1. Jubilant Foodworks

This restaurant chain touched a new 52-week high of Rs 586.9 today, after its unit, Jubilant Foodworks Netherlands, launched a cash offer to acquire the remaining 45.3% in Domino's Pizza Eurasia. DP Eurasia operates the Domino's Pizza brand in Turkey, Azerbaijan, and Georgia.

The acquisition is expected to take place at an average price of €1.1 per share, totaling approximately €73.4 million (Rs 668.8 crore). This move will help the company to expand its presence in pizza delivery, particularly in Turkey, Azerbaijan, and Georgia. 

Emkay Global says that the potential expansion into other underpenetrated regions is a future opportunity for Jubilant Foodworks. However, it remains cautious of the adverse currency movements and inflationary pressures in Turkey. The brokerage has a ‘Sell’ rating on the company.    

Meanwhile, on December 19, the company initiated a makeover drive for its pizza chain brand Domino’s. Under the campaign, 'It Happens Only with Pizza’, Jubilant Foodworks plans to upgrade its pizza stores, and introduce new packaging & delivery systems with an aim to boost consumer demand. According to Sameer Khetarpal, the MD and CEO, “Priority remains on growing Domino’s as well as our fried chicken brand Popeyes”. He also highlights that the company targets to have 3,000 Domino’s outlets in the medium term.

2. Varun Beverages:

This non-alcoholic beverages firm rose 12% to an all-time high of Rs 1,380 on December 20 as it announced the acquisition of South Africa’s The Beverage Company for Rs 1,320 crore. According to Trendlyne’s Technicals, VBL rose 19.4% in the past month, outperforming the food, beverage & tobacco sector by 13.4% in the same period. 

The Beverage Company’s (BevCo) acquisition gives VBL a presence in 10 African nations, including the five existing ones, with control over most of southern Africa. The market is projected to grow to 153.7 crore cases by CY27, with an expected Compound Annual Growth Rate (CAGR) of 5.3% from CY22 to CY27E. BevCo achieved a sales volume of 11.7 crore cases in FY23 across its five manufacturing facilities. The volume distribution included 14.6% for the company's energy drink (Reebost), 14.9% for Pepsi brands, and 70.5% for other in-house brands.

Revenue from Sting and Gatorade increased by 50% YoY. Energy drink Sting contributed 15% to the revenue, and Gatorade contributed 7% in Q3CY23. The greenfield facility in the Democratic Republic of Congo (DRC) has an investment of Rs 1,600 crore for future expansions. VBL plans to launch another energy drink in India with PepsiCo which is forecast to further increase its volumes by 24%. 

PepsiCo branded carbonated drinks contributed 15% to the revenue of the company in India, with a growth in sales of 7.5% for Q3CY23. The company expects reduced seasonality as the South and West regions become more important. In Q3CY23, VBL reduced prices on major packs, boosting volumes.

KR Choksey says that PepsiCo and market leader Coca-Cola dominate over 80.0% of the carbonated drinks market in India. VBL, contributing around 90% to PepsiCo's beverage sales in India, benefits from industry growth factors like rising income, increased spending, large youth population, growing urbanization, and improved electricity and cooling equipment availability in rural areas. After completing significant capital expenditures in CY23 and CY24E, an increase in free cash flow is expected, helping reduce debt. The broker maintains a ‘Buy’ rating on the stock.

3. Nippon Life India AMC:

This asset management company rose by 2.9% in the last week and surged 39.1% in the last quarter. Monthly SIPs stood at Rs 17,073 crores, the highest ever, and the number of active demat accounts on CDSL crossed the ten crore mark in November. Nippon AMC is the fourth largest fund house in terms of equity assets under management (AUM).

The firm’s average AUM is expected to increase by 25% YoY in FY24 to Rs 3,664 crore with debt assets forming only 19% of total AUM, according to the management. This, they say, “signals a downward trend in debt assets due to volatile interest rates, new tax treatment restricting long-term capital gain benefits, and higher FD rates offered by banks”. 

BOB Capital expects the industry to grow by 15% in the medium term factoring in a 10% rise in annual inflows and believes hybrid funds could gain traction in times of weak debt inflows. 

Despite many new entrants in the industry, the firm’s focus on active management of investments could build a competitive advantage over the new entrants who focus mainly on passive funds. Analysts have noted that the firm is among the only few fund houses with a separate risk team and audit being done at both the scheme and AUM level. Additionally, the firm is looking to diversify its revenue sources by entering portfolio management services and alternative investment funds.

According to Trendlyne’s Forecaster, the firm’s net profit is expected to grow at 24.9% YoY in FY24. Due to its established core business, the firm appears in a screener of companies with strong cash-generating ability from core business.

4. Aether Industries:

This specialty chemicals company rose 1.6% on Tuesday after the company entered a strategic agreement and contract with a lithium-ion manufacturer. The agreement is for the commercial supply of one specific electrolyte additive and to initiate the discussion on three other types of electrolyte additives. The electrolyte additive industry has a market size of $1.4 billion (approx. Rs 11,581.3 crore) in 2022. The industry’s market size is expected to grow to $3.5 billion (approx. Rs 29,405.3 crore) by 2028. Owing to this, it has also risen by 5% over the past week, helping it to appear in a screener of highest gaining stocks in the same period.

The company also signed an agreement with Saudi Aramco Technologies for its converge polyols technology on June 9. With this, the company jointly developed the manufacturing process using the converge polyols technology. The company also signed a letter of intent (LoI) with a US-based oilfield services company to become its strategic supplier and contract manufacturing partner on June 7. 

However, according to Trendlyne’s technicals, the stock has fallen by 19.2% over the past six months. It recently plunged by 10.8% in two sessions ending November 30 to nearly touch its listing price of Rs 744.4 per share. The stock declined after a fire broke out at its manufacturing facility in Surat on November 29 which injured 25 employees and prompted the Gujarat Pollution Control Board to forbid operations at the facility. 

HDFC Securities maintains its ‘Buy’ rating on the company with a target price of Rs 1,200 per share. This implies a potential upside of 35.1%. The brokerage believes that the company’s capacity expansion-driven growth, advanced R&D capabilities, skilled management, a leading market position in most products and diversification will help with revenue growth.

5. Cochin Shipyard: 

This marine port and services provider has risen by 19.1% in the past month. During the month, the company launched the first three anti-submarine warfare watercraft for the Indian Navy. The contract was signed with the Ministry of Defence (MoD) in April 2019 for eight ships. The company also signed a new contract worth Rs 488.3 crore with MoD on December 19, 2023, to repair and maintain the equipment and systems onboard the naval vessels. 

Cochin Shipyard’s current order backlog stands at Rs 22,000 crore, which will be executed over the next few years. The pick-up in execution provides strong earnings visibility in the coming years. The company expects to receive repeat defence orders and other opportunities worth Rs 13,000 crore in FY24-25. This increasing order inflow will be backed by the expansion of the dry dock and the completion of the international ship repair facility (Q1FY25). This will double the operational capability of the yard and enable the company to construct and repair larger vessels.

In Q2FY24, Cochin Shipyard’s net profit grew by 60.9% YoY to Rs 181.5 crore while the revenue increased by 47.7% YoY. It beat Trendlyne Forecaster’s net profit estimate by 44.4% and revenue estimate by 22.7%. The company also appears in a screener for stocks with improving cash flow from operations for the past two years.

ICICI Direct gives a ‘Buy’ call on Cochin Shipyard and estimates its revenue, EBITDA and PAT to grow at 34%, 78% and 52% CAGR respectively over FY24-25. The analysts expect growth to be led by execution pick-up in all the segments.

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