1. Rail Vikas Nigam (RVNL):
This railway construction firm surged to a new 52-week high of Rs 645 on Friday after rising 49.7% in the past week. RVNL is engaged in the complete life cycle of projects in railway track construction, railway electrification, and signalling solutions. The surge followed the company's receipt of a LoA from Maharashtra Metro Rail Corp. for the construction of six new elevated metro stations in Nagpur, worth Rs 187.3 crore. The company also emerged as the lowest bidder for a South Eastern Railway contract worth Rs 202.9 crore.
All major railway stocks, IRFC, RVNL, and IRCON International, have risen sharply in the past week after Railway Minister Ashwini Vaishnaw announced plans to introduce 2,500 new general passenger coaches and 10,000 non-AC coaches. He also announced the production of fifty new Amrit Bharat trains, known for their high-speed and luxury services. RVNL stands to benefit from these plans as it is involved in the construction and maintenance of coach manufacturing factories.
RVNL reported an 8.4% YoY revenue growth to Rs 23,075 crore in FY24, with net profit increasing by 10.8% YoY to Rs 1,574 crore. The company’s order book at the end of FY24 stood at Rs 85,000 crore, with around 40-45% coming from bidding orders, which have margins higher than 10%, while the rest is from nomination projects.
Director of Operations, Rajesh Prasad, said, “The India-Middle East-Europe Economic Corridor announced in the G20 summit has got big opportunities for RVNL basically in the railway segment.” He highlights that the project is still in the concept stage and RVNL is certainly going to benefit when execution starts.
IDBI Capital maintains a ‘Hold’ rating on RVNL as the company plans bids for high-speed rail projects under the Viksit Bharat 2047 scheme (currently, they have no exposure to this segment). The brokerage is optimistic given the company’s guidance for net profit growth of 10-15% in FY25, and its focus on improving EBITDA margins by targeting bidding projects.
2. NBCC (India):
This construction and engineering company has risen 20.9% in the past month and hit its all-time high of Rs 198.3 on Tuesday. The surge came after the company secured multiple orders worth Rs 1,120.3 crore, including major projects in urban development, educational institutions, and infrastructure.
NBCC witnessed strong growth in FY24, with a 50.6% YoY increase in net profit to Rs 401.6 crore and a 19% rise in revenue to Rs 10,666.7 crore. This was driven by growth in its project management consultancy (PMC) and engineering, procurement & construction (EPC) segments. The company has underperformed the booming construction industry by 321.8% over the past five years, despite rising by 246%. NBCC aims to overcome this by focusing on redevelopment and real estate sectors.
The company plans to sustain growth momentum by focusing on its order book, and expects to secure Rs 25,000 crore in new orders in FY25 across housing, railway, metro, and renewable energy sectors. The company holds a current under-execution order book of Rs 20,000 crore and intends to tender projects worth Rs 15,000 crore, aiming to achieve Rs 13,000 crore in revenue for FY25.
Commenting on the new orders, Chairman and MD, K. P. Mahadeva Swamy said, "We have won a record new business worth Rs 23,500 crore, which is more than 250% of the previous year. Our order book stands at Rs 64,900 crore, and we expect to achieve a top line of Rs 12,350 - 13,000 crore in FY25, driven by our focus on real estate and infrastructure projects."
Geojit BNP Paribas has upgraded the stock to a ‘Hold’ rating from ‘Sell’, with a target price of Rs 176. The brokerage expects FY25 and FY26 EPS to rise by 10% and 6%, respectively, driven by robust tendering and execution. However, the firm is in the PE Sell Zone, currently trading above its historical PE.
3. Tata Elxsi:
This IT software & services company fell over 2.2% on Thursday as its net profit declined by 6.5% QoQ (-2.5% YoY) to Rs 184.1 crore in Q1FY25, missing Forecaster estimates by 6.3%. The fall was due to higher employee benefits expenses and raw material costs. In addition, EBITDA margins contracted 160 bps QoQ to 27.2% during the quarter. However, on Friday, the stock recovered its previous day’s losses and was up 1.6%, with the broader IT industry rising 4.9% on the back of positive results by heavyweight TCS.
Tata Elxsi’s revenue grew by 2.3% QoQ (9% YoY) to Rs 926.5 crore, due to growth in the software development & services or SDS segment, which contributes 97% of the total revenue. The SDS segment consists of transportation, media & communication, and healthcare verticals.
