1. Macrotech Developers (Lodha):
This realty company hit its all-time high of Rs 1,309.5 on Thursday before falling by 1.3% in today’s session. Its Q4FY24 results showed revenue growing by 24.8% YoY while profit fell 10.6% YoY to Rs 665.5 crore. Profit declined due to a rise in the cost of projects and increased depreciation & amortization expenses. Despite the fall, it beat Trendlyne Forecaster’s net profit estimate by 45.6% and revenue estimates by 9.6%. It reported a 340 bps growth in EBITDA margin to 33.4%.
Lodha achieved its estimated FY24 pre-sales growth of 20% and posted pre-sales of Rs 14,520 crore. Its pre-sales jumped 40% YoY in the quarter to Rs 4,230 crore and collections grew 20%. The Mumbai-based company’s business is focused in Tier-1 cities in Maharashtra, and the Mumbai region contributed 61.6% of its pre-sales while Pune contributed 24.5%. The firm is now diversifying its focus toward the south, and Bengaluru contributed around 8% of the pre-sales. The management expects to advance its ‘expansion stage’ in Bengaluru.
On the back of its strong operating cash flow generation and its recently raised Rs 3,300 crore via QIP, Macrotech Developers reduced its debt by 55% to Rs 3,010 crore, less than 0.2X the equity. Managing Director Abhishek Lodha said, “The sharp reduction in net debt has happened alongside the addition of new projects worth Rs 20,300 crore. This enhanced financial strength will give us the opportunity to accelerate margin and top-line growth.” The company has targeted a 20% sales booking CAGR over FY24-26, implying bookings worth Rs 21,000 crore in FY26. The firm appears in a screener for stocks with low debt.
ICICI Securities maintains its ‘Hold’ on Macrotech Developers based on its strong launch pipeline and new project additions. The brokerage is however cautious due to its higher-than-expected price growth. Over the past year, the company’s share price has grown by 167.5%, outperforming its industry by 26.8 percentage points.
2. Axis Bank:
This banking & finance company surged 6% on Thursday following the announcement of CEO and Managing Director Amitabh Chaudhry's term extension by three years till December 31, 2027. Chaudhry, who joined the bank in January 2019 after leading HDFC Standard Life Insurance for nine years, is increasingly seen as instrumental for the bank's growth trajectory. The bank released its quarterly and annual results this week, which aligned with or beat estimates across all fronts.
In FY24, Axis Bank reported a 22% YoY increase in revenue to Rs 72,336 crore, slightly exceeding Trendlyne’s Forecaster estimates by 1.7%. The bank's net profit for the fiscal year stood at Rs 24,861 crore, surpassing estimates by 4%. Its profit in FY24 is not comparable to the same in FY23 because of the acquisition of Citibank India's consumer banking business in March 2023. The company shows up in a screener of stocks with increasing revenue every quarter for the past eight quarters.
Additionally, the bank's board approved a fundraising plan of Rs 55,000 crore, with Rs 35,000 crore to be raised through debt and the remaining Rs 20,000 crore through equity. This capital infusion aims to strengthen the bank's financial position and support future growth efforts.
Commenting on the results, Amitabh Chaudhry said, “In FY24, we relentlessly focused on our key priority areas - Bharat Banking, Digital and Sparsh (our customer obsession program), I believe we were also nimble in picking up some enticing new opportunities that came our way.” He also highlighted the progress in integrating Citi's operations, which will complete within the next six months.
ICICI Securities reiterated its ‘Buy’ call on Axis Bank. They are optimistic as the bank posted an improvement in net interest margin by 5 bps QoQ to 4.6%, contrary to their expectation of a decline. With a target price of Rs 1,280, Axis Bank presents offers a potential upside of 13.2%.
3. Persistent Systems:
This IT consulting & software company has fallen 11.6% over the past week. This comes after its Q4FY24 EBIT missed Trendlyne’s forecaster estimates by 4.2%. The EBIT margin flatlined at 14.5% as margin expansion was offset by lower resource utilisation, higher subcontractor costs and travel costs. The company’s management gave a flat margin guidance for FY25.
Sandeep Kalra, the CEO acknowledged the weak numbers, and said, “We will be working towards improving utilization, onsite-offshore mix, and other operational efficiencies to achieve our medium-term target of improving margins by 200-300 basis points over the next 3 years”.
In Q4FY24, Persistent Systems’ net profit grew 1% QoQ to Rs 315.3 crore, driven by lower finance costs. Its revenue also increased 3.7% QoQ to Rs 2,590.5 crore, led by growth in its BFSI (which constitutes around 31% of its total revenue) and healthcare (24% of the revenue pie). The software, hi-tech, and emerging industries (45.1% of the revenue) weakened during the quarter. Both net profit and revenue however, beat estimates.
