1. Avenue Supermarts (DMart):
This department store company has been rising in the past week after its quarterly results for Q1FY25. The company saw revenue growth of 19% YoY to Rs 14,111 crore, surpassing Trendlyne’s Forecaster estimates by 1.5%. However, its net profit fell short of estimates by 3.8%, despite increasing by 17.5% YoY to Rs 773.8 crore.
The net profit jump was driven by higher revenue from the discretionary segment. DMart’s general merchandise and apparel segment saw an uptick, driven by a growing number of DMart Ready outlets. But high EBITDA margins were offset by higher operating costs, due to investments in service sales and future capacity building. DMart added six new stores in Q1, bringing its total to 371.
The company, like many others, has been facing heat from quick commerce players like Zepto and Blinkit. Trent’s Zudio has also emerged as a competitor in the value apparel segment. Neville Noronha, CEO of Avenue Supermarts, said, “We aim to open new stores as quickly as possible, but our main focus remains on how well the newly opened stores are being managed.”
The company currently trades in the PE Neutral Zone. However, even at this neutral level, its PE stands at 123, which is higher than the industry average. The company appears in a screener of stocks with annual profit growth higher than sector growth.
Prabhudas Lilladher downgraded DMart’s rating to ‘Accumulate’ as the company missed net profit and margin estimates. However, the brokerage is upbeat about the company’s sustained focus on tier-2 and tier-3 cities, and further acceleration in store openings in the coming years. They expect addition of 45-50 stores in FY25 to drive a 21% sales growth and anticipate a net profit CAGR of 25% over FY25-26.
2. Asian Paints:
This paint maker fell 1.4% on Thursday after announcing Q1 results. Asian Paints’ net profit surprised investors by declining sharply, down 24.5% YoY to Rs 1,170 crore, and missing Forecaster estimates by 15.6%. Revenue was down 2.3% YoY during the quarter. The weak profit performance was due to previously taken price cuts, higher raw material prices and employee benefit expenses, as well as restricted supply chains due to heatwaves.
During the quarter, domestic business, contributing around 97% to the revenue, grew by 5.9% YoY. Domestic business includes decorative and industrial segments. The decorative segment was impacted due to raw material price inflation and supply chain challenges.
Raw material prices were up 1.8% YoY in Q1FY25 and are expected to rise further, around 1.5% in Q2. Asian Paints announced a 0.7-1% price hike on July 10 to offset these costs, and more hikes are likely in the upcoming quarter. The industrial segment, however, outpaced decoratives, led by growth in auto OEM and powder coatings. Meanwhile, international business (constituting over 3% of the revenue) fell by 3.6% YoY due to underperformance in key markets including Nepal, Bangladesh, and Egypt.
The paint industry faces both cost and competitive pressures and potential market share shifts, especially with the entry of Aditya Birla Group’s Birla Opus. The next few quarters are crucial to assess the impact of Birla Opus on the industry as a whole, and on Asian Paints.
The management highlighted that April and May were challenging months, while June saw some demand recovery, particularly in rural areas. Speaking on the outlook, Amit Syngle, the MD and CEO, said “We are seeing some green shoots in rural areas, and the progression of the monsoon is expected to support this uptick”. He adds that growth in T3 and T4 cities outpaced T1 and T2 cities. Syngle also highlights that the upcoming festive season will drive growth for the company.
Motilal Oswal has a ‘Neutral’ rating with a target price of Rs 3,150. The brokerage expects muted revenue growth due to price cuts and competitive pressure, despite initiatives to improve volumes. The company is in the PE Buy Zone, indicating it is currently trading below its historical PE.
3. Jubilant Ingrevia
This specialty chemicals company fell by 6.6% over the past week and announced its results on Tuesday. For Q1FY25, the company’s net profit declined by double digits, down 15.4% YoY to Rs 48.7 crore, while its revenue fell by 4.6% YoY due to a decline in its chemical intermediaries segment revenue. The firm missed Trendlyne’s forecaster estimates for revenue by 2.2% and for net profit by 0.7%.
FY24 was a difficult year for the company as well. The firm saw a fall in net profit of 40.5% YoY to Rs 182.9 crore, while the revenue declined by 13.2% YoY due to weaker speciality chemicals and chemical intermediaries segment revenue. While the firm beat the forecaster estimate for revenue in FY24 by 0.9%, hit missed the net profit estimate by 4.4%. The stock shows up in a screener for stocks sold by superstar investors.
