1. Latent View Analytics:
This data processing services company rose by 8.2% over the past week after it acquired a 70% stake in Indian IT services company Decision Point on March 28 for $39.1 million (approx. Rs 326.3 crore). Decision Point is a leader in business improvement using artificial intelligence (AI), and revenue growth management solutions. The acquisition,Latent View says, will give it a foothold in the retail CPG segment. It will also give access to new clients and geographies. The company appears in a screener of stocks where mutual funds increased their shareholding in the past month.
Decision Point will also bring new large clients in the Retail CPG vertical, and in new regions like LatAm, US (its clients are largely US firms and are billed in $) and India. As a higher margin business, Decision Point can play a role in restoring LatentView’s operating margins to its historic levels of 32.1% (stands at 24.4% in FY23).
Speaking on the acquisition, the management commented, “Decision Point derives about 8% revenue from Beagle GPT (the GenAI app used by Fortune 500 retail CPG clients), which helps the company have multiple revenue streams. After the integration, the retail CPG segment will become the second largest (20% of revenue by FY25) vertical for the company.”
Post the acquisition, Anand Rathi Wealth Management maintains its ‘Buy’ rating on the stock with a target price of Rs 630. This indicates a potential upside of 14.6%. The brokerage expects the company to maintain industry-leading growth in Q4FY24, despite the prevailing tough environment, followed by strong growth in FY25 supported by Decision Point’s integration (expected to be completed in Q1FY25).
2. AU Small Finance Bank:
This small finance bank has risen by 4.8% in the last two days after releasing its Q4 business update. Its total deposits have risen 26% YoY to Rs 87,182 crore and gross advances grew by 25% YoY to Rs 73,999 crore.
The management noted that the macro environment has remained challenging in Q4FY24, due to intense competition among banks to mobilize deposits. However, the expansion in the bank’s business groups, such as urban branch banking (which focuses on the urban market and constitutes 79% of deposits) and swadesh banking (which focuses on the core market and makes up 21% of deposits) have driven deposit growth during the quarter.
AU Bank has risen by 12.4% over the past week, outperforming its industry by 8.3%. On Monday, the bank announced the merger with Fincare SFB, after receiving approval from the RBI on March 4. Fincare has previously served a total customer base of approximately 54 lakh across 1,292 branches, with a strong presence in South India. After the merger, AU Bank’s total branch count will reach around 2,334, serving over 1 crore customers.
The merger enables AU Bank to expand into new geographical areas, especially in South India. This increased presence will facilitate the distribution of its products and services to a larger customer base, and help strengthen its market position in the south. According to Trendlyne’s Forecaster, the bank’s revenue is expected to grow by 26% YoY in FY24.
Motilal Oswal reiterated its ‘Buy’ rating with a target price of Rs 720. This implies an upside of 13.4%. It believes that the overall business of the bank will become more diversified, gaining presence in high-yielding MFI (micro-finance) and gold loan.
3. Tata Technologies:
This software and services company has surged by 9.9% in the past week following its joint venture (JV) announcement with BMW Group. This partnership involves building a software hub with a 1,000+ workforce to provide the BMW Group with automotive software and digital engineering services. JM Financial estimates that the JV could add 4-5 percent to their bottom line.
This collaboration is also expected to diversify the company’s client base, which is currently dominated by Tata group firms that account for approximately 33% of revenue as of Q3FY24.
Tata Tech’s IPO worth Rs 3,042.5 crore was oversubscribed 69.4 times and debuted with substantial gains of 162.6%. Currently, the stock trades 124.3% above its issue price since November 2023. Price consolidation in the past few months was mainly because of investors cashing in on bumper listing gains. Trendlyne’s Forecaster estimates the company’s revenue to grow by 14% YoY in FY24. At the same time, it forecasts its net profit to increase by 12.5% YoY.
The share of electric vehicles (EVs) in India's auto sales has surged to 6.4% in 2023 from 1.75% in 2021, indicating a shift in consumer preference towards EVs over the past two years. This suggests that India has crossed the tipping point in mass adoption of EVs, with sales now exceeding 5% of overall auto sales. Tata Technologies, with its extensive expertise in automotive technology, is well-positioned to capitalise on this EV trend.
CEO, Warren Harris, says "We see very strong tailwinds as the industry pivots towards alternative propulsion systems and connected services." Despite some OEMs suggesting a slowdown in EV sector growth, Harris remains upbeat, believing otherwise from a product engineering perspective. Additionally, he highlighted optimism in the aerospace sector, citing their relationship with Airbus.
