1. AU Small Finance Bank: This banking stock has outperformed the Nifty Private Bank index by 14.3% in the past month, and rose 16.4%, according to Trendlyne’s Technicals. Currently, the stock is trading at an all-time high. In Q4FY23, the bank’s deposits grew by 32% YoY to Rs 69,365 crore. Advances also improved by 26% YoY to Rs 59,158 crore, led by the commercial banking division.
   
   The Net Interest Margin (NIM) of the bank is one of the highest among its peers at 6.1%. However, the margins are expected to decrease due to rising cost of funds and limited scope to raise interest rates. Its bottom line was also aided by lower provisioning.
   
   The gross NPA remains steady at 0.7%, backed by high-rated customers. The bank is also investing in newer product lines like credit cards and video banking. The company shows up in a screener for consistently high-return stocks in the Nifty 500 for five years.

In its future outlook, AU Small Finance Bank’s management said that it plans o focus on building the asset book and maintaining asset quality. The bank’s CEO, Sanjay Agarwal, expects the asset book to grow 29-30% in FY24, aided by branch expansion and market share gains. Margin compression and elevated cost ratios are expected to put pressure on the return on assets number. 

ICICI Securities suggests that the bank’s high ROA and investments toward franchise build-up will help grow the asset base.Its higher provision coverage ratio of 75% has resulted in lower provisioning, and a focus on retail customers will help in maintaining asset quality.

2. Craftsman Automation: This auto part and equipment manufacturer has seen its stock price rise by 12.6% in the past week, while the broader benchmark Nifty Auto increased by 2.6%. The stock is currently trading at a 52-week high, according to Trendlyne’s Technicals. The firm’s revenue grew by 20% and net profit by 37% YoY in Q4FY23. The revenue growth was driven by auto powertrain and AI products. During the quarter, the company maintained a stable EBITDA margin of 21.3%. The profit growth was in part due to lower taxes from the recent tax regime change.
   
   The firm is also in the final stages of validation to supply critical parts for a domestic SUV, starting in July 2023. The firm plans a capex of Rs 320 crore in FY24, against 309 crore in FY23. The capex would be spent on the refurbishment of outdated equipment and semi-automation in material handling. The firm also aims to reduce its debt by Rs 200 crore in FY24, bringing the net debt below Rs 1,100 crore. The stock shows up in a screener for companies with high TTM EPS growth.

Craftsman Automation’s management has guided a revenue growth of 20% for FY24, aided by higher volumes from new customers and a ramp-up in powertrain orders from Stellantis, an automotive manufacturer based in the Netherlands. However, the projected growth for powertrains in FY24 is lower at 14%, whereas Aluminium and industrial products are expected to grow by 20% or more. Exports are expected to slow down owing to recessionary fears in European markets. In terms of domestic growth, the commercial and passenger vehicle segment is expected to drive the first half of FY24,  while the construction and farm machinery division will fuel growth in the second half.

According to Motilal Oswal, the firm’s track record of market leadership in the auto component industry is uncommon. The firm has managed to create niche products and demonstrated superior capital efficiency, resulting in higher growth numbers than the industry. The brokerage has maintained a ‘Buy’ rating on the company.

3. Kalpataru Power Transmission: This electric utility company’s promoters sold 96.3 lakh shares (nearly 6% stake) worth Rs 467.8 crore in a bulk deal on May 30. Parag Mofatraj Munot (promoter) and two promoter group entities, Kalpataru Constructions and Kalpataru Viniyog, sold their shares at around Rs 485 per share, which was lower than the stock’s opening of Rs 503.9 on Tuesday. ICICI Prudential Mutual Fund picked up nearly 15 lakh shares worth Rs 72.5 crore on the same day. 

Since the promoter sale, the stock has risen 5.8% till Friday. It shows up in a screener for stocks with strong momentum. This uptrend seems to be driven by the firm’s robust order book and healthy business outlook. As of the end of FY23, its order book stood at Rs 45,918 crore, and its order inflow for FY23 grew by 39% YoY to Rs 25,241 crore. Leveraging its presence across diverse geographies and segments, the company is pursuing growth in verticals such as water, metro and airports in both domestic and international markets. The management points out that the merger with its subsidiary, JMC Projects, has enhanced Kalpataru Power’s abilities to bid on larger and more complex projects, leading to cost synergies. The company is focused on divesting its non-core investments to free up capital and reduce debt over the coming quarters. 

ICICI Securities believes that the company is well-placed to benefit from the government’s increased focus on infrastructure, given its strong order pipeline, geographical expansion, and strengthening balance sheet. According to Trendlyne’s Forecaster, the consensus recommendation on the company from 13 analysts is ‘Buy’, with 10 rating it ‘Strong Buy’, two ‘Buy’ and one ‘Hold’. 

4. Torrent Pharmaceuticals: This pharma company rose over 7% and touched an all-time high of Rs 1,884.9 on Wednesday after reporting strong Q4 results. The company posted a net profit of Rs 287 crore during the quarter, led by lower raw material expenses, compared to a net loss of Rs 118 crore in Q4FY22. The loss incurred in the previous year’s quarter was on account of a one-time impairment provision and costs from the discontinuation of its liquid business in the US. 

Despite posting a profit, it missed Trendlyne’s Forecaster estimates by 12%. Torrent’s India revenue, which contributes 59% to total revenue, has increased by 22% YoY, led by growth in chronic therapies and new launches. For FY23, its revenue rose by 13% to Rs 9,620 crore, marking the seventh consecutive quarter of YoY revenue growth. 

Meanwhile, the company’s EBITDA margins have also improved by 286 bps to 29.2%, led by a favourable product mix and lower R&D expenses in the US. The management has guided for margins to improve by 60-100 bps every year due to price increases across markets. It is also targeting 2% volume growth in its base business.  

Following the release of the company’s results, ICICI Securities maintains its ‘Hold’ rating but revises the target price to Rs 1,645 from Rs 1,630. According to the brokerage, Torrent is expected to take a few more quarters to fully realise synergies from the Curatio portfolio. Torrent acquired Curatio Health Care for Rs 2,000 crore in September 2022 to enhance its presence in dermatology.  The analysts also expect higher interest costs and depreciation to affect Torrent’s profitability in the near term. 

5. Page Industries: This other apparels & accessories stock plunged almost 9% and touched its 52-week low of Rs 34,952.6 on May 26 as its Q4FY23 net profit declined by 58.9% YoY to Rs 78.3 crore. Its revenue has also fallen by 12.8% YoY to Rs 969.1 crore, affected by low demand. This caused the company to feature in a screener of stocks with low Piotroski scores, which indicates weak financial performance. 

Revenue and net profit missed Trendlyne’s Forecaster estimates by 15.2% and 42.9% respectively. It has also underperformed its industry in terms of net profit and revenue. Its EBITDA margin witnessed a drop of 10.1 percentage points on the back of increasing raw material, inventory, employee benefit and finance costs. 

According to VS Ganesh, Managing Director of the company, Page Industries saw a reduction in profitability due to higher inventory levels acquired during an inflationary period and lower than optimal capacity utilisation. However, the company has implemented a new inventory management system (auto replenishment strategy or ARS) to better manage its inventory.

Axis Securities maintains its ‘Hold’ rating on the stock with a downgraded target price of Rs 40,000 per share. This indicates a potential downside of 3%. The brokerage believes that the implementation of ARS will affect volume growth and margin expansion in the next two quarters. It expects the company’s profitability to improve only in H2FY24.  

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