1. Rail Vikas Nigam (RVNL): 

This construction & engineering stock has risen by 45.8% over the past week after it formed a joint venture (JV) and incorporated a South African subsidiary on Tuesday. The surge helped its stock price to touch its all-time high of Rs 251.4 per share on Thursday. According to Trendlyne’s technicals, the stock has also risen by 59.5% over the past month, helping it to feature in a screener of stocks with expensive valuations according to the Trendlyne valuation score.

RVNL has formed a JV with Jakson Green to strengthen its renewable energy portfolio. As per the agreement, RVNL will hold a 49% stake in the JV, while Jakson Green will hold the remaining 51% stake. Among the renewable energy projects, the JV will focus on exploring opportunities for solar power projects internationally and in India. The company also incorporated a subsidiary in South Africa named RVNL Infra South America. This will enable the company to establish its railway infrastructure business internationally.

The company’s director of operations, Rajesh Prasad said, “With the new JV and subsidiary, we are we–placed to receive orders in international markets. We expect the company to book orders worth Rs 80,000-85,000 crore in FY24.” 

Speaking on the stocks’ recent rally, Vishal Perival, infrastructure sector analyst at IDBI Capital, noted, “Railway stocks have experienced significant upswings in anticipation of the upcoming budget. There is an expectation of substantial budgetary allocation for the sector." Trendlyne’s Forecaster sees the company’s revenue growing by 3.2% YoY to Rs 5,463.8 crore in Q3FY24. However, net profit is expected to fall by 4.8% YoY to Rs 364 crore.

2. PCBL:

This carbon black company hit its all-time high of Rs 317.9 on Thursday and has risen by 17% in the past week. The rise came after the company announced its Q3FY24 results. PCBL’s net profit grew by 52.4% YoY to Rs 147.9 crore, beating Trendlyne Forecaster’s estimate by 4.8% while its revenue increased by 21.3% YoY to Rs 1,663.9 crore, marginally below Forecaster’s estimate. The company also appears on a screener for stocks with improving ROCE in the past 2 years

The revenue increase was on account of increased carbon black demand from auto OEMs in the festive season. Increased demand from Europe has also helped boost international sales. Its Q3FY24 consolidated sales volume stood at 1.4 lakh MT and it achieved the highest-ever power generation volume. 

The firm also achieved its highest-ever EBITDA of Rs 286 crore, up 66% YoY. Its EBITDA margin was driven by higher price realization for its specialty products. The firm has also patented two high grades of specialty chemicals and expects to reach a volume of 6,000 tonnes annually in the next two years, which will be sold at 4X of current margins. These products are expected to provide roughly 7-8% additional EBITDA to the company. 

During the quarter, the company acquired a 100% stake in Aquapharm Chemicals for Rs 3,800 crore. Post-acquisition, Aquapharm is expected to add 40% more EBITDA to Philip Carbon. Aquapharm’s biodegradable chelating agents are rapidly replacing traditional agents and it has been ramping up its sales in Asia and looking forward to expanding in the European market. 

JM Financials maintains its ‘Buy’ call on PCBL as it considers it a key player in the carbon black market for lithium-ion batteries. It also suggests that its joint venture with Kinaltek will help it achieve its goal of diversifying its business portfolio.

3. IRB Infrastructure:

This roads and highways company has risen by 11.3% in the past month and reached a new 52-week high of Rs 47.6 in the past week. The firm reported a 26% YoY increase in toll collections in December 2023 of Rs 488 crore. It also emerged as the preferred bidder for NHAI’s Kota bypass on NH-27 in Rajasthan and for the Gwalior-Jhansi bypass section under the Toll Operate Transfer (TOT) model. The two projects have an upfront cost of Rs 1,683 crores and will turn cash-flow positive in the first year of their operations. 

Additionally, the firm’s Samakhiyali Santalpur Build Operate Transfer (BOT) project in Gujarat became operational on December 28, 2023. Historically, Q3 and Q4 are high-volume quarters for IRB Infrastructure, and owing to this, management expects the uptick in toll collections to continue in Q4FY24. 

