1. Coforge

This software and services company has been in the news as its promoter, Baring PE, sold its entire stake of 26.6% through block deals on August 24. The stock gained 9.7% on the day of sale. The complete stake sale by promoters removes the impact of the periodic bulk deal sales by the promoter, which had limited the upside for the stock, despite the firm’s consistent performance. 

According to Trendlyne Technicals, the stock has gained 15.9% in the past month, supported by its strong Q1FY24 results. The firm reported a 2.7% QoQ increase in revenue and a 44% rise in net profit during the quarter. The BFSI segment was the major revenue driver, with a QoQ growth of 4%.

Coforge reported its highest-ever deal wins of $531 million in Q1FY24. Its average deal win in the past four quarters stands at $370 million. This has resulted in a 12-month executable order book of $897 million. Coforge has also reported a net addition of 1,482 employees in the trailing 12 months, a positive trend in contrast to the decline observed in its peers’ employee counts. Another strength lies in Coforge’s attrition rate, which is one of the lowest in the industry at 13.3% in Q1FY24.

The management has provided a revenue guidance of 13%-16% for FY24, with a gross margin expansion of around 50 bps. The revenue growth will be backed by the huge order book, while margin expansion will be aided by moderation in onsite expenses, wage hikes, and a lower attrition rate.

America makes up over half of the company’s Q1 revenue. The growth from this region has improved by 5.8% QoQ. However, top-line growth was impacted by EMEA (Europe, Middle East, Africa) and ROW (rest of world), which have grown by only 1%.

Sharekhan says that the complete stake sale by promoters removes the oversupply of shares and doesn’t limit the upside. Also, the deal wins in the quarter provide visibility for revenue growth. The brokerage maintains its ‘Buy’ rating on the stock.

2. Finolex Industries

This pipe manufacturer hit an all-time high of Rs 250 today, a 24.2% increase in the past month following its Q1FY24 results. The company’s profit has surged by 16.2% YoY to Rs 115.3 crore, beating Trendlyne Forecaster's estimate by 5.6%. Its revenue also grew marginally and features in a screener for stocks with increasing revenue for the past three quarters.

The company’s pipe volume has grown by 28.1% YoY, driven by seasonally strong demand from the agriculture sector, and momentum from the plumbing segment. The overall pipe manufacturing sector saw increased volumes, with competitors like Astral and Apollo Pipes reporting volume growth of 31.1% YoY and 47% YoY, respectively.

EBITDA margin contracted by 612 bps sequentially due to the impact on profitability in the PVC (polyvinyl chloride) resin segment. This was the result of a 40.4% YoY drop in PVC resin price, which led to a lower selling price of existing inventory. Finolex’s management has guided for a 15% CAGR in pipe volume over the next five years. The company has also planned a capex of Rs 200 crore and 250 crore for FY24 and FY25, respectively, mostly for mold additions in pipe and fittings, and maintenance. 

As of Q1FY24, the company has a net cash surplus of Rs 1,650 crore. According to Chief Financial Officer Niraj Kedia, “The surplus cash will be used for expansion, or paid out as dividend or buyback if there are no proper investment avenues.”

ICICI Securities maintains a ‘Buy’ call on Finolex Industries on the back of margin expansion due to lower raw material prices in both agriculture and non-agriculture segments.

3. BSE 

This banking & finance stock has surged by more than 5% for three consecutive sessions to touch an all-time high of Rs 1,138.8 per share. The boost came as its derivatives market share increased to 3.4% in August from 0% in April. Its expiry day market share also jumped to 11%. According to Trendlyne’s Technicals, the stock has risen by 31.3% over the past month, helping it to appear in a screener of stocks that have gained more than 20% in the same period.

In addition, rumours have surfaced regarding a potential merger of the exchange with the commodity exchange MCX. This is driven by MCX’s need for  technology-related solutions for its trading platform and BSE’s potential to strengthen its position through MCX’s commodity volumes. The silence from the exchanges regarding these rumours has caused many to take the possibility seriously. 

HDFC Securities has upgraded the stock to a ‘Buy’ rating from ‘Accumulate’, with an increased target price of Rs 1,230 per share. This indicates a potential upside of 9.2%. The brokerage believes that the BSE derivatives will grow on the back of onboarding of large member brokers, the launch of new weekly index contracts, hedging activity, and a continued increase in active traders. It expects the exchange’s revenue to grow at a CAGR of 13.1% over FY22-26, led by growth in transaction revenue.

4. Indian Hotels Co

This hotel chain rose by 7.9% between Wednesday and Friday, reaching a high on Wednesday, followed by new highs on both Thursday and Friday. This surge comes on the back of a healthy business outlook for the hotel industry. Given its expansive presence across India, Indian Hotels is expected to benefit from robust domestic demand and the recovery of inbound international travel to pre-covid levels. Puneet Chhatwal, the MD & CEO of Indian Hotels, says, “We continue to envelop India and are present in over 125 locations across 31 states and union territories.”

Along with these industry tailwinds, events such as the ICC Men’s World Cup, G20 Summit, and the Miss World Beauty Contest being hosted in India are expected to boost travel. In Q1FY24, the company opened five new hotels and signed 11 new hotels (Managed Properties). The management’s plans include the opening of more than 20 hotels and a capex of more than Rs 600 crore in FY24. The company has managed to expand its network without taking on a lot of debt, and shows up in a screener for companies with improving cash flows from operations over the past two years.

With demand continuing to outpace supply in the industry, branded hotel chains have been able to raise room rates. The company expects this favourable supply-demand balance to persist in the coming quarters, allowing it to increase room rates without sacrificing occupancy rates during the holiday season in H2FY24. Trendlyne’s Forecaster estimates the hotel chain’s annual revenue and profit to grow by 13.7% YoY and 22.6% YoY in FY24 respectively.

5. Shoppers Stop

This retailing company declined by over 12% in intraday trade on Monday following the exit of its Managing Director & CEO, Venugopal G Nair, effective from August 31, citing personal reasons. Having held the CEO position since November 2020, Nair’s tenure saw the company’s share price surge by over 300%. The company has appointed Kavindra Mishra, the CEO of Homestop, as the  Executive Director & CEO for a period of three years, effective from September 1, 2023.

Under Venugopal’s leadership, the company implemented a growth plan focusing on four key aspects: private label, omnichannel, beauty business, and store expansion. In Q1FY24, Shoppers Stop introduced an affordable retail format called ‘Intune’. According to Nair, “Intune is a ‘Fashion For All’ format, which is one of our strategic initiatives to cater to young families.”

Despite the company's assurance of maintaining the strategy developed during Venugopal’s tenure, its share price has fallen.The company also stated that it would continue to prioritize opening smaller-sized stores for enhanced efficiency and reiterated its plans to add 12-13 departmental stores for FY24. In Q1FY24, the company added six beauty stores, but the opening of the targeted 2-3 department stores was delayed.

During the quarter, Shoppers Stop’s net profit declined by 36.4% to Rs 14.5 crore due to an increase in employee expenses, and depreciation & amortization costs. Meanwhile, its revenue grew by 4.9% to Rs 1,000.9 crore. According to Trendlyne’s Forecaster, the firm’s revenue is expected to increase by 12.3% in FY24.

Post the announcement of the CEO's resignation, Motilal Oswal reiterates its ‘Neutral’ rating, with a target price of Rs 750. The brokerage believes that the company’s focus on growing its beauty segment, improving the private label mix, and opening smaller-sized stores along with steady store addition guidance, should aid revenues.

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