1. Thermax:

This heavy electrical equipment company hit an all-time high of Rs 3,772.9 per share on Friday, with a 22.3% rise in the past month. This rise followed a licensing and technical assistance deal with South Korea’s Flowtech. The deal enables Thermax to obtain technology to manufacture polycarboxylate ether products known for their water-reducing abilities, and improve concrete setting time. This will also strengthen its construction chemicals business, which currently accounts for 7% of its top line. The company appears in a screener of stocks with rising mutual fund shareholding in the past month.

In Q3FY24, Thermax’s net profit rose 88.9% YoY to Rs 238.3 crore, beating Trendlyne’s Forecaster estimates by 54%, while its revenue grew 13.9% YoY to Rs 2,382.8 crore, slightly missing forecasts by 1.1%. This profit boost was mainly from an exceptional gain of Rs 126 crore, from transferring leasehold rights for a vacant plot. 

The firm's green energy solution contributes 5.1% to revenue, while accounting for 50% of interest payments. This has significantly impacted profitability.

Thermax has not received any significant orders in the past two quarters due to a slowdown in the domestic business. However, its management is optimistic that bidding for domestic power projects will lead to a quarterly order inflow of Rs 2,400 crore for the next three quarters. They expect it to ramp up after Q1FY25, helped by projects in the Middle East.

MD and CEO, Ashish Bhandari, announced plans to invest Rs 1,000 crore in Gujarat to  set up renewable energy capabilities and build-own-operate customer plants for biomass over FY25.

Post-results, HDFC Securities maintains a ‘Buy’ rating on Thermax as they expect the company to benefit from its investments in the clean energy and sustainability sectors. They expect a revenue CAGR of 10.6% and adjusted profit after tax CAGR of 18% over FY24-26.

2. JK Lakshmi Cement:

This cement & cement products manufacturer rose by 3.5% over the past week, as brokerages like HDFC Securities, Axis Securities, and SBI Securities maintain their ‘Buy’ ratings on the stock. Its Q3FY24 net profit has risen by 88.1% YoY to Rs 143.7 crore and revenue increased by 9.1% YoY. It beat Trendlyne Forecaster estimates for net profit by 9.4% but missed revenue estimates by 3.1%. However, its EBITDA margin improved by 588 bps YoY on the back of a decline in fuel expenses and higher price realization. The company appears in a screener of stocks in the Nifty 500 with consistently high returns over five years.

In Q3FY24, JK Lakshmi Cement reported a 7.6% YoY increase in sales volume to 29.6 lakh tonnes. The growth in margin was supported by premium cement sales, which accounted for 25% of trade sales volume. The firm’s fuel expense dropped by 14.7% YoY thanks to enhanced renewable energy use and its waste heat recovery system (WHRS). Due to the imposition of busy season charges by railways, the company moved 90% of its volume by road and the remainder by train, leading to a 5% YoY increase in freight cost per tonne to Rs 1,330. 

The firm’s clinker capacity and grinding capacity utilization stood at 105% and 79% respectively for the quarter. The management has guided capex plans of Rs 2,500 crore for the next 2-3 years. The capex will be used to add 2.3 MT in clinker capacity and another 4.6 MT for the grinding unit.

Management expects a volume growth of 8-10% in Q4FY24 and highlights a reduction in cement costs across most locations, which are currently 2-3% lower than Q3FY24 exit levels.

SBI Securities has given a ‘Buy’ rating to the company, with a target price of Rs 1,090. They say, “The company’s recently announced expansion plans, coupled with its target to reach a full-year EBITDA/Tonne of Rs 1,000 in the next 14-18 months, will aid long-term sustainable growth.” 

3. Quess Corp: 

This software and services firm rose by 7.8% on Monday following its announcement of a demerger into three entities: Quess Corp (workforce management), Digitide Solutions (insurance technology and human resource organization), and Bluspring Enterprises (facility management and industrial services). These segments currently contribute 68%, 14%, and 18% to the company’s revenue, respectively. The demerger aims to improve valuations and enable a focus on pure-play verticals. It is expected to be completed in 12-15 months, with shareholders getting one share each of Digitide Solutions and Bluspring Enterprises for every share held in Quess Corp.

