to Rs 1 lakh crore in a few years. To meet its target, it has been aggressively focusing on bidding for projects in the domestic and international markets.

5. Aditya Birla Fashion & Retail: This fashion retailer announced that its arm TMRW acquired eight digital-first lifestyle and apparel brands on Monday for Rs 289 crore. The management expects these acquisitions to increase the firm’s digital presence across apparel segments like casual wear, kids wear and western wear. The company has been scaling up its digital capabilities to increase sales through e-commerce. Robust growth in e-commerce sales was a key growth driver in Q2FY23. Digital sales grew 24% YoY. 

The company’s revenue rose 49.7% YoY to Rs 3,074.6 crore and net profit jumped nearly 7X YoY. This growth was led by aggressive network expansion offline and online. The company added 85 branded stores in Q2 and plans to continue ramping up its store count across business segments in H2FY23. Aditya Birla Fashion acquired Reebok’s India operations to diversify its product portfolio with an entry into the footwear segment. It also acquired a majority stake in Masaba to expand into the beauty segment. 

The management aims to acquire 30 brands across the fashion sub-categories within three years, which will be funded through internal accruals initially. This is in line with the company’s strategy to lower debt and strengthen its balance sheet. It reduced debt to Rs 243 crore in Q2FY23 from Rs 2,500 crore at the end of FY20. The stock shows up in a screener for companies with low debt.

Looking ahead, the management expects consumer demand to rise in H2FY23 on the back of the festive/wedding season and normalisation of economic activities. However, ICICI Direct sees the risk of rising margin pressure as investments into new brands may lead to higher-than-expected working capital requirements.

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