1. Hero MotoCorp:
This two-wheeler manufacturer rose by 6.9% in the past week and hit an all-time high of Rs 4,954.4 today. The company’s net profit improved by 16.1% YoY to Rs 935 crore and its revenue increased 12.9% YoY in Q4FY24 to Rs 9,794 crore. It beat Trendlyne Forecaster’s net profit estimates by 18.8%. The company recorded its highest-ever quarterly wholesales as it grew by 9.6% YoY to 13.9 lakh units. Growth has continued in April, when wholesales surged by 34.7% YoY.
CEO Niranjan Gupta says, “We expect double-digit revenue growth for the industry in FY25. With our upcoming product launches, we aim to outperform the industry and gain market share. We should maintain EBITDA margins at 14-16% in the long term.”
Hero Motocorp’s Q4 EBITDA margin grew by 120 bps YoY to 14.3%. However, increased spending in the electric vehicles (EV) and premium motorcycle segments, and marketing expenditure has offset this. Margins are expected to stabilise with upgrades to current stores, premium product launches and a better product mix. The company plans to expand its network of EVs to 100 cities in FY25 and launch new products in the premium, EV and entry-level segments.
The management has guided for a capex of Rs 1,000-1,500 crore for FY25. It also foresees export contribution to increase to 10% of overall revenue in the medium to long term. The company has received approval to form a subsidiary in Brazil, which will focus on premium products.
Motilal Oswal maintains a ‘Buy’ call on Hero MotoCorp and expects it to deliver a volume CAGR of 9% over FY25-26, driven by new launches and a ramp-up in exports. The brokerage expects revenue and profit CAGR to be 13.5% and 17%, respectively over FY25-26. The company appears in a screener for stocks with broker prices or recommendation upgrades in the past month.
2. Westlife Foodworld:
This restaurant chain has fallen by 2.5% in the last two days after announcing its Q4FY24 results. Westlife Foodworld’s net profit plunged 96.2% YoY to Rs 0.8 crore, down from Rs 20.1 crore in Q4FY23. Trendlyne’s Forecaster had estimated net profit at Rs 13.1 crore for the quarter. The sharp decline was due to the rapid addition of new stores amid a muted demand environment, higher marketing spends, finance costs, and depreciation & amortisation expenses.
During the quarter, Westlife’s revenue grew just 1.1% YoY. Its SSSG (same-store sales growth) contracted by 5% YoY. This was led by a decline in dine-in sales (-2% YoY) and bad publicity the company faced around its cheese.
Earlier this year, allegations surfaced in Maharashtra that McDonald’s used substitutes in place of real cheese in its burgers and nuggets. But it was later confirmed that the company used 100% real cheese. Saurabh Kalra, the Managing Director, said, “Around 70–80 restaurants were impacted by these challenges, particularly in the western region.” Rumours are hard to kill – the management says that these concerns still persist, even after Westlife’s efforts to address the cheese controversy through targeted campaigns.
The restaurant major also witnessed pressures as customers reduced their spending on dining out and delivery services, despite attractive discounts. In fact, the QSR industry has been witnessing demand pressures in the past few quarters. According to Prabhudas Lilladher, “QSR demand remains subdued due to inflationary pressures, lower eat-out frequency, and increasing competition from unorganized players/cloud kitchens”.
Meanwhile, the McDonald’s operator has continued to expand its store network and added 17 restaurants in Q4 FY24. The company aims to add 45-50 stores in FY25 with a focus on South India, smaller towns, and drive-thrus. The company has guided capex of Rs 200-250 crore for FY25.
Post the company’s result announcement, Dolat Capital maintains its ‘Sell’ rating with a target price of Rs 764. The brokerage believes the company has an attractive menu offering and strong brand extensions like Mc Café, but it will have to battle a high SSSG base and subdued demand.
3. Marico:
This FMCG company surged 10% on Tuesday after it reported quarterly and annual results. Marico's revenue for Q4FY24 came in line with Trendlyne’s Forecaster estimates at Rs 2,293 crore, up 1.7% on a YoY basis. Meanwhile, its net profit increased 5.3% YoY to Rs 318 crore, missing estimates by 10.5%. This was due to lukewarm rural demand in the previous quarter. Parachute coconut oil, contributing 34% to its total revenue, witnessed volume and value growth of 2% each in Q4.
Consumer intelligence firm NielsenIQ has reported a 6.6% growth in the industry's value driven by a 6.5% increase in volumes in the March quarter. Roosevelt D’Souza, head of customer success India at NielsenIQ, stated, “The FMCG industry's growth in rural areas surpassed that of urban growth for the first time in the past five quarters.”
Marico’s Managing Director & CEO Saugata Gupta, said, “We have lost market share in the bottom of the pyramid segment in value-added hair oils, where there has been significant competitive intensity.” To counter this, the company implemented project SETU at the start of the fiscal year to improve direct reach to 1.5 million outlets by FY27, from 1 million outlets currently. The expected outlay for the project is Rs 80-100 crore spread over the next three years, which will be funded through internal accruals.