During the quarter, the transportation vertical’s revenue grew 5.3% QoQ driven by deal wins, while that of the media vertical rose marginally by 0.5% QoQ. Meanwhile, the healthcare vertical remained muted, as its revenue fell by 4.3% QoQ. This was due to delayed renewals of some projects by a large US client.
Commenting on the outlook, CEO & MD Manoj Raghavan said, “We expect continued growth in the transportation segment, led by a strong deal pipeline, particularly in the OEM space”. He sees green shots in the media & communication vertical and highlights the company’s M&A plans going ahead. For FY25, Raghavan projects EBITDA margins in the range of 28-29%.
JPMorgan retains its ‘Underweight’ call on Tata Elxsi, with a price target of Rs 5,800. It believes the positive surprise in the transport vertical will be offset by headwinds persisting in the healthcare business. The brokerage cuts its earnings estimate by 2-4% over FY25-27 due to higher tax rates. The company is in the PE Sell Zone, indicating it is currently trading above its historical PE.
4. Indigo Paints:
This paints company rose by 10.2% over the past week as major industry players, Asian Paints and Berger Paints are expected to hike prices by 0.7-1%. Nuvama stated that the price increase is a proactive measure to compete against Birla Opus, a newcomer, and maintain healthy profit margins. For FY24, the company’s net profit increased by 11.7% YoY to Rs 147.3 crore, while its revenue rose by 21.7% YoY. The stock shows up in a screener for stocks with strong momentum.
In the past five years, the company’s revenue grew by 20% CAGR, the highest among its peers. It currently ranks as the fifth-largest producer of decorative paints in the country. Recently, it acquired a 51% stake in Apple Chemie India (ACIL) to enter the Waterproofing and Construction Chemicals (WPCC) segment whose FY24 market size was expected to be Rs 20,105.6 crore with a CAGR growth of 13.9% over 2025-33.
The company also launched a new water-based paint facility in Tamil Nadu and is expanding its capacities for both solvent-based and water-based paints in Rajasthan. The company currently operates five manufacturing units and its production volumes have risen in key segments like cement paints and putty.
Analysts expect the Indian paint industry to grow at a CAGR of ~12.7% from FY25 to FY27, reaching a market size of ~Rs 1 lakh crore. They highlight that the frequency of home repainting has improved, from every 7-8 years in FY13 to 4-5 years in FY23, indicating a growing paint consumption trend in India. Additionally, the Indian government has raised its infrastructure budget by 11% for FY25. These factors are expected to be key growth catalysts for the company.
Keynote Capital has given Indigo Paints a “Buy” rating, with a target price of Rs 1,594. The brokerage notes that the company has consistently achieved growth rates of 2-2.5X compared to its peers. We expect IPL to grow its revenue by 18% in FY25 and, due to operating leverage, expect margin to improve further.
5. Zydus Lifesciences:
This pharma company rose by 3.4% in the past week and hit an all-time high of Rs 1,203 on Thursday. The company also appears in a screener for stocks outperforming their respective industry over the last quarter.
The price rise followed multiple approvals by the US FDA. The firm won approval for Sacubitril and Valsartan, used to treat chronic heart failure. These tablets have annual sales of $5.5 billion. In the past week, it also received US FDA approval to market diroximel fumarate delayed-release capsules, a treatment for multiple sclerosis, which has annual sales of $847.4 million.
Zydus Lifesciences has been busy over the past month – it received approval for azilsartan, indicated for the treatment of hypertension to lower blood pressure. Azilsartan has annual sales of $89 million. Zydus and Dr. Reddy's Laboratories also announced a licensing agreement for the co-marketing of a pertuzumab biosimilar, a critical treatment for breast cancer patients in India.
Trendlyne Forecaster estimates Zydus Lifesciences’ net profit to rise 5.5% YoY in Q1FY25. In FY24, the company’s profit grew by 102.3% YoY to Rs 3,972.8 crore, while its revenue improved by 13.8% YoY. It also beat Trendlyne Forecaster’s net profit estimate by 7.8%. Speaking about the growth outlook, Managing Director Sharvil Patel says, “We expect all our businesses to register high-teen growth. We also expect to comfortably maintain FY24 margins of 27.5% in the coming year, and we will do our best to improve those margins.”
Geojit BNP Paribas is positive about Zydus Lifesciences due to new drug launches and its existing portfolio. However, the brokerage states that the company’s valuations are looking expensive. The firm is trading in the PE Sell Zone.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
