1. Dixon Technologies (India) Ltd: This consumer electronics manufacturer is expected to sign new contracts following new government restrictions on importing laptops, tablets, and servers. The stock rose 7.5% on the day of the announcement. Dixon Technologies’ CFO, Saurabh Gupta, commenting on the news, said, “The company’s IT hardware segment turnover could rise by Rs 3,000-4,000 crore in the next two years due to the government policy.”

In Q1FY24, Dixon’s revenue increased by 14.6% YoY, driven by higher sales in the mobile division. However, TV and LED light sales have been muted. Lower raw material costs led to a 55 bps expansion in gross margins. Dixon’s EBITDA margin improved by 53 bps YoY and is projected to increase by another 30 bps in FY24. New client acquisitions in mobile manufacturing, as well as incremental orders from existing clients are expected to drive revenue growth. The firm aims to improve margins by adding more products through original design manufacturing and backward integration, with a  planned capex of Rs 400 crore for FY24. The stock shows up in the screener for growth in quarterly net profit and profit margin.

Dixon has partnered with China-based mobile companies Xiaomi and Itel to manufacture smartphones in India. Production is expected to start in September 2023. There are also recent reports that Dixon is in talks with Google to produce Google Pixel Phones in India. Dixon started the production of 4G phones for Jio in May 2023.

BOB Capitals says Dixon Technologies has the ability to deliver revenue and PAT growth of 45% and 60% respectively in FY24. However, the stock’s recent run-up discounts the near-term positive outlook. The brokerage has revised its rating from ‘Buy’ to ‘Hold’. 

2. Samvardhana Motherson International: This auto parts & equipment manufacturer fell 2.9% on Thursday as its revenue marginally missed Trendlyne’s Forecaster estimates by 0.9% in Q1FY24. However, its net profit jumped 2.3x YoY to Rs 600.9 crore in Q1 but fell 8.1% QoQ. 

Despite the initial fall in share price after the result announcement, it recovered on Friday and closed 1.9% higher. The company's Q1 revenue improved by 27.7% YoY to Rs 22,280.3 crore, aided by an increase in revenue from the wiring harness, modules & polymer products, vision systems and emerging businesses segments. The rise in net profit and revenue helps the company show up in a screener of stocks with good quarterly growth in the recent results.

In terms of geography mix, sales in North America, Europe and China have witnessed YoY growth, but North American and European sales dipped QoQ due to declining demand. According to the management, “Macroeconomic factors are stabilising at elevated levels, while wage bills and interest rates continue to pressure profitability on a QoQ basis.” 

Post results, Motilal Oswal maintains its ‘Buy’ rating on the stock with an upgraded target price of Rs 115 per share. This indicates a potential upside of 17.8%. The brokerage remains positive about the company’s future based on the overall recovery of the industry, , strong order book execution for Samvardhana Motherson Automotive Systems Group BV (SMRPBV), receding cost inflation, and capacities in place for growth. 

The stock has a consensus estimate of ‘Buy’ from 13 out of 18 analysts. However, it is in ‘the Sell’ zone based on the time it has spent below its current PE.

3. Trent: This retailer rose by over 6% in trade on Thursday and touched its all-time high of Rs 1,915. This uptrend follows the release of its Q1FY24 results on Wednesday. The company’s net profit has risen by 32.9% YoY to Rs 173.5 crore and revenue grew by 45.8% YoY, beating Trendlyne’s Forecaster estimates by 19.7% and 14.7% respectively. This growth comes despite a slowdown in discretionary spending, and subdued market conditions. In addition to exceeding Forecaster estimates, Trent has also outperformed its peers. For instance, Aditya Birla Fashion & Retail posted a net loss of Rs 141.4 crore in Q1FY24, while Shoppers Stop’s net profit fell by 36.5% YoY to 14.5 crore. 

