This week, we take a look at analyst stock picks which saw positive YoY profit and revenue growth in Q3FY23, with strong Trendlyne Durability, Valuation and Momentum scores.

1. Oil India: Prabhudas Lilladher keeps its ‘Buy’ rating on this oil exploration & production company, and raises the target price to Rs 305 from Rs 300. This implies an upside of 19.8%. In Q3FY23, the company’s net profit surged by 76% YoY to Rs 2,284.4 crore and revenue grew by 37.7% YoY. Oil India has a high DVM score, with a Durability score of 85, Valuation score of 84.3 and Momentum score of 67.3. 

Analyst Avishek Datta attributes the firm’s robust Q3 performance to healthy crude oil and gas realisations, along with increasing demand. He adds that the company’s Numaligarh refinery has had a steady performance. 

Datta sees the company’s aggressive production expansion plans as a key positive, and expects oil volumes to increase by 30% and gas volumes to surge by 60% by FY25. The analyst believes, “Oil India’s earnings will ride on new capacity addition across crude oil, natural gas and refinery”. He expects the company’s net profit to grow at a CAGR of 15.7% over FY22-25. 

2. Zydus Lifesciences: KRChoksey maintains its ‘Buy’ rating on this pharmaceuticals company and increases its target price to Rs 610 from Rs 507. This indicates an upside of 30.1%. In Q3FY23, the company’s net profit rose by 24.5% YoY to Rs 622.9 crore and revenue increased by 19.4% YoY. Zydus Lifesciences has a Durability score of 75, Valuation score of 33.3 and Momentum score of 67.7. 

Analyst Abhishek Agarwal attributes the company’s growth in Q3 to healthy growth in the key markets of India and the US. He points to new product launches and innovations in the US market as growth drivers. According to the analyst, “Zydus Lifesciences has a strong portfolio of existing products and new US product launches in the pipeline, which provides revenue visibility over the long term.”

Agarwal expects growth in the India formulations business will be led by rising market share in key therapies. The consumer wellness segment will see an expansion in margins in the medium term, he says, due to pricing actions and recovery in rural demand. The analyst anticipates the firm’s revenue to grow at a CAGR of 14.3% over FY22-25. 

3. JK Lakshmi Cement: Axis Direct maintains a ‘Buy’ call on this cement manufacturer with a target price of Rs 840, indicating an upside of 12.8%. In Q3FY23, the company’s net profit increased 19.1% YoY to Rs 76.4 crore, while its revenue grew 20.9% YoY. The company missed the brokerage’s estimates according to analysts Uttam Srimal and Shikha Doshi. JK Lakshmi Cement has a Durability score of 75, Valuation score of 37.5 and Momentum score of 60.8. 

The analysts say, “The company is working on many levers – optimising geo-mix, higher production, sale of blended cement, increasing proportion of trade sales, premium and value-added products, logistic efficiency.” They expect the company to post EBITDA growth of 12% CAGR over FY21-24 on the back of better realisation, higher volume and cost-saving initiatives.

Srimal and Doshi are optimistic as the demand for cement remains robust on account of the government’s push for infrastructure development and affordable housing.

4. Mahindra & Mahindra: HDFC Securities maintains a ‘Buy’ call on this automobile manufacturer and increases the target price to Rs 1,554. It indicates an upside of 15.1%. In Q3FY23, the company’s profit rose 34.7% YoY to Rs 2,676.6 crore, while its revenue grew 30% YoY. Analysts Aniket Mhatre and Sonaal Sharma believe that the higher-than-estimated profit growth is backed by higher other income. Mahindra & Mahindra has a Durability score of 70, Valuation score of 47.5 and Momentum score of 58.9.

According to the analysts, “It is commendable that Mahindra & Mahindra has already achieved most of the targets it earmarked a couple of years ago (like EPS CAGR, improvement in auto margins, RoE at 18%, calibrated asset allocation, etc.) and the management has indicated that it is now time to raise its targets.” 

They continue to remain positive about the company on the back of a big order backlog for utility vehicles, positive rural sentiment, strides taken to achieve a strong position in electric vehicles and cautious capital allocation.

5. Oil And Natural Gas Corp: ICICI Direct updates its rating to ‘Buy’ from ‘Hold’ on this oil and gas producer and gives it a target price of Rs 180, indicating an upside of 16.7%. In Q3FY23, ONGC reported an increase of  5.1% YoY in net profit to Rs 11,489 crore and a 15.7% YoY rise in revenue. Analysts Harshal Mehta and Payal Shah say the results are below estimates due to the decline in crude prices and increase in depreciation. ONGC has a Durability score of 70, Valuation score of 74.7 and Momentum score of 64.5.

The analysts believe that even if gas prices get capped, realisations are likely to remain high as they are well above historical averages, and with the commencement of production from the KG Basin in May, volumes are expected to grow. They add, “Sustained higher crude oil prices and gas realisations can result in better profitability.” Mehta and Shah remain optimistic due to the high dividend yield and payout ratio.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.

(You can find all analyst picks here)