1. Info Edge (India):
This internet software & services company has risen by 8% over the past week and touched a 52-week high of Rs 6,545 on Thursday. On May 16, Info Edge (India) reported a net profit of Rs 60.4 crore for Q4FY24, compared to a loss of Rs 272.8 crore in Q4FY23. Its revenue grew 8.7% YoY to Rs 657.4 crore, beating Trendlyne’s Forecaster estimates by 7.2%. EBITDA margins improved by 153 bps YoY to 41% during the quarter.
Info Edge’s recruitment business and cash cow (Naukri), which accounts for 73% of its revenue, grew by 3.4% YoY in Q4. Billings during the quarter were up 7% YoY. Recruitment business growth was slightly slower compared to the other segments due to a slowdown in IT hiring. Hitesh Oberoi, the Managing Director said, “FY24 was a challenging year for the overall recruitment business largely because of the slowdown in IT hiring”. However, he highlighted that there has been an increase in IT job listings and resumes being viewed by hiring managers over the last 3-4 months.
Meanwhile, during Q4FY24, the company’s non-recruitment business verticals, namely 99acres.com (real estate), Jeevansathi.com (matrimony), and Shiksha.com (education) grew by 22.5%, 29.2%, and 22.2% respectively.
In addition to the various lines of online business, the company has invested in several start-up companies. As of March 2024, Info Edge holds 13.6% and 12.7% stakes in Zomato and PB Fintech (PolicyBazaar), respectively. The management reiterated no plans to sell their holdings in these companies, given their growth prospects. Other strategic investments include Nopaperforms Solutions, Ambition Box, and AarogyaAI. The company highlighted that businesses like Ambition Box and Job Hai have begun monetizing in Q4, and have the potential to grow at a faster pace moving forward.
Post Info Edge’s results announcement, JM Financial upgraded its rating to 'Buy' and raised the target price to Rs 7,000. According to the brokerage, billings growth slowdown in the recruitment segment has bottomed out. It expects EBITDA margins to expand from 40.1% in FY24 to 44.7% in FY27.
2. Balkrishna Industries:
This off-highway tyre manufacturer hit a new 52-week high of Rs 3,174.3 on Tuesday after surging 17.5% in the past week, following the release of its Q4 and FY24 results. In Q4FY24, the company reported revenue growth of 20.2% YoY to Rs 2,852.7 crore, surpassing Trendlyne’s Forecaster estimates by 15.4%. During the same period, its net profit went up by 87.4% YoY to Rs 486.8 crore, beating estimates by 29.1%.
The revenue beat was mainly driven by a 13% volume expansion due to market share gains on a YoY basis, and partially passing higher freight tariffs (due to the Red Sea crisis) onto customers. The increase in net profit was supported by improving EBITDA margins, which grew by 460 basis points YoY to 24.9%.
Geographically, 47.1% of the company’s revenue comes from Europe, 26.8% from India, 16.9% from the Americas, and the rest from other regions. On the global front, the company has a market share of 5-6%. Balkrishna aims to increase it to around 10% in the next five years through diversification and better penetration in the OEM segment, particularly in the non-farm tyre category. Currently, sales from replacements account for 71.1% of revenue, while OEMs contribute 27%.
Joint Managing Director Rajiv Poddar said, “The company is considering price hikes in the coming quarter to counter rising raw material prices, especially in natural rubber, and freight costs.” He also emphasized that India will be a focus market for the firm due to significant growth in the replacement market.
Sharekhan upgrades Balkrishna Industries to ‘Buy’ with a target price of Rs 3,195. Analysts are upbeat as the management is looking for volume growth in FY25 with margins stable at current levels. They also expect a revival in demand and are positive about the company’s market share strategies.
3. HG Infra Engineering:
This construction & engineering stock has risen by 46.5% over the last month due to its strong Q4FY24 results on May 8 and two order wins on Wednesday. Its Q4FY24 net profit grew by 11.2% YoY to Rs 190 crore, while revenue increased by 11.1% YoY to Rs 1,713.9 crore. Its net profit missed Trendlyne’s Forecaster estimates by 10.3%, but revenue beats estimates by 12.4%. The company appears in a screener of stocks outperforming their industries in terms of price change over the past month.
HG Infra’s revenue increased on the back of its order book increasingly diversifying with the addition of solar projects to its existing portfolio of road engineering, procurement and construction (EPC), railways and water projects. Despite a rise in revenue, its order inflow for FY24 stood at Rs 4,350 crore, 45.6% lower than the management’s estimate of Rs 8,000 crore on account of a reduction in orders from the National Highways Authority of India (NHAI) due to elections.
