1. Siemens: This heavy electrical equipment stock is trading near its 52-week high after rising for four consecutive sessions since December 7. The uptick came after the company announced that it was the lowest bidder for the 9,000 HP (horsepower) Electric Locomotives project in Dahod, Gujarat. The bid was made for an Indian Railways project estimated at Rs 20,000 crore. Winning this project is expected to improve the company’s revenue. Trendlyne’s Forecaster estimates a 22.9% YoY increase in revenue for the company in FY23.

Indian Railways expects the delivery of its first locomotive by the end of 2024. This will be  a decade-long project for Siemens, and the number of deliveries will increase in the coming years. With an increase in capex from the Centre in railways and infrastructure (upcoming ‘Vande Bharat’ trains, building data centres and e-charging stations, among others), Siemens stands to benefit the most, according to reports.

This has especially enthused brokerages like Prabhudas Lilladher and ICICI Securities who have raised their target price for the stock by 10.9% and 5.7% respectively. Analysts expect that increased government spending in green infrastructure, automation and electrification space will also boost the company’s growth. According to Trendlyne’s Forecaster consensus recommendation, 12 analysts recommend a ‘Buy’ while 6 recommend a ‘Hold’ on the stock.

In its analyst call on December 9, the management of Siemens talks about the growth in their order book in all segments including energy, infrastructure and mobility – which grew 136% YoY in FY22. Total order inflow rose 43% YoY. MD & CEO Sunil Mathur says that the infrastructure space is seeing a boom as global companies are setting up their data centres in India. Automotive, chemicals and even pharma businesses are expected to do well. However, semiconductor shortages, delay in deliveries, high inflation and increase in import costs could still be challenging.

2. V-Guard Industries: This consumer durable stock rose over 6% in the past week and hit its 52-week high of Rs 273 on Thursday. V-Guard’s share price started to rise after the company announced the acquisition of Sun flame Enterprises Private (SEPL) for Rs 660 crore on December 9. With the recent rise in share price, the company features in a screener of stocks with prices above short, medium and long-term moving averages.

With the acquisition of SEPL, V-Guard is on its way to becoming a significant player in the domestic kitchen appliances segment. SEPL offers a wide product portfolio, including cooktops, chimneys, pressure cookers, mixer grinders and small kitchen appliances, that cater to a wide consumer segment. In FY22, SEPL recorded a revenue of Rs 349.8 crore. V Ramachandran, COO of V-Guard, said, "SEPL acquisition offers multiple levers for unlocking significant synergies in areas like geography, product portfolio and channels.” The management said the acquisition is expected to close by mid-January 2023 and will be funded through a mix of internal accruals and debt.

The acquisition comes at a time when the operating profit margin of V-guard has been on a downtrend since Q3FY21. Gross margin of the company fell 210 bps YoY to 28.6% in Q2FY23 despite a correction in commodity costs due to high cost-inventory. ICICI Securities believes the margins were affected mainly in the cables and wires segment. However, the company’s revenue has risen in the past seven quarters (YoY) and the SEPL acquisition is expected to aid revenue growth going forward.

3. KEC International: This heavy electrical equipment company rose 10.4% over the past week due to its improving business outlook on the back of rising order intakes and the easing of inflationary pressures. The company’s year-to-date order intake grew 20% YoY to over Rs 13,000 crore. The management aims to increase the value of contracts won by 16.3% YoY to Rs 20,000 crore in FY23. Given the improvement in order intake, its order book, which used to be close to Rs 20,000 crore a year ago, has grown to nearly Rs 29,000 crore. The stock also received seven broker target price upgrades and one recommendation upgrade over the past three months.

Amid this optimism, the company announced new order wins worth Rs 1,349 crore on Monday. These contracts include projects in India and international markets, ranging across various segments like transmission & distribution, infrastructure and cables. This uptrend in price also helped the company show up in a screener for stocks with strong momentum.

In Q2FY23, the company’s net profit fell 31.2% YoY to Rs 55.2 crore despite its revenue rising 13.3% YoY. Its profit fell due to high input costs, logistics costs and subcontracting charges. However, the management expects its margins and profitability to improve due to falling commodity prices and growing order intake. It also plans to lower its interest charges by focusing on debt reduction. According to Nirmal Bang, the company’s margins will improve from Q3FY23 due to falling commodity prices and improving execution of projects. The management has guided a 20% YoY growth in revenue for FY23.

4. Sapphire Foods India: This quick-service restaurant gained more than 5% in intraday trade on Thursday after it announced that its promoter groups and investors were planning to offload a part of their stakes. The offloading comes after the firm’s pre-IPO lock-in period expired on November 15, thus allowing 43.4% of the total shareholding to be sold. As of September, the promoter groups held a 51.3% stake in the company.

The largest stakeholder, Sapphire Foods Mauritius sold a 6.14% stake (39 lakh shares) for Rs 525.5 crore. Private equity fund Wwd Ruby sold a 4.5% stake for Rs 385.1 crore, effectively paring its stake to 5.3% from 9.8%. Another promoter, Sagista Realty Advisors, which owns a 4.5% stake (28.6 lakh shares) plans to offload 1.5 lakh shares.

In Q2FY23, the company was back in the black on a YoY basis after it posted a profit of Rs 26.9 crore. Its revenue also grew 35.9% YoY to Rs 562.8 crore, the highest-ever. The company shows up in a screener for stocks in the PE Buy zone with a good durability score and rising momentum. The stock also has a consensus recommendation of ‘Buy’, according to Trendlyne’s Forecaster.

However, gross margins fell 310 bps YoY due to high inflation and lower price increases. Although its India business saw its EBITDA grow 40 bps YoY, its Sri Lankan business was adversely impacted by high inflation, which brought down the overall EBITDA margin by 50 bps YoY. Despite high input costs, the company has been focusing on expanding its network; it opened 42 new restaurants in India and Sri Lanka in Q2. The company aims to double its footprint in the next 3-4 years.

5. Colgate-Palmolive: This personal products company held an investor meet on Tuesday, outlining its growth strategy. During the meet, the management highlighted the four pillars of its growth strategy: toothpaste volume growth, science-led premiumisation, category growth in toothbrushes and devices, and building personal care portfolio. But this did not excite investors as the company’s share price fell over 4% on Wednesday. As a result, it comes up in a screener that lists stocks with RSI indicating price weakness.

The company’s focus areas in its premiumisation plan are powered toothbrushes and teeth whitening products. It plans to set up an exclusive professional eB2B platform for dentists and build a new segment dedicated to kids.

Post this conference, brokerages have mixed views about the company. Foreign brokerage Citi maintains its ‘Sell’ rating on the stock with a target price of Rs 1,650. It believes that driving change in consumer habits will require sustained investments, and the results of the same would be likely delayed.

Prabhudas Lilladher maintains its ‘Hold’ rating on the stock with a target price of Rs 1,639. The brokerage believes Colgate-Palmolive needs to be more aggressive in the personal care segment to boost growth.

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