Among the better performers this quarter was the company’s specialty chemicals segment, which constitutes 42% in the revenue mix and grew by 8.3% YoY. EBIT margin improved to 14.5% from 9.5% in Q4FY24 for this segment. However the chemical intermediaries (acetyl) segment which constitutes 40% of the revenue mix struggled, due to lower demand coming from the paracetamol end-use segment and lower acetic acid prices.
Deepak Jain, CEO and Managing Director of the firm highlighted that in the CDMO (contract development and manufacturing organizations) space, the company is in “advanced stage discussions” for multiple projects in pharma, agro and semiconductor end-use. He expects CDMO to grow at 25-30% in FY25. He adds that the specialty segment is expected to have an EBITDA of 20%+ in steady state, and with new launches going forward, EBITDA may reach 23-25% in the next 2-3 years.
Prabhudas Lilladher has maintained its “Hold” rating on Jubilant Ingrevia, with a target price of Rs 592. The brokerage notes that the company has been adding capacities across segments, but challenges are expected to persist due to international pricing pressures and agrochem weakness, which the brokerage expects will only resolve in the later stages of H2FY25.
4. Just Dial:
This internet software company hit a new 52-week high of Rs 1,304 on Friday after surging 26.5% in the past week, following the release of its Q1FY25 results. The company’s net profit grew 69.3% YoY to Rs 141.2 crore, surpassing Trendlyne’s Forecaster estimates by 16.5%.This was helped by lower employee benefit expenses and finance costs, and a deferred tax credit of Rs 3.9 crore. EBITDA margins were up by 13.8 percentage points YoY to 28.7%.
The company has outperformed the internet software industry by 4% over the previous quarter. Just Dial expanded its active business network to 4.5 crore firms during the quarter, and attracted 18.1 crore unique quarterly visitors, with 85.2% accessing the platform via mobile sites and apps.
Commenting on the company’s target, MD & CEO VSS Mani said, “We are targeting 15-17% revenue growth for FY25 and an EBITDA margin over 25%". He also highlighted the firm’s plans to launch its B2B offerings via the JD Mart app and expand its presence in Tier 2 and Tier 3 cities.
ICICI Direct maintains a "Buy" rating on the stock with a target price of Rs 1,210. The brokerage believes that the company’s focus on Tier 2/3 cities, coupled with price hikes and other initiatives, will drive future growth. It expects revenue and PAT to grow at 15% and 18.9% CAGR respectively over FY25-26.
5. Glenmark Pharmaceuticals:
This pharma company has risen by 13.7% in the past month and hit its all-time high of Rs 1,427 on Tuesday. In the past week, the company announced its exit from its arm Glenmark Life Sciences through an offer for sale. Glenmark Pharmaceuticals and Managing Director Glenn Mario Saldanha will divest their 7.9% stake (approx 96.1 lakh shares) for Rs 779 crore. In March, the firm also sold a 75% stake in Glenmark Life Sciences to Nirma for Rs 5,651 crore. This step was taken to improve its weak balance sheet and high debt position. After the divestment, the company has turned net cash positive.
In the past week, the company also received US FDA approval for topiramate capsules, a bioequivalent to Topamax, used in people with epilepsy to treat and prevent seizures. It has annual sales of $21.9 million.
Trendlyne Forecaster estimates the company’s net profit to grow approx 12X in the upcoming Q1FY25 results. In FY24, the company reported a loss of Rs 1,501.7 crore compared to a profit of Rs 297.2 crore in FY23.
Going forward, the management expects its global brands like Ryaltris and Salmex to drive growth and become worth $300-400 million over the next five years. It expects Ryaltris’ annual sales to double by FY25 from $40 million currently. Speaking about targets, the management stated, “For FY25, our revenue target is Rs 13,500-14,000 crore (up from Rs 12,653.1 crore in FY24) and EBITDA margin target is close to 19%.” The company plans to spend Rs 700 crore in capex, and around 7% of revenue on R&D.
KRChoksey maintains a ‘Buy’ call on the stock and expects revenue to grow at a CAGR of 10% and profit at a CAGR of 41.4% over FY25-26. It believes that the company’s domestic segment has a strong growth trajectory, as it has been able to outperform in key therapy areas such as respiratory, derma and cardiac, and it expects its market share to increase. The company appears in a screener for stocks with increasing shareholding by foreign investors and/or institutions.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
