1. Escorts Kubota: This commercial vehicles stock rose by 1.4% intraday after posting a 106.1% YoY growth in net profit, reaching Rs 289.3 crore for Q1FY24 on Tuesday. Its revenue has also improved by 15.9% YoY to Rs 2,355.7 crore, owing to increased sales in the agri machinery, construction and railway segments. This helped the company feature in a screener of stocks with improving net profit for the past three consecutive quarters. Notably, both net profit and revenue also beat Trendlyne’s Forecaster estimates by 33.3% and 7%, respectively. 

This increase in net profit is on the back of a reduction in the cost of stock in trade and a 1-2% price hike across all models and variations implemented in November 2022. Commenting on its near-term performance, Nikhil Nanda, the Chairman and Managing Director said, “With further advancement of monsoon, adequate reservoir levels, better liquidity and consumer credit availability, we expect demand to improve. The construction segment is also poised for growth, owing to government incentives and a focus on faster execution of infrastructure projects.”

Post results, Motilal Oswal maintains its ‘Neutral’ rating on the stock, with an upgraded target price of Rs 2,450 per share. This suggests a potential downside of 4.9%. The brokerage believes that the company’s near-term demand outlook is positive, led by healthy monsoon conditions and lower channel inventory. However, it warns of headwinds the company will face, like the impact of the high base of FY23 and reducing subsidies by state governments. The brokerage expects the company’s revenue to grow at a CAGR of 7.9% over FY23-25.

2. Chalet Hotels: This hotel company hit an all-time high of Rs 497 on July 27, 2023. The stock price has increased by 10.3% over the past month, outperforming its industry’s change of 3.4%. In Q1FY24, the company’s profit grew by 210.6% YoY to Rs 88.7 crore, beating Trendlyne Forecaster’s estimate by 77.2%. Despite a 100 bps YoY decrease in the EBITDA margin, the adjusted margin (after deducting one-time tax and expenses) grew by 110 bps YoY. The company also appears in a screener for stocks with increasing net profit and margin. 

During Q1, Chalet Hotels implemented a strategic approach of raising prices at the expense of occupancy. Consequently,  the occupancy rate fell by 8 percentage points YoY to 70%, while the average room rate (ARR) surged by 38% YoY. This led to an increase of 24% YoY in revenue per available room (revPAR). 

Q2 is generally a weak quarter for hotels since the monsoon keeps people at home. But the demand outlook looks strong due to events like the G20 summit, the ODI World Cup, and demand from international travellers returning to pre-covid levels. Managing Director and Chief Executive Officer of Chalet Hotels, Sanjay Sethi, said, “India's strong economic indicators, a robust demand-supply environment, and ongoing capex initiatives bode well for the future of Chalet Hotels.” 

Prabhudas Lilladhar maintains its ‘Buy’ call on the firm and expects a revenue and EBITDA CAGR of 25% and 31% respectively over FY24-25 on the back of revPAR growth and operationalization of hotel/commercial assets. The brokerage believes that the upcoming events and new projects will drive future growth. According to Trendlyne Forecaster, the company has a consensus recommendation of ‘Buy’ from nine analysts.

3. InterGlobe Aviation: This airline company fell by 4.6% in trade on Thursday, despite its healthy Q1FY24 performance. It is back in the black after posting its highest-ever quarterly net profit of Rs 3,090.6 crore, compared to a net loss of Rs 1,064.3 crore in Q1FY23. The stock beat Trendlyne Forecaster’s net profit estimates by 53.8%. Its profitability has improved on the back of a decline in average fuel prices and forex-related gains. Its revenue rose by 29.8% YoY, driven by an 18.8% YoY increase in capacity and a 30.1% YoY growth in passenger numbers. 

Despite its robust bottom-line performance, the street holds a bleak near-term outlook for the company, as doubts linger if the airline can replicate its Q1 success in Q2FY24. Brokerages point out that the firm benefited from Go First suspending its operations in May. According to reports, JM Financial expects the company’s Q2 profitability to be hit by higher aviation turbine fuel (ATF) costs and lower fares in the seasonally weak quarter. ATF prices have risen by 1.6% since July, which will increase margin pressure in Q2. 