The company’s progress was driven by a 40% YoY growth in store count, reaching a total of 609 fashion stores. The company added seven Westside stores in Q1, taking the total to 221, and added 40 Zudio stores (also closed 4 stores), bringing the total to 388. The firm plans to add 200 Zudio stores in FY24. Noel N Tata, Chairman of Trent, says, “We will further expand our reach, aiming to be even closer  and more convenient for  customers, reinforcing our brand commitment.”

Despite its healthy performance, the fashion retailer’s gross margins have contracted by 479 bps YoY to 44.5%. According to ICICI Securities, the fall in margins is due to an increasing mix of Zudio, which has a relatively lower margin profile. While Westside serves as the company’s flagship brand, Zudio represents its value-fashion brand. Also, a 70.2% YoY rise in rental expenses increased pressure on its margins. 

Overall, the company’s balance sheet is healthy despite its expansion strategy. Trent plans to aggressively increase its store count in key markets and expand its digital presence to drive growth in the coming quarters.

4. Zomato: This food delivery services provider reported its first-ever profit in Q1FY24 on the back of  a 64.2% YoY revenue growth. Despite a loss before tax, a deferred tax credit of Rs 17 crore has resulted in a net profit of Rs 2 crore, beating Trendlyne Forecaster’s estimated loss of Rs 168.5 crore. Post results, Zomato touched a 52-week high of Rs 102.9 on Monday and has risen by 7.9% in the past week. It also features in a screener for stocks with the highest recovery from 52-week lows.

Temporary store closures in Delhi and reduced traffic of delivery partners in April-May (summer season) impacted Blinkit’s (quick commerce segment) gross order value, resulting in muted growth. Yet, its average order value improved. On the other hand, the Hyperpure platform saw a 27% YoY growth in revenue as Zomato increased the minimum order value. 

Easing competitive pressures in the quick commerce segment, driven by a lack of funding for smaller players, is expected to contribute to future growth. Zomato dominates the food delivery market and boasts an increasing user base. Chief Financial Officer Akshant Goyal says, “We expect our business to remain profitable and continue to deliver over 40% YoY top-line growth for at least the next couple of years.”

Given improved visibility of profitability and sustained improvement in underlying operating metrics, ICICI Securities maintains a ‘Buy’ call on Zomato, and expects Blinkit to turn profitable by FY25 and Hyperpure by FY26. According to Trendlyne’s Forecaster, the company has a consensus recommendation of ‘Buy’ from 25 analysts, of which 17 are ‘Strong Buy’.

5. Emami: This personal products company has risen around 15% since Monday and is trading near its 52-week high of Rs 524 after reporting healthy Q1FY24 results. As a result, the company’s share price has outperformed its sector by 21.7% in the past month and features in a screener of stocks with strong momentum.

The company’s net profit surged by 86.5% YoY to Rs 137.7 crore, driven by a fall in the cost of inventory, and beat Trendlyne’s Forecaster estimates by 12.3%. Its revenue also rose by 6.8% YoY, due to healthy growth in both domestic and international businesses. Its gross margins also improved by 240 bps on the back of easing input costs and a better product mix. 

In Q1FY24, FMCG companies saw their operating margins expand YoY, thanks to the cooling of inflation over the past few months and a gradual recovery in rural demand. Mohan Goenka, Vice-Chairman and Whole-Time Director of the company, says, "Going forward, we expect a steady recovery in rural demand, led by the easing of liquidity pressure, forecast of near normal monsoon and moderation of inflation.”

Despite a rise in revenue, the company’s summer product segment has witnessed a 5% decline in sales due to erratic summer and monsoon conditions across the country. Meanwhile, sales across the non-summer portfolio (which consists of Zandu pain management, BoroPlus and Kesh King ranges) grew by 16%.

ICICI Securities maintains its ‘Add’ rating post Emami’s Q1 results, but raises the target price to Rs 520. The brokerage has a positive outlook on the FMCG company, noting its distribution expansion plans and new product launches. Emami makes it to a screener of stocks where brokers have upgraded recommendations or target prices 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.