1. Angel One: This broking company’s stock rose over 5% intraday on Tuesday, in response to its Q4FY23 results. Angel One’s stock had risen for eight consecutive sessions in anticipation of good results. Its Q4 net profit has increased 30% YoY to Rs 266.9 crore, beating Forecaster estimates by 11%.  The stock made into a screener of companies with good quarterly revenue and net profit growth in recent results.

Angel One’s revenue also rose 23% YoY, beating Forecaster estimates by 3%. All-time high average daily trading value (ADTV) from its retail derivatives segment and higher-than-expected interest income drove revenue. The F&O segment’s revenue contribution in gross broking revenue increased to 87% in Q4FY23 from 82% in Q3FY23. However, with a 25% increase in securities transaction tax (STT) for options and futures trades starting in April, FnO volumes could come under pressure.  

In Q4, Angel One’s gross client acquisition fell 12% YoY due to a slowdown in the addition of new demat accounts, which reached pre-Covid levels for top discount brokerages like Zerodha. But Angel’s market share rose 176 bps YoY to 12%, with the top five players capturing nearly 60% of the overall market share.

2. Tata Chemicals: This commodity chemicals manufacturer fell 5.9% in trade on Tuesday with a 3.15X surge in volume. This dip in the stock came after the company announced a price cut of 3-4% on its light and dense soda ash across India on April 17. The price cut was in response to  declining soda ash prices in China, which started in mid-March after the news of a substantial capacity addition in Inner Mongolia from May 2023.

If the Chinese capacity expansion plans move forward as projected, it could result in moderation of soda ash prices in the near-to-medium term. This could potentially lower the company’s profitability.

According to reports, Kotak Institutional Equities expects the impact of the price cuts to be offset by lower coal prices. The brokerage also anticipates robust Q4FY23 earnings on the back of better realisations on US exports, upward revisions of US domestic contract prices, and lower energy costs. Trendlyne’s Forecaster predicts a 21% YoY rise in the firm’s net profit in Q4FY23, and the consensus recommendation on the company is a ‘Buy’.

The company is focused on capacity expansions, increasing plant utilisation and improving cost efficiencies to meet the expected growth in demand, aided by the re-opening of China and the emergence of new glass applications.

3. One97 Communications (Paytm): This internet software & services stock was up nearly 2% in trade on Thursday after Motilal Oswal initiated coverage with a ‘Buy’ rating and a target price upside of 34%. This comes after the company released its Q4 operational update, which reported growth across metrics like gross merchandise value and loan disbursements. Currently, the management is working towards improving the quality of its loan book and expanding its customer and merchant base. However, the company may face stiff competition from Jio Financial Services (JFSL) once it lists on the bourses in September 2023. A report from Macquarie suggests that JFSL may be directly competing with Paytm and Bajaj Finance.

On a positive note, the payment industry is expected to grow to $16 trillion, and Paytm is well-positioned to benefit from the surge in digital payments, which is expected to increase threefold by 2026. In the near term, payment revenue may grow at a 21% CAGR over FY23-25E. Motilal Oswal says that Paytm will achieve EBITDA break-even by FY25. However, its inability to get RBI approval to onboard new customers in the payment bank and secure a payment aggregator license, which is critical for long-term growth, remains a major risk. The stock features in a screener where brokers have upgraded their recommendations and target price in the past three months.

The stock has gained 23.4% in the last three months. Trendlyne’s Forecaster estimates a 13% increase in revenue in Q4FY23.

4. ICICI Lombard General Insurance: This general insurance company saw a decline of  over 4% on Wednesday as brokerages lowered the target price following its Q4 results. This fall was also due to the lower-than-expected net premium earned by the company, which was primarily due to muted growth in the motor segment. ICICI Lombard is currently trading near its 52-week low.

The company’s profit has risen 40% YoY to Rs 436.9 crore, beating Trendlyne’s Forecaster estimates by 12%. The surge in profit was supported by a fall in underwriting losses, which stood at Rs 250.78 crore, down from Rs 308.98 crore in Q4FY22. Premium earned stood at Rs 3,726 crore (up 12% YoY) during the quarter.

Bhargav Dasgupta, Managing Director & CEO of ICICI Lombard, said that the health insurance vertical remained the fastest-growing segment for the company, while the motor segment witnessed a slowdown.  He added that the company expects motor OD (own damage) pricing to improve in the medium term.

Post the result, Emkay Global reiterated its ‘Buy’ rating on the stock but cut the target price by 6%  to Rs 1,400 per share from Rs 1,490 earlier. ICICI Direct has also reduced the target price by 3.8%. Analysts believe the competition intensity in the motor segment remains elevated for ICICI Lombard and regulatory changes could lead to near-term volatility. They are skeptical about the management’s guidance to achieve a 102% combined operating ratio by FY25.

5. Dalmia Bharat: This cement and construction company is the fourth-largest manufacturer in India and has been in the news recently for the sale of its non-core business, Dalmia Refractories, for Rs 800 crore. Dalmia is increasingly divesting its allied and non-core businesses. In FY22, it divested its 5.2% stake in IEX for Rs 614 crore and its Hippo stores for Rs 155 crore.

The firm acquired the cement assets of JP Associates for Rs 5,666 crore, which has added another 9.4 MT capacity to the existing 37 MT. Dalmia Bharat targets to reach 75 MT by FY27 and 110 MT by FY31. To fund its capex plans, it is planning to sell its remaining 15% stake in IEX and its refractory business in China and Germany. Some of the proceeds from the sale will be utilized for debt reduction.

The cost optimization initiatives undertaken by Dalmia Bharat, along with higher price realisations, are driving margin expansion. Also, with 2024 being an election year, the government spending on infra projects is expected to be high. The management expects the demand for infrastructure and housing will drive decadal high growth in cement. The stock has gained 10% in the past month and shows up in the screener for growth in net profit with an increasing profit margin

Axis Securities is optimistic about Dalmia Bharat’s strategy to divest its non-core businesses and expand its capacity, as it aligns well with the current macro-outlook for cement demand. Also, the recent drop in fuel costs and price hikes undertaken by cement firms are expected to support margin expansion.