In  Q3FY24, the company reported a revenue increase of 8.4% YoY and a net profit decline of 27.4%. It missed Trendlyne’s Forecaster estimates by 4.4% and 18.9%, respectively. The decline in profitability was on account of higher employee expenses as the firm added 22,000 employees in the past two quarters. It also reduced spending in Indian IT staffing. Some employees have been placed in the BFSI, manufacturing and telecom segments.  

The firm has reduced marketing expenses and is trying to enhance the client base to increase employee utilization. The firm's CEO, Guruprasad Srinivasan, stated that the firm has been focusing on niche segments like e-commerce, healthcare, FMCG and industrials to offset the spending cuts in the IT sector.

Quess Corp has also cut its gross debt by Rs 110 crore to Rs 400 crore. Margins are expected to expand in FY25, owing to a rebound in India’s IT solutions and increased infrastructure activities like port development, airports, and power plants, which would boost the company’s manpower supply business.

Motilal Oswal Securities predicts a 50% net profit CAGR over FY24-FY26 on a low base of FY24. Formalization of labour reforms and margin expansion are expected to drive the bottom line. However, due to concerns over taxation, a weak macroeconomic environment, and high valuations, the brokerage maintains a ‘Neutral’ rating on the firm.

4. NBCC (India): 

This construction & engineering company has risen by 4.6% over the past week, after winning multiple orders and signing two memorandums of understanding (MoUs). The company bagged three orders worth Rs 369 crore from multiple clients on Monday. The orders include infrastructure development for Rani Lakshmi Bai Central Agricultural University in Jhansi, a court complex and residential quarters in Telangana, and renovations of Noida’s ICAI Bhavan.

On Tuesday, NBCC won an order worth Rs 560 crore to construct the permanent campus of NIT Sikkim. The company also signed an agreement with the Greater Noida Authority to develop a purchasable floor area ratio (FAR) for five existing Amrapali projects on Thursday, with a total value of Rs 10,000 crore. It also signed two MoUs with Housing and Urban Development Corp to provide consultancy services and asset monetisation activities. 

NBCC released its Q3FY24 results on February 13, reporting a 60.3% YoY increase in net profit to Rs 110.7 crore. Its revenue also grew by 13.7% YoY to Rs 2,405.5 crore, beating Trendlyne’s Forecaster estimates by 10.8%. The revenue boost was on the back of improvement in the PMC, real estate and EPC segments. It appears in a screener of stocks with a 10% increase in share price over three months, with rising net profit growth.

Kellambally Mahadevaswamy, CMD of the company, said, “The company has a robust order backlog, with our consolidated order book reaching Rs 5,300 crore. We have set a target of around Rs 12,000 crore for the next financial year, a significant hike from the current target of Rs 8,000 crore.”

5. Devyani International:

This restaurant chain has fallen by 11.5% over the past month following an 86.6% YoY drop in its Q3FY24 net profit to Rs 9.6 crore. It missed Trendlyne’s Forecaster estimates by 77.4%. The decline was due to increased finance costs, employee benefits and depreciation expenses. A lower deferred tax credit (Rs 1.8 crore) compared to Q3FY23 (Rs 14.3 crore), and an exceptional item worth Rs 8.8 crore also contributed to the decline. In addition, Yum Restaurants India sold its entire 4.4% stake (5.3 crore shares) in Devyani International for approximately Rs 871.1 crore through a block deal on Wednesday.

Despite opening new stores (a 24% increase YoY), its revenue only grew by 6.7% YoY due to subdued same-store sales growth (SSSG) in the KFC and Pizza Hut brands. KFC and Pizza Hut reported SSSG of -4.7% and -13%, driven by falling dine-in sales. The management said that the pizza category remains under pressure due to increasing competition from unorganised players. 

The past quarter has been volatile for QSR (quick services restaurant) companies, with demand dipping after the Cricket World Cup and Diwali seasons. According to Ravi Jaipuria, the Chairman of Devyani International, “Consumer sentiment remains subdued, despite Q3 traditionally being a strong and festive quarter. We have also seen the impact of certain international geopolitical events on the American brands that we deal with.” However, the management is hopeful of a recovery in the next few quarters.

The company added 94 stores in Q3, taking the total to 1,452. It also acquired 283 KFC stores in Thailand. Devyani plans to add 250-275 stores in Q4 and is on track to achieve its target of 2,000 stores in FY24.

Motilal Oswal reiterates its ‘Buy’ rating on the stock with a lower target price of Rs 195. The brokerage remains cautious due to the demand challenges in the near term.

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