1. Siemens: This heavy electrical equipment stock announced its Q1FY23 results on Tuesday with net profit growth of 85.1% YoY to Rs 462.7 crore. Revenue has also increased 17.4% YoY, with growth across segments like smart infrastructure, mobility, and digital industries among others. The stock closed 3% above on Wednesday after its robust results. It touched an all-time of Rs 3,248.05 on Wednesday and then increased again to Rs 3,250 on Thursday. It shows up in a screener of stocks with strong momentum.

The management says that a substantial increase in the outlay for capex in infrastructure and railways in the recent Budget announcements will boost all business segments. After the company received a Rs 26,000-crore locomotive order from Indian Railways on January 16, it entered into the golden crossover zone (SMA 50 day trading above SMA 200 day). Since then, the stock has gained more than 8% in a month.

ICICI Securities and Prabhudas Lilladher remain positive on the stock and expect the company to grow further in automation and digitization products, according to reports. Also, a large orderbook gives visibility for revenue streams in a long-term perspective. Bob Capital Markets expects traction to pick up in the automation and digitalisation businesses. It has raised target price for the stock by 22% to Rs 3,800. Trendlyne’s consensus recommendation shows that 12 analysts recommend a ‘Buy’, while five give ‘Hold’ and ‘Sell’.

However, the company is battling high import costs of machine components as input costs were up 37% YoY in Q1FY23. Also, any slowness in capex and low profitability from the mobility business can slow down growth.

2. Gujarat Gas: This city gas distribution company fell 2% on Tuesday as its sales declined 27.1% YoY to Rs 3,821.3 crore in Q3FY23. However, its net profit has grown 202.2% YoY to Rs 371.6 crore. The stock shows up in a screener of companies with increasing net profit and profit margin (YoY). Its net profit beat the Forecaster estimates by 7.5%, but revenue missed Trendlyne’s forecaster estimates by 21.4%.

ICICI Securities says that lower volumes from the key region of Morbi drove the drop in revenue. However, with rising propane prices, the brokerage believes the company may see some revival in volume trends in Q4FY23. The brokerage maintains its ‘Add’ rating on the company as volumes and margins are likely to remain volatile. But it believes a reduction in gas prices for both domestic and LNG, and a relatively stronger propane price environment could drive steady growth in operating margins. It has given the company a target price of Rs 540, indicating a potential upside of 11.8%. It estimates the company’s revenue to grow at a CAGR of 1.2% over FY22-25.

The stock ranks high on Trendlyne’s checklist with a score of 60.9%, while the consensus recommendation on the stock is ‘Hold’. 

3. Zee Entertainment: This broadcasting & cable TV company has been falling after it posted weak results. In Q3FY23, the company’s profit fell 92% to Rs 24.3 crore from Rs 299 crore in Q3FY22, while revenue remained flat at Rs 2,111 crore. As a result, the company features in a screener of stocks with a decline in quarterly net profit and falling profit margin (YoY). Revenue has been in line with Forecaster estimates but profit missed estimates by over 90%.

Advertising revenue has declined to Rs 1,063 crore due slowdown in ad spends by FMCG companies, considering the challenging macroeconomic environment.

In addition, Zee’s EBITDA also fell 27.5% YoY and operating margins contracted because of elevated investments in content, marketing and technology.

Post results, foreign brokerage CLSA maintains its ‘Buy’ rating and believes the upcoming Zee-Sony merger could likely be a re-rating catalyst. But ICICI Securities maintains its ‘Hold’ rating. The brokerage has cut its EPS estimates for the company to around 14% for FY24E and reduced the target price to Rs 225.

On Tuesday, NCLT (National Company Law Tribunal) adjourned the hearing on the petitions against the merger of Zee Entertainment with Culver Max Entertainment (formerly known as Sony Pictures Networks India) to March 9, according to reports. In December 2021, Zee and Sony signed a definitive agreement to merge their operations. As the merger was nearing its finish line, Zee’s creditors and lenders, including IndusInd Bank, Axis Finance, IDBI Bank and Indian Performing Right Society (IPRS), filed a petition against the merger, seeking the repayment of debt. The company's merger had already been approved by NCLT, stock exchanges and shareholders. CCI has  given conditional approval.

4. Torrent Power: The electrical utilities firm saw its Q3FY23 revenue and profit grow by 33% and 86% YoY respectively. Torrent Power has been able to reduce its transmission and distribution losses across establishments. Electricity generation with Regasified LNG (RLNG) declined due to the higher cost of RLNG. However, it was offset by higher generation in solar power plants.
   
   Torrent Power’s margins improved on the back of the sale of LNG and increased contribution of electricity generation from the newly acquired Dadar and Nagar Haveli units. The company has seen strong demand from its franchise and licence division. It gained 12% in the past week on the back of good results. The stock shows up in the screener for strong momentum with price above short-term and long-term moving averages.

Its management sees a capex of Rs 1,500 crore in electricity generation and another Rs 250 crore in the transmission and distribution business to increase profitability. HDFC Securities says Torrent Power's profitability has increased on the back of solid LNG trading. Its investment in the transmission and distribution business will cut down losses and new plants (a 115 MW wind power plant, and a likely300 MW solar plant)  will add to the revenue. The capex incurred by Torrent Power will help it sustain the growth, maintaining the bottom line. HDFC Securities maintains an ‘Accumulate’ rating on the company.

5. Finolex Cables: This electrical & telecommunication cables manufacturer has gained 22% till Thursday, since announcing its Q3FY23 results on February 9. Its consolidated net profit rose 7.9% YoY to Rs 154.3 crore. The firm’s standalone net profit surged 41.7% YoY, beating Trendlyne’s Forecaster estimates by 63.1%. Consolidated revenue grew 18.2% YoY, driven by robust growth in sales volumes across all segments. This healthy performance helped the company show up in a screener for companies with improving cash flows and high durability scores.

The stock’s bull run post its results comes on the back of a strong business outlook and economic tailwinds. The management believes that the company will be a direct benefactor of the Centre’s push toward infrastructure development. It expects demand for electric cables from real estate and construction sectors to increase in the coming quarters. Notably, the electric cables segment contributed 64.6% to the firm’s consolidated revenue in Q3 and grew by 14.6% YoY. 

The company’s communication cables segment is also expected to benefit from the increased spending toward telecommunication from government and private companies. Although the segment has contributed only 10% to Finolex Cables’ revenue, it grew by 59.7% YoY. The sales volume of its optic fibre cables jumped 70% YoY on the back of robust demand. 

Looking ahead, the management is focusing on expanding its distribution reach and improving product availability to gain market share. According to reports, brokerage Sharekhan believes the company is well-placed to capitalise on the Centre’s increase in infrastructure capex, given its debt-free balance sheet, improving cash flows and distribution reach.   

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