However, the election effect is waning, as the company bagged two orders worth Rs 4,142.2 crore from Maharashtra State Road Development Corp (MSRDC) from the Maharashtra government on Tuesday. Road EPC projects accounted for 38% of the total order book of Rs 12,434 crore in FY24, while 40% originated from hybrid annuity model (HAM) road projects, 22% from railway projects, and the rest from other projects.
Post results, the company’s Chairman and Managing Director, Harendra Singh, said, “We have five solar projects which are expected to be completed by H1FY25. We expect to add new projects worth Rs 11,000-12,000 crores in road, railway, solar and water segments to sustain and scale our business. We believe that we will achieve 15-20% growth in the top line in the coming years and maintain a steady margin in the range of 15-16%.”
Post results, Axis Direct maintains its ‘Buy’ call on the stock with a target price of Rs 1,320 per share. Since the release of the analyst call on May 13, the stock has risen by 28.5%, achieving the target price. The brokerage believes that the company’s revenue will grow on the bank of a strong order book position, better order intake, diversification into related sectors as well as the government’s infrastructure focus. It expects the company’s revenue to grow at a CAGR of 15% over FY25-26.
4. Cipla:
This pharma company rose by 10.4% in the past month following multiple announcements. In the past week. The firm received final approval from the US FDA for its Lanreotide injection product, used in tumor treatment. The Lanreotide injection is a generic version of the Somatuline Depot injection. According to IQVIA, Somatuline Depot has annual sales of approximately $898 million.
Cipla also announced its Q4FY24 results this month. Its net profit improved by 80.1% YoY to Rs 939 crore, while revenue increased by 9.2% YoY. It beat Trendlyne Forecaster’s net profit estimates by 10%. The company’s EBITDA grew by 12.1% YoY. The profit growth was due to higher non-operating income as the firm received a Rs 309.7 crore dividend from one of its subsidiaries. The company also appears in a screener for stocks with annual profit growth higher than sector profit growth.
The company plans to incur Rs 1500 crore in capex in FY25. Ashish Adukia, Chief Financial Officer, said, “We expect the EBITDA margin for FY25 to increase by 200 basis points to about 24.5-25.5% compared to FY24.” The management expects to spend 6-7% of revenue in FY25 on research and development.
Meanwhile, four promoters of Cipla sold a total of 2.5% stake (aggregating to 2.1 lakh shares) in the company through open markets. Buyers include global and domestic funds such as ICICI Prudential Mutual Fund, Aditya Birla Mutual Fund, Axis Mutual Fund, Societe Generale, and Morgan Stanley Asia.
Axis Direct maintains a ‘Buy’ call on Cipla due to its better-than-expected results from business in the US. The brokerage believes results were driven by more US distributors buying manufactured drugs from India, a shortage of drugs in a few segments and the launch of products like gSynbicort and Peptide with a market size of $300-400 million.
5. PVR INOX:
This movies & entertainment company declined by 1.4% after it announced its results on May 14. The firm missed Trendlyne Forecaster revenue estimates for Q4FY24 by 29.1% and the net profit estimate by 68.3%. The company’s net loss reduced by 61.2% YoY to Rs 219.8 crore on the back of a 4.9% decline in movie exhibition costs. The stock shows up in a screener for stocks with low PE.
The company’s customer footfall declined by 10.7% QoQ to 32.6 million in Q4FY24 on the back of fewer movie releases and promotional offers. Analysts suggest that the upcoming 2024 general elections and T20 Cricket World Cup may exert pressure on the movie pipeline for Q1FY25, potentially resulting in decreased occupancy levels.
The company’s management anticipates improvements in revenues and costs in FY25. But the effect of streaming platforms on theatre footfalls is a factor that the management does not have a clear answer for. The company plans to reduce losses by cutting annual capital spending, and is exploring options like franchising for its outlets..
The company’s management anticipates a reduction of approximately 25% in total capital expenditure for FY25 compared to the previous year, as it rolls out a new screen portfolio, where its landlord partners will co-invest for most of the screen growth.
Sanjeev Kumar Bijli, Executive Director of the company, said that in FY24 PVR Inox exited 85 underperforming screens and are going to shut down about 70 underperforming screens in FY25. He adds “We will be very selective in adding new cinemas and plan to open about 120 new streams in FY 25, prioritizing expansion efforts in South India.”
The company is prioritizing the southern region due to the considerable success of its new program "PVR passport," which offers customers the opportunity to watch four movies per month at PVR INOX theaters for just Rs 87 per ticket. Southern enrollments in PVR passport lead at 35%, followed closely by the North and West regions at approximately 33% each.
Motilal Oswal has retained its "Neutral" rating on PVR INOX with a price target of Rs 1,400. The brokerage says that maintaining occupancy and traction in ad revenues amid an increasing threat from deep-pocketed OTT players is key. The brokerage values PVR INOX at 13x FY26E EV/EBITDA to arrive at a TP of Rs 1,400.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