Motilal Oswal believes that the company is not out of the woods yet as it has to ground 40 aircraft due to engine failures. However, the brokerage is optimistic about the company’s long-term prospects as it believes that IndiGo is well-positioned to expand its network given its strong order book. In June, the company placed an order for 500 Airbus A320 aircraft, making it the largest single purchase agreement in the history of commercial aviation. 

Despite potential headwinds in Q2FY24, the management has guided for a 25% YoY and 6% QoQ increase in capacity and also expects the passenger load factor to increase. 

4. Cyient Ltd: This software and services firm saw its stock price rise by 8.9% in the past week, according to Trendlyne’s Technicals. Its Q1FY24 earnings reported a 34.9% YoY increase in revenue and a 52.4% surge in net profit, underperforming Trendlyne’s Forecaster estimates by 2.1% and 2.7% respectively. The EBITDA margins expanded by 30 bps YoY on account of lower administrative and general expenses, but an increase in employee wages moderated the growth. Also, a 270 bps QoQ drop in attrition rate helped increase the bottom line. 

Cyient’s transportation and sustainability segments grew by 3.5% and 4.4% respectively, while the new growth units (NGU) and connectivity verticals declined by 6.5% and 3.4%. Demand softness in the semiconductor and wireless segment impacted overall growth.

Cyient anticipates further growth in its Digital Engineering and Technology (DET) sector, driven by higher order intake from maintenance, repair and overhaul (MRO) projects in aerospace, and investments in clean energy and EV.   

Cyient won six large deals worth $49 million in the quarter, contributing to a total contract value of $193 million, a YoY increase of 32.5%. The management expects FY24 revenue to grow at a rate of 15-20%, with margin expansion in the range of 150-250 bps. This expansion will be on account of higher utilisation, lower attrition, and automation in certain divisions. The stock shows up in the screener for firms with increasing profit margins and QoQ growth in net profit.

Cyient separated its Design Led Manufacturing division (DLM) as Cyient DLM and listed it on the stock exchange on July 10, 2023. The IPO was subscribed 71.35 times and saw a gain of 52% from its IPO price on the listing day.

Axis Securities says Cyient’s stable order inflow in challenging times and margin expansion provides visibility for sustained growth momentum. The brokerage maintains its ‘Buy’ rating.

5. UPL: This agrochemical company has fallen around 4% since Monday and touched a new 52-week low of Rs 600.4 on Thursday, after a weak show in Q1FY24. It has fallen by 23.7% in the past two years, making it a part of a screener of stocks with weak momentum.

UPL’s net profit dropped by 81.1% YoY to Rs 166 crore, missing Trendlyne’s Forecaster estimates by 56% in Q1FY24. Its revenue also decreased by 17% to Rs 8,963 crore, and the EBITDA margin fell by 387 bps to 17.8% due to slowdown in the agrochemical and broader chemical industries, pricing pressures, and muted demand. According to the management, “The market is witnessing pricing pressure, given the high base of the previous year and aggressive price competition from Chinese exporters."

During the quarter, UPL’s crop protection segment (which contributes around 85% to the total revenue) underperformed, with a revenue fall of around 30%. Meanwhile, the seeds business segment (which contributes around 10% of the revenue) rose by 29.7%. 

In contrast, other major agrochemical players like PI Industries have seen their CSM (custom synthesis and manufacturing) segment contribute 76% of the total revenue, and insecticides, fungicides and herbicides constitute 79% of Sumitomo Chemical's revenue. Trendlyne’s Forecaster shows PI Industries’ revenue to grow by 13.8% YoY in Q1FY24.

Mike Frank, the CEO of UPL, says, “We anticipate demand to remain subdued in Q2FY24 but expect performance to improve sequentially. We are optimistic about demand recovery in H2FY24 as channel inventory normalizes.” The company has cut its FY24 revenue growth guidance to 1-5% from 6-10% earlier and EBITDA growth guidance to 3-7% from 8-12%. It also targets at least a 50% cost reduction for FY24.

Post the Q1FY24 results, ICICI Securities maintains its ‘Add’ rating but lowers the target price to Rs 673, as it expects higher competition and input inflation. As a result, the company makes it to a screener of stocks with broker downgrades in price or recommendation in the past month.

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