1. CEAT: This auto tyre manufacturer has risen by 17.5% over the past month till Friday. The uptrend is driven by a healthy outlook for the company on the back of analysts seeing robust demand and improving margins. The management’s future plans have also helped boost positive sentiment around the stock. 

In an investor meet last month, the company announced plans till FY26, which include increasing market share across segments. CEAT expects to maintain its leadership position in the 2-wheeler segment and become the market leader in the PV segment. The firm plans to achieve this through associations with OEMs, new launches in the EV space, and a focus on SUVs. It also plans to double its revenue from international business. 

In an interview, Arnab Banerjee, MD & CEO of CEAT, said that the firm is focusing on expanding the production capacity of its agricultural radial tyres. He added, “This is the most profitable segment, and the capex is going towards it.” Demand for these tyres is primarily from international markets. 

For FY24, the company expects volumes to grow in the low-to-mid single digits, driven by strong demand in the replacement segment. It anticipates export market recovery to be slow due to high inflation. However, the management expects raw material costs to remain steady, allowing them to pass on the benefits to customers.  The stock shows up in a screener for companies benefiting from lower crude oil prices. Prabhudas Lilladher believes that any impact from lacklustre exports, moderate growth and high-interest costs on the bottom line will be offset by lower commodity prices and cost controls in FY24.

2. Tata Consultancy Services: This IT consulting & software company rose 2.5% on Thursday, despite its net profit falling 2.8% QoQ to Rs 11,047 crore in Q1FY24. The positive reaction in TCS’ share price was likely due to a 2% growth in its order book QoQ, to $10.2 billion, a five quarter high. Its net profit also beat Trendlyne’s Forecaster estimates by 1.2%. The company shows up in a screener of stocks with falling profit margins (QoQ).

In Q1FY24, the IT giant’s revenue remained flat QoQ at Rs 59,381 crore, narrowly missing Forecaster estimates. It was impacted by reduced revenue from the BFSI, communication, and technology & services segments, which together contribute to 46% of the company’s revenue. According to the management, the demand slowdown was due to macroeconomic concerns, which led to the reprioritization of deals, and pauses and deferrals in non-critical projects. However, K Krithivasan, Chief Executive Officer (CEO) and Managing Director of the company expects an increase in long-term demand from the rise of new technologies that use generative AI.

ICICI Securities maintains a ‘Buy’ rating on the stock with a reduced target price of Rs 3,780, indicating a potential upside of 7.5%. The brokerage has reduced the target price due to uncertainty about demand in the banking, hi-tech and telecom sectors. It expects the company’s revenue to grow at a CAGR of 7.8% over FY23-26.

3. Craftsman Automation: This auto parts and equipment manufacturer has seen its stock price rise by 16.9% in the past week, while the broader benchmark Nifty Auto increased only 0.8%. The stock is currently trading at a 52-week high, according to Trendlyne’s Technicals. The firm is diversifying its business beyond the commercial vehicle segment. It acquired DR Axion in December 2022, which has resulted in a significant shift in its revenue composition. The contribution from the passenger vehicle segment has increased from 7% to 30%.The firm has also received export orders in the tractors and construction equipment segment.

Craftsman Automation is also engaging with EV manufacturers and has received orders to supply e-axles for an EV player. The firm plans a capex of Rs 320 crore in FY24 for the refurbishment of outdated equipment and semi-automation in material handling. The firm is also looking to reduce its debt by 20% during the same fiscal year. The stock shows up in a screener for companies with high TTM EPS growth.

The management has guided revenue to grow by 20% in FY24, aided by higher volumes from new customers and a ramp-up in the export of powertrain orders from existing clients. Domestic growth in the first half of FY24 will be driven by the passenger vehicle segment, while the construction and farm machinery division is expected to contribute in the second half.

According to Motilal Oswal, the firm’s ability to establish a presence in the EV segment, and its healthy order wins across the board will help its revenue growth. It has managed to create niche products and also has superior capital efficiency, resulting in higher growth rates compared to the industry. The brokerage maintains a ‘Buy’ rating on the firm.

4. PCBL: This chemicals & petrochemicals company has had a volatile week. It fell over 3% on Wednesday after hitting its 52-week high of Rs 178.3 on Monday. PCBL rose around 2% on Monday after it commissioned the first phase of its capacity expansion in specialty chemicals at Mundra, Gujarat. But the rise was short-lived as the stock fell post its Q1FY24 results announcement.
   
   Its net profit fell 15% YoY to Rs 109.2 crore in Q1FY24 due to a higher tax rate of 29%, as against 21.5% in Q1FY23. It also reported a 4.4% YoY drop in its revenue to Rs 1,347 crore. This is likely due to the 4.7% YoY fall in the carbon black segment, which contributes to around 97% of the total revenue. Lower realisations during the quarter also accounted for the revenue decline. 

PCBL’s newly commissioned project in Mundra, which was announced on Monday, has a specialty chemical production capacity of 20,000 MTPA (metric tonnes per annum). This will enable the company to meet growing demand. Once completed,  the Mundra plant will have a production capacity of 40,000 MTPA. 

Following the capacity expansion announcement and results, ICICI Securities has maintained its ‘Buy’ rating on the company and increased the target price to Rs 200 from Rs 180. This implies an upside of 26.7%. The brokerage believes that the steady growth in domestic demand augurs well for the company in the coming years. As a result, it appears in a screener of companies where brokers have upgraded their recommendation or target price in the past three months. 

5. Indian Oil Corp: This oil and gas company hit its 52-week high of Rs 101.45 on Monday. The price rise came after the board’s approval for a capital raise of up to Rs 22,000 crore through a rights issue. This may result in a dilution of 13% in shareholding for existing investors. The funds raised from the rights issue are expected to be spent on Indian Oil’s capex and emission-reduction plans.

Reports suggest that the fundraising is likely part of the government’s initiative to support state-run fuel retailers’ net zero carbon emission projects. This aligns with the Centre’s plans in its 2023-24 budget. 

On the same day, Indian Oil Corp also approved a 50:50 joint venture (JV) with Sun Mobility (Singapore) to establish a battery-swapping business in India. Indian Oil will invest Rs 1,800 crore in the JV till FY27. The board has also approved an investment of $78.3 million in its Singapore arm for the acquisition of a stake in Sun Mobility.

Indian Oil Corp features in a screener for stocks with target price upgrades by brokerages in the past three months. Motilal Oswal remains optimistic and gives a ‘Buy’ call on the back of the company’s plan to commission various projects over the next two years and its margin recovery in refining. According to Trendlyne’s Forecaster, the company has a consensus recommendation of ‘Buy’ from 30 analysts.  

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