Joindre Capital has initiated a 'Buy' rating on Tata Technologies. They believe that the company's expertise in the engineering, research and development (ER&D) space, along with its long-standing relationships with OEMs worldwide, increasing outsourcing demand, and rising EV adoption will drive growth.
4. Mahindra & Mahindra
This cars & utility vehicles manufacturer rose by 4.8% over the past week. The company recently signed an agreement with Volkswagen group, where it will equip its new electric platform INGLO with electric components from Volkswagen´s Modular electric drive matrix (MEB) and unified cells. The company plans to launch five all-electric SUVs on INGLO, starting December 2024.The company also signed an Memorandum of understanding (MoU) with Adani Total Energies E-Mobility to set up EV charging infrastructure across the country.
Trendlyne’s Forecaster estimates the company's net profit to grow by 27.8% to Rs 1,980 crore in Q4FY24 due to its strong PV order book in Q4FY24, while revenue should improve by 6.7% YoY. The firm beat the Trendlyne Forecaster’s estimates for Q3FY24 for net profit by 5.9%, but missed the revenue estimate by 0.3%.
The company’s total wholesales for FY24 rose by 18.1% YoY to 8.3 lakh units and the passenger vehicles domestic wholesales rose by 12.9% YoY to 40,631 units. But rural demand has been weak, driving YoY declines in commercial vehicles, 3W and tractor wholesales – these fell 6.1%, 7.3%, 27.8% respectively.
However, demand is reportedly strong for its new launches, specially the SUV’s priced above Rs 10-12 lakh. The company is ramping up its SUV production capacity to 49k units per month, from the current 40-42k units.
Rajesh Jejurikar, ED & CEO, Auto & Farm Sectors of the firm, said, “ New bookings continue to be healthy at around 50,000 per month and the order backlog stands at around 2.3 lakh units. The rural economy is experiencing challenges, but tractor subsidies have decreased, benefiting the industry. Farm machinery growth is 29%, with a goal of 40% this year. In the urban space there are segments, particularly the rich, where we are seeing increased demand for certain vehicles.”
ICICI Direct recommends a ‘Buy’ for Mahindra & Mahindra with a target price of Rs 2,225. The brokerage maintains its bullish stance on M&M due to the company's market leadership in the SUV and tractor segments. The brokerage expects sales to grow at 14.2% CAGR in FY23-26E amid 9.4% blended volume CAGR. The adjusted PAT is expected to grow to Rs 11,496 crore by FY26E.
The brokerage currently values M&M based on Sum Of The Parts (SOTP) at Rs 2,225 (11x FY26E standalone EV/EBITDA and Rs 300 per share value accruing for the Electric PV arm).
5. Aditya Birla Fashion and Retail (ABFRL):
This department stores company rose by 15.5% in the past week. The rise came after the company announced a vertical demerger of its Madura Fashion & Lifestyle (MFL) business into a separate listed entity. This move aims to create two growth engines, with distinct plans to create value and allocate capital. Managing Director Ashish Dikshit said, “The restructuring will help the company focus on different strategies for each business segment.”
MFL’s portfolio consists of lifestyle, casual wear, and sportswear brands like Louis Phillippe, Van Heusen, Allen Solly, Peter England, American Eagle, Forever 21, and Reebok. After the demerger, ABFRL’s portfolio will consist of value retail, ethnic, luxury, and digital brands. The demerger will allow ABFRL to focus on high-growth segments where there are tailwinds from a shift to premiumization, the rise of super-premium and luxury brands, and rapid growth in digital-first brands.
Trendlyne’s Forecaster estimates the firm to report a loss of Rs 293.2 crore in Q4FY24 and expects revenue to fall 16.9% YoY. The company reported a net loss of Rs 186.9 crore in Q4FY23. Analysts are cautious due to the company’s rising debt and inefficient working capital management. They believe that any misstep can lead to inventory liquidation-led margin loss or derailed growth. ABFRL also appears in a screener for stocks with low Piotroski scores (companies with weak financials).
Axis Securities maintains a ‘Hold’ on the company on the back of near-term challenges, such as a slowdown in discretionary spending due to lower demand from tier-2/3/4 cities, a sharp increase in debt, and an increase in ad spending.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