The company has outperformed its larger IT peers in revenue growth. For instance, Infosys reported a 2.3% QoQ degrowth in revenue during the quarter, while TCS’ was up 1.1% QoQ.
In terms of geographies, North America and India revenue grew by 4% and 4.5% QoQ while Europe declined 9.3% QoQ. In contrast, Infosys’ North America revenue declined by 2.2% QoQ. During the quarter, Persistent’s total contract value (TCVs) stood at Rs 44.8 crore. The company also highlighted that there has been no deal re-negotiation.
Post the company’s results, Sharekhan maintains its ‘Buy’ rating and lowers the target price to Rs 4,510. The brokerage says the company’s commentary on maintaining EBIT margin at the current level for FY25 via investments in building sales and marketing capacity as well as building next-gen technology assets, including the AI domain, is likely to place an upper limit on the profitability.
4. Hindustan Zinc:
This zinc company has been on a rally, rising by 42.4% over the past month. However, the stock fell by 1.5% on April 19 after it posted a 21.1% YoY decline in its net profit to Rs 2,038 crore in Q4FY24. Revenue also decreased by 12% YoY to Rs 7,285 crore during the quarter. The company’s revenue missed Trendlyne’s Forecaster estimates by 5.8%, but net profit beat estimates by 1.9%. It shows up in a screener of stocks with high promoter pledges.
Revenue fell on account of significantly lower zinc & lead prices and lower lead volumes, which was partially offset by an increase in silver and zinc volumes. On an annual basis, the company’s refined zinc production was marginally down YoY, while refined lead production was up 3% YOY. The increase in lead production was due to the company adopting pyro operations which increases the value of lead ores.
The company has set a capex of Rs 2,249.7-2,708 crore for FY25. Part of the capex will be used for the undergoing expansion of its 160 kt roaster in Debari which is expected to be completed by Q4FY25. The remaining will be used for the 510kt fertilizer plant in Chanderiya which will be commissioned by FY26. Speaking after the results, Amit Misra, CEO of the company said, “Our FY25 volume growth guidance for mined metal production is set at 4-6.5% YoY, refined metal production at 4-6% and saleable silver production at 0.5-4%.”
The sharp rise in the stock’s share price prior to results came in reaction to the company reaching its highest-ever production numbers for zinc and silver production in its FY24 business update, and a surge in zinc prices (up 17.4% in April 2024). Zinc prices had fallen by 13% in 2023, contributing to the fall in the company’s revenues. But prices have been on a recovery in 2024, rising by 9.5% so far. With its rise in production, the company has become the 2nd largest producer of zinc and the 3rd largest producer of silver globally. The company has also incorporated a subsidiary to discover and develop mineral blocks, which will produce lead alloys and other critical minerals listed by the government.
Post results, Motilal Oswal maintains its ‘Neutral’ rating on the stock with an upgraded target price of Rs 370 per share. The brokerage states that the company’s performance has been in line with its estimates. It also believes that the company’s focus on improving production with tight cost control will boost profitability. It expects the company’s net profit to grow at a CAGR of 16.7% over FY24-26.
5. Laurus Labs
This pharma company rose by 2.6% today post its result announcement. The firm beat Trendlyne Forecaster estimates for Q4FY24 for revenue by 2.1%, however missed the net profit estimate by 37%. For Q4FY24, the company’s net profit fell by 26.6% YoY to Rs 75 crore on the back of rise in raw material and employee expenses, while its revenue rose by 4.3% YoY. The stock shows up in a screener for companies with annual net profit declining for the last 2 years.
The company’s API business contributed more than half of the revenue and saw a growth of 30%. Its formulations or FDF business saw continued volume-led recovery in Antiretrovirals (ARV), and stable pricing despite market challenges. Spends were high compared to last year partly due to additional spend towards Competitive Generic Therapies (CGT) space.
The company’s management expects EBITDA margins to improve in FY25 as they are prioritizing capex into high value and growing market segments. For FY24, net capex was reported at Rs 700 crore (14% of the revenue). The management also notes that their $100 million CDMO investments are on track and they are planning an R&D center coming on line by June 2024 end. Laurus has recently inked a pact with Slovenia-based drug maker Krka to set up a joint venture firm in Hyderabad. Krka will hold a 51% stake and Laurus 49% share in the joint venture.
The company’s management says that at least two products are under preparation for the US market and they have launched one in Q4. V V Ravi Kumar, Executive Director & Chief Financial Officer, said: “Overall FY24 was challenging, driven by selling price decline in antiretroviral (ARV) products and absence of large purchase orders (PO). Despite operational challenges, our committed capacity built-up is on track as is our focus on productivity improvement.”
Goldman Sachs initiated coverage on Laurus Labs with a "sell" rating and a price target of Rs. 350, with a “Sell” rating. According to the brokerage, shares of Laurus Labs may fall as much as 23% over the next 12 months as it thinks that its segments lack immediate growth catalysts.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