The Hybrid Annuity Model (HAM) for road projects is facing obstacles in execution and funding, so to reduce its debt levels, NHAI has shifted from HAM to BOT and TOT models while awarding road contracts. IRB currently has a 38% market share in India’s TOT roads and a 20% share in India’s Golden Quadrilateral project (including BOT and TOT).

Kotak Institutional Equities states, “With a Rs 44,400 crore BOT in the pipeline for FY24 and two more TOT projects expected to be awarded, firms like IRB with strong balance sheets will benefit.” The firm’s private InvIT (IRB Infrastructure Trust) has successfully refinanced five BOT projects at a lower interest rate, which could save Rs 1,000 crore in interest expense over the next five years. 

4. ICICI Lombard General Insurance:  

This general insurance stock rose 5.8% on January 17 after announcing its Q3FY24 results, as its net profit grew by 22.4% YoY to Rs 431.5 crore and revenue rose by 14.7% YoY. The company appears in a screener of stocks with increasing quarterly net profit and margins. According to Trendlyne’s Technicals, the stock rose 6.7% in the past week.

In Q3FY24, gross direct premium income (GDPI) reached Rs. 6,400 crore, growing 15% and outperforming the industry. In the motor segment, the company saw 5.6% YoY growth, with strong contributions from the new private car segment at 30% YoY. The health segment grew at 29.1% YoY. The company’s provision increased to Rs 37 crore in Q3FY24 as compared to Rs 1 crore in Q3FY23.

The management says the company maintains its premium growth guidance in the 15-19% range till FY25. They tend to remain careful in the motor segment, noting that although claim ratios have decreased since Q3FY23, they are still quite high. Also, they expect the combined ratio to fall by another 160 bps in FY25 due to the lower claims ratio, which indicates that the company aims to reduce its losses.

Sharekhan highlights the firm’s competitive advantage in business reach through a multi-channel distribution network and conservative underwriting. As a result, the brokerage expects the RoE to come back to the 18% levels of Q3FY23 in the next one year from the current levels of 17.1% in Q3FY24. The brokerage maintains a 'Buy' rating on the stock. 

5. Newgen Software Technologies:

This IT consulting & software company rose 5% on January 16 and reached its 52-week high of Rs 901.1, after announcing its Q3FY24 results. Its net profit jumped by 43% QoQ to Rs 68.3 crore in Q3FY24 on account of a deferred tax credit of 5.8 crore. Revenue was up 10.4% QoQ, due to gains in India, EMEA (Europe, Middle East, and Africa), APAC (Asia–Pacific, excluding India), and USA markets. The company’s net profit beat Trendlyne’s Forecaster estimates by 3.7%, while revenue missed estimates by 2.3%. 

As a result of the share price rise, Newgen features in a screener of stocks with prices above short, medium, and long-term moving averages.  During the quarter, the company’s India market (which constitutes 34% of the revenue pie) saw revenue increase by 19.8% QoQ, and that of the EMEA market (contributing 31% to total revenue) rose by 0.6% QoQ, driven by strong growth in banking and financial services.  

The software firm is witnessing strong traction from its existing and new clients. Newgen has added 11 new clients during the quarter and 38 clients during 9MFY24 across various geographies. Its order book is also seeing healthy traction. Diwakar Nigam, the Chairman & Managing Director said, ”The company’s order book has grown around 20% in 9MFY24, of which there's a significant part to be executed over the next 2-3 quarters. This is expected to drive revenue growth for the company, by more than 25% over the coming quarters”. 

Post Newgen Software’s Q3 performance, Nuvama Wealth maintains its ‘Buy’ rating with an upgraded target price of Rs 1,000, implying an upside potential of 20%. The brokerage believes the company’s growth momentum will continue, driven by strong deal bookings and pipeline, product launches, and its investments in sales and marketing.

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