1. Deepak Nitrite: This chemical manufacturer rose by 9.5% in trade on Wednesday, marking its highest single-day gain in over 26 months. This uptrend follows the company’s announcement that its subsidiary, Deepak Chem Tech, has signed an MoU with the Gujarat Government to invest around Rs 5,000 crore in the state over the next four years. The company plans to manufacture specialty chemicals like phenol, acetone and bisphenol in Dahej and Nandesari, Gujarat.
   
   This sharp surge in the stock price comes despite the company’s subdued performance in Q4FY23. Its net profit has fallen 12.5% YoY to Rs 233.9 crore due to high input costs. Its revenue marginally increased by 4.8% YoY in Q4. However, it beat Trendlyne’s Forecaster profit estimates by 5.8%. The stock also shows up in a screener for companies with increasing net cash flows over the past two years.
   
   Going forward, the company plans to become the largest producer of solvents, as it believes this will help it benefit from import substitution. To achieve this goal, the management is aggressively expanding the firm’s production capacity. However, the expansion plans have encountered project delays, with the management announcing a delay in three of its projects. This includes the debottlenecking of its phenol plant, which was supposed to be commissioned in Q4FY23. It has now been delayed to Q1FY24. Similarly, the commissioning of its methyl isobutyl ketone (MIKB) and methyl isobutyl carbinol (MIBC) plants has been delayed by one quarter to Q1FY25. Only the commissioning of its photo chlorination and fluorination units seems to be on track.
    
2. EIH: This hotel company rose 7.5% on May 18 and touched its 52-week high of Rs 218.5 per share as it posted a 5.7x growth in net profit to Rs 84.4 crore in Q4FY23. Revenue has shot up 111.7% YoY to Rs 637.1 crore, driven by industry-leading revenue per available room (RevPAR) of Rs 15,284. This growth has exceeded Trendlyne’s Forecaster estimates by 20.7% for revenue and 6.4% for net profit.

The company’s net cash flow turned positive for the first time in the past five quarters, owing to a reduction in debt. This has helped the company show up in a screener of stocks with improving return on capital employed (RoCE) in the past two years. EIH also leads the industry in RevPAR and average room rate (ARR), demonstrating its ability to command a premium.

MD and CEO Vikram Oberoi, expects further growth in occupancy levels and ARR, backed by strong domestic demand and the recovery of foreign occupancy in the winter season.

According to ICICI Direct, profitability is expected to remain healthy due to strong ARR and occupancy levels, particularly in key cities like Mumbai and Delhi with consistent demand. The broker has upgraded its rating on the hotel company to ‘Buy’ from ‘Hold’ with a target price of Rs 240, implying a potential upside of 18%.

3. Dixon Technologies: This consumer electronics company has risen 10% since announcing its results on Tuesday evening and 20.6% over the past week till Friday. Its PE ratio is 85.3 (above the industry median), but it is trading below its 3 and 5-year historical PE averages. In Q4FY23, its net profit increased by 28.1% YoY to Rs 80.6 crore, while its revenue grew by 3.8% YoY. It beat Trendlyne Forecaster’s revenue and profit estimates by 1.5% and 9.6% respectively. The firm also shows up in a screener for companies with improving cash flows and high durability scores. 

This healthy Q4 performance was led by growth in home appliances and mobile business verticals. An increase in revenue contribution from original design manufacturers (ODM) has aided in margin improvement. Its EBITDA margin expanded by 110 bps YoY to 5.1%. But the growth in the white goods and lightning segments was subdued due to weak demand. 

Despite the healthy performance in Q4 and the stock’s uptrend, analysts’ views on the company’s prospects differ. While BoB Capital Markets maintains a ‘Buy’ rating on the firm due to its dominant position in the electronics manufacturing space and growing revenue contribution from the ODMs, ICICI Securities maintains its pessimistic outlook toward the company. It believes weakness in demand for white goods and durables will impact revenue growth in the near term.

The management expects to deliver ‘industry-leading’ growth in FY24 on the back of its robust order book, new client additions, and increasing production capacity. It expects further expansion of the EBITDA margin in FY24 given the increasing contribution from the ODM business and its backward integration efforts. 

4. Aditya Birla Fashion & Retail (ABFRL): This retailing company hit a new 52-week low on Tuesday after reporting a net loss of Rs 187 crore in Q4FY23, compared to a net profit of Rs 43.6 crore in Q4FY22. This was due to an increase in expenses, which offset the demand for its apparel and lifestyle products. The company features in a screener of stocks with declining profits for the past three quarters. However, its revenue has increased by 26.2% YoY, beating Trendlyne’s Forecaster estimates by 3.9%. 

The company’s management states that the overall demand continues to be weak in the value and premium categories, which could likely affect the SSSG (same-store sales growth) and new store additions, especially for Pantaloons. Jagdish Bajaj, Managing Director, said, “The performance in metro cities continued to remain strong, but sales in Tier-2 and Tier-3 cities remained sluggish as inflationary pressures and weak consumer sentiments impacted demand.”

On the bright side, the Lifestyle brand posted its highest-ever Q4 revenue of Rs 1,535 crore, led by robust retail and strong e-commerce performance, while the Pantaloons segment has grown by 18% YoY, with an SSSG of 13% during the quarter.

Following the company’s results, ICICI Securities has downgraded its rating to ‘Add’ from ‘Buy’ and lowered the target price to Rs 220. The brokerage expects increased competitive intensity from online/offline players and a slower improvement in the profitability of emerging business. As a result, the company features in a screener of stocks where brokers have downgraded the target price or recommendation in the past month. 

5. Narayana Hrudayalaya: This healthcare facilities provider has risen 9.3% until Friday after posting results on Monday. It also touched its new all-time high of Rs 880.8 on Wednesday. In Q4FY23, Narayana Hrudayalaya’s profit rose 151.2% YoY to Rs 173.1 crore, while its revenue increased by 30.1% YoY. It beat Trendlyne’s net profit Forecaster estimate by 11.5%. The company’s YoY profit growth also beat its industry’s profit growth of 41.4% YoY. The multispeciality private hospital appears in a screener for stocks with growth in quarterly profit and profit margin. 

According to Emmanuel Rupert, Managing Director and Group CEO, Narayana Hrudayalaya achieved its highest-ever revenue and profitability due to a rise in patient footfalls, along with improvements in the specialty and payor mix. He added, “The performance improvement is supported by the growth in business across our flagship units, other hospitals, and newer hospitals, in addition to the increased contribution of international patients.” The average revenue per occupied bed has increased by 11% YoY to Rs 36,986 per day.

The management expects the India business to grow at the current pace and has guided an aggressive capex of Rs 1,100 crore for FY24.

ICICI Direct maintains a ‘Buy’ call on the healthcare facilities provider on the back of improved occupancy levels, ramp-up in new hospitals, and consistent performance at the Cayman Islands facility. According to Trendlyne’s Forecaster, the company has a consensus recommendation of ‘Strong Buy’ from nine analysts, of which five are ‘Strong Buy’, three ‘Buy’ and one ‘Hold’.

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