1. Godrej Consumer Products: This FMCG company is trading near its 52-week high of Rs 992.5 after reporting strong Q4 results on Thursday. Godrej Consumer’s net profit has grown 24.5% YoY to Rs 452.1 crore, beating Trendlyne’s Forecaster estimates by 1.8%. Its revenue also increased by 10% YoY, led by a volume growth of 6%. The personal care (which contributes to 58% of total revenue) and home care (39% of total revenue) segments grew by 17% and 14% respectively. 

Commenting on the results, Managing Director and CEO, Sudhir Sitapati, says that the performance is broad-based, with the India-branded business experiencing a 13% increase in volumes.

In International markets, the Africa, USA, and Middle East cluster delivered 8% sales growth, while the Latin American region witnessed a 3% decline. The performance in Nigeria was impacted by the election and demonetisation. 

Post the results, ICICI Securities maintains its ‘Add’ rating and raises the target price to Rs 1,050, implying an upside of 6.9%. The brokerage believes that Godrej Consumer’s margins have improved, led by a moderation in input costs. As a result, the company features in a screener of companies where brokers have upgraded their recommendations or target prices in the past three months.

2. KEI Industries: This electrical cables and wires manufacturer has risen 10.8% till Friday since announcing its Q4FY23 results on May 2. Its net profit rose 19.1% YoY to Rs 138.1 crore and revenue grew 9.1% YoY in Q4, driven by growth across all its segments. This healthy performance has enabled the stock to show up in a screener for companies with net profits rising sequentially for the past three quarters. According to Trendlyne’s Forecaster, the consensus recommendation from 13 analysts on the company is ‘Buy’. 

The company’s sales volume increased by 13% YoY on the back of lower metal prices, but this also meant selling prices fell in Q4FY23. However, the decline in raw material costs boosted its EBITDA margin by 66 bps YoY to 10.7%. Also, the management’s focus on increasing the contribution of the retail and extra-high voltage segments towards revenue aided margin expansion. 

The management believes that the firm is well-placed to capitalise on the Centre’s infrastructure push, given its capex plans to increase production capacity. Anil Gupta, Chairman and MD of KEI Industries, says, “We'll be spending around Rs 250 crore to Rs 300 crore every year over the next three years to maintain a revenue CAGR of 17% to 18% per annum, as against achieved CAGR of around 15% during the last 15 years.” He adds that the capex requirements will be entirely funded by internal accruals. The management aims to improve EBITDA margins by increasing retail sales, exports, and optimising costs in the coming quarters. 

3. Shoppers Stop Ltd: This retailing firm owned by Raheja group has a pan-India presence with 280 stores in 54 cities, and an online channel that contributes to nearly 33% of its revenue. According to Trendlyne Technicals, its share price has increased 13.5% in the past month. Shoppers Stop has expanded itself in major Tier 1 and Tier 2 cities, which are high-growth areas with major sales in private brand labels. The firm has done Rs 280 crore capex for store expansion and technology, and plans a capex of Rs 150-200 crore for FY24.

In Q4FY23, Shoppers Stop reported its highest-ever revenue and gross margins at Rs 1,175 crore and 43.2% respectively. The increase in the volume mix of private labels has been driving margins, with revenue from the private brand and beauty segments growing 35% and 29% YoY respectively. The firm’s average transaction value (ATV) per customer and average selling price of products (ASP) grew 6% (to Rs 4,086) and 9% YoY (to Rs 1,540), respectively. This has led to growth in the bottom line. The firm increased its Q4FY23 profit by 35% YoY by pruning loss-making stores and optimizing store sizes and its distribution network. 

It expects growth in its beauty segments and categories (loungewear, innerwear, athleisure) by partnering with international brands. The stock shows up in the screener for stocks that have been efficiently managing their assets to generate profits and improve ROA over the past two years.

HDFC Securities says Shoppers Stop’s aggressive focus on store expansion and assortment management reflects its outperformance in key performance indicators. However, business relevance and longevity remains an open question, as the company directly contends with deep-pocketed e-tailers. The brokerage has maintained a ‘Sell’ rating on the stock on account of higher valuation.

4. Escorts Kubota: This commercial vehicles manufacturer traded lower on Tuesday and Wednesday but recovered on Thursday. However, the stock closed 0.34% lower on Friday. Its Q4FY23 earnings report showed a 14% YoY increase in consolidated net profit to Rs 216.4 crore. However, the company still faces challenges due to the high cost of materials, with input costs rising 38% YoY in Q4. Despite this, the stock gained 4% in the past week, outperforming the automobiles & auto components sector by nearly 1%.

The company’s domestic wholesales have fallen 5.5% YoY in FY24, according to its recent business update. Its exports fell by more than 50%. Retail sales were also impacted by unseasonal rainfall and crop damage in certain regions. However, the management remains positive about demand revival and expects rural demand to bounce back in Q2FY24, driven by better crop prices. Bharat Madan, CFO of Escorts Kubota, says the company is targeting a 25% growth in exports in FY24, once supply chain issues ease up. 

The management plans to double tractor capacity and invest Rs 350 crore in capex (a 40% YoY increase) in FY24. With the government's continued support for infrastructure projects and strong demand, the company's earnings are expected to improve. The management expects margins to improve further as commodity prices decline. It also forecasts mid-single-digit growth in wholesales in FY24. According to Trendlyne’s consensus recommendation, five analysts maintain a ‘Buy’, seven recommend ‘Hold’, and 10 maintain ‘Sell’ on the stock. 

5. Dr. Reddy's Laboratories: This pharmaceutical company announced its Q4FY23 results on Wednesday, reporting a significant increase in net profit to Rs 960.1 crore – up nearly 10x YoY. The surge in profit was due to a high base of expenses on the impairment of non-current assets in Q4FY22, when the profit had fallen 82.6% YoY.

The impairment cost of non-current assets decreased from Rs 741 crore in Q4FY22 to Rs 54 crore in Q4FY23. If the charges are adjusted, the profit has risen only 22.3% YoY during Q4FY23. According to the Q4FY22 earnings call, the high impairment charges were partially caused by the decrease in market potential of Tepilamide Fumarate Extended-Release Tablets (PPC-06) valued at Rs 430 crore, and also the impairment of Shreveport plant assets and goodwill of Rs 310 crore. 

Even with the adjustment, the pharma company is still profitable in YoY terms. Its revenue increased 15.3% YoY to Rs 6,453.7 crore. The management attributed the growth to new product launches, though it was partly offset by price erosion. Dr. Reddy's Laboratories features in a screener for stocks that have seen improvement in net profits, operating profit margin and revenues in recent quarters. 

Despite the positive results, the company’s share price fell 8.2% since results, as it did not meet its estimates. According to Trendlyne’s Forecaster estimates, the pharma company missed net profit estimates by 6.3% for Q4FY23.

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