Gupta expects project SETU to enhance direct reach and weighted distribution, as well as help in market share gains across categories in urban and rural markets. Gupta anticipates Marico’s food business to grow at a compound annual growth rate (CAGR) of more than 20%, reaching 2X the current scale by 2027.
Sharekhan maintains a ‘Buy’ rating on Marico as it expects a revenue CAGR of 12.2% in FY25-26, led by growth in the core portfolio and 20%-plus growth in new business segments. They see the portfolio diversification into premium foods and personal care products improving the company’s revenue trajectory in the long term. With a target price of Rs 620, this FMCG player has a potential upside of 5.6%.
4. Kotak Mahindra Bank:
This bank stock fell by 8.6% over the past month after the Reserve Bank of India (RBI) ordered the bank to stop onboarding new customers through its online and mobile banking channels, and issuing new credit cards on April 25. This follows the RBI's observation of deficiencies in the bank's income tax examination. The company’s joint Managing Director Krishnan Venkat Subramanian resigned a few days after the news, on April 30 to ‘pursue other opportunities’.
The bank’s management says that the ban will affect the company’s pace of customer additions, and estimates a Rs 300-450 crore decrease in its profit before tax in FY25. Speaking on the RBI directive on the bank’s earnings call, Shanti Ekambaram, Deputy Managing Director of the bank said, “Given the recent RBI directive, the focus on cards will be on servicing and nurturing our existing customers through customer engagement and loyalty programs. Our focus on personal loans and business loans will continue as is.”
The stock, however, recovered to rise by 5% on Monday, after its net profit grew by 18.2% YoY to Rs 4,133.3 crore in Q4FY24. Revenue also increased by 25.3% YoY to Rs 12,307.1 crore, helped by the treasury, corporate and retail banking segments. The growth in net profit and revenue helped it to beat Trendlyne’s Forecaster estimates by 22.8% and 32.8%, respectively. The bank's asset quality also improved as its gross and net NPAs contracted by 39 bps YoY and 3 bps YoY to 1.4% and 0.3%. It appears in a screener of stocks with increasing revenue for the past eight quarters.
The company’s advances grew by 17.6% YoY to Rs 3.8 lakh crore, with traction across all segments. Its deposits growth (23.6% YoY) outpaced advances growth (17.6% YoY) causing its credit-deposit (CD) ratio to fall by 400 bps YoY to 84%. This will help in improving the liquidity of the bank.
Post results, ICICI Direct has downgraded the bank to a ‘Hold’ rating with a lower target price of Rs 1,800 per share. This indicates a potential upside of 9.6%. The brokerage believes that while the regulatory ban is expected to impact growth, the company’s fundamentals remain strong with the ability to drive healthy business growth. It expects the bank’s net interest income (NII) to grow at a CAGR of 13% over FY24-26.
5. Mangalore Refinery And Petrochemicals (MRPL):
This Refineries & Petroleum-products company fell by 17.1% over the past week after it announced its results on 3rd May. The firm beat Trendlyne Forecaster estimates for Q4FY24 for revenue by 13.5% and the net profit estimate by 83.6%.
For Q4FY24 the company’s net profit fell by 40.5% YoY to Rs 1138.5 crore on the back of a rise in raw material costs by 7.8%, while its revenue fell by 0.5% YoY. The stock shows up in a screener for companies having a PE higher than the industry PE.
The firm’s Gross Refinery Margin (GRM) has contracted to $11.35 per bbl in Q4FY24, compared to $15.12 per bb in Q3. The GRM decline was due to the rise in crude oil prices by an average of 17% QoQ in Q4FY24. When compared to its peers, MRPL’s GRM was still higher than most OMCs this quarter, like Indian Oil Corp.(IOCL) at $8.4 per bb and Hindustan Petroleum (HPCL) at $6.9 per bb.
The company has processed three new crudes during the year, including Siberian Light from Russia, KG-D6 from Reliance's KG-D6 block, and KG-D98 from ONGC's East Coast block. The company’s management notes that their Russian crude usage has been at around 30-40%, which has been similar for the oil industry as a whole.
The company’s management has guided an increase in their number of retail outlets from the present 100 in FY24 to 1000 by FY27. Vivek Tongaonkar, Director Finance at MRPL said “We are excited about our strategic direction for the future. Significant planning is underway for new projects aimed at enhancing our refinery's GRMs by enhancing the PET-CHEM intensity from the current 10% to 12.5%. We anticipate an investment of approximately Rs 8,000 crore over the next five years, primarily funded through internal accruals.“
Motilal Oswal has maintained a "sell" rating with a price target of Rs 175. The brokerage said: “ While MRPL delivered a solid beat vs our estimates, we believe its earnings are set to decline from Q!FY25 amid weaker GRM QoQ. We are estimating a GRM of $8/bbl in FY25/26, leading to an RoE of 18.2%/15.4%. We value the stock at 6.5x FY26E EBITDA of Rs 61 billion, to arrive at our TP of Rs 175.”
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
