1. Titan Company:
This jewellery company jumped 6.5% on Budget day, following Finance Minister Nirmala Sitharaman's proposal to lower customs duty on precious metals like gold, silver, and platinum. She proposed cutting the customs duty on gold and silver to 6% from 15%, and reducing the customs duty on platinum to 6.4% from 15.4%.
Analysts expect the recent drop in gold prices to spark demand for gold jewellery in the coming quarter, boosted by the upcoming wedding season. Jewellers have reported a rise in daily demand, with some experiencing a surge of up to 20% since the duty reduction. Titan’s jewellery segment has already seen double-digit growth in the number of buyers in FY24. On a consolidated basis, the company reported revenue growth of 26.3% YoY to Rs 51,617 crore in FY24, with net profit of Rs 3,496 crore, up 7.6% YoY.
In the Q1FY25 business update, the company said that standalone sales grew 9% on a YoY basis. Its jewellery segment, which contributes over 85% to the total revenue, added 34 stores during the quarter, taking the total count to 699. The watches and wearables segment outperformed other segments in terms of sales growth, with a 15% rise on a YoY basis.
Ajoy Chawla, CEO of the jewellery division at Titan, said, “Q1 is likely to be a little bit more stressed because of the absence of wedding dates and the elections, and the elevated gold prices during April to June period”. However, he expects the second half of the year to be much better compared to the first half.
Motilal Oswal maintains a ‘Buy’ rating on Titan given its growth outlook driven by new store additions, attractive designs, and market share gains. With a target price of Rs 4,100, Titan has a potential upside of 17.3%.
2. United Spirits:
This breweries & distilleries company has risen 8.9% in the past week, reaching an all-time high of Rs 1,450 on Thursday. The surge came after the Andhra Pradesh government announced it would resume buying liquor from top brands, boosting shares of major alcohol companies.
In Q1FY25, United Spirits' profit rose 1.7% YoY to Rs 485 crore, while its revenue increased by 7.6% YoY to Rs 6,273 crore, driven by strong performance in the beverage alcohol segment. EBITDA margin grew by 174 bps YoY to 19.5%. The company appears in a screener of stocks outperforming their respective industry over the past year.
During the quarter, the company saw strong consumer demand for its premium offerings, including the successful launch of McDowell's X-series, which are new beverages targeted at mid-to-upper consumer segments. The firm also acquired stakes in specialty beverage firms like V9 Beverages and Indie Brews, expanding into zero alcohol and premium craft segments.
United Spirits projects a volume growth of 4-5% and aims for a price mix improvement in the premium and above segments. The company’s CFO and Executive Director, Pradeep Jain said, “We project volume growth in the range of 4-5% and a price mix improvement of 6-8% on a full-year basis.” He also highlighted that the company aims to maintain its 'Prestige and Above’ (P&A) segment revenue growth rate in double digits.
Post Q1FY25 results, Edelweiss has upgraded the stock to ‘Buy’, with a higher target price of Rs 1,630. The brokerage remains positive on the company's expansion into new premium categories like tequila and craft spirits. However, the firm is in the PE Sell Zone, currently trading above its historical PE.
3. Newgen Software Technologies:
This IT consulting & software company fell 2.2% on July 18 as its net profit plunged 54.8% QoQ to Rs 47.6 crore in Q1FY25 due to higher employee benefits and other expenses. Revenue declined by 16.1% QoQ to Rs 314.7 crore, caused by weakness in key geographies. The company’s revenue missed Trendlyne’s Forecaster estimates by 1.3%. EBITDA margins contracted 17.6 percentage points to 15.1% in the same period.
During the quarter, the company’s India and e EMEA (Europe, Middle East and Africa) markets, both of which separately contribute around one-third of the revenue pie saw revenues fall by 23% and 32% QoQ respectively. In contrast, the APAC (Asia Pacific excluding India) and USA markets grew by 23.5% QoQ and 10.5% QoQ, respectively.
Q1 is typically a weak quarter for IT companies. But this year the bigwigs in the industry reported a decent first quarter, and highlighted green shoots in the banking, financial services, and insurance (BFSI) space. However, for Newgen, the banking segment saw a decline of 17.3% QoQ. The products and platforms business also declined 41.3% QoQ, resulting in weak quarterly performance.
Meanwhile, Newgen continued to seetraction from its existing and new clients in Q1 and added 13 new clients during the quarter. It secured significant orders from banks in Indonesia, Malaysia, and Qatar. In Q1, Newgen also launched a new product, Newgen LumYn, a Gen AI-powered platform designed for the banking sector.
During FY24, revenue was up 27.7% YoY to Rs 1,243.8 crore, while net profit grew by 42.7% YoY. Speaking on the outlook, Virender Jeet, the CEO said, “We would like to keep the historical momentum of over 25% annual topline growth going forward, led by deal wins. We expect around 20% PAT growth and 23-24% EBITDA margins in FY25.”
Over the past week, Newgen Software rose by 5%, outperforming its industry by 3%. However, it has surged by 158.6% in the past year. The company is in the PE Strong Sell Zone, and is currently trading above its historical PE.
Post Newgen’s results, ICICI Securities maintains its ‘Hold’ rating with a target price of Rs 1,010. The brokerage notes the strong traction in lending, trade finance, and supply chain financing solutions. It believes 25% plus growth could sustain in the near term.
4. Gravita India:
This lead & aluminium metals company rose by 21.7% over the past week and announced its results on Monday. For Q1FY25, the company’s net profit increased by 29.3% YoY to Rs 67.3 crore, while its revenue rose by 25.9% YoY due to a rise of 42.6% YoY in lead segment revenue. The firm beat Trendlyne’s Forecaster estimates for revenue by 7.5% and for net profit by 11.3%. The stock shows up in a screener for stocks with strong momentum.
The company’s lead and plastics segment were the revenue drivers in Q1FY25. Lead volumes rose by 43% YoY to 41.9kt, while plastics volumes rose by 18% YoY to 3.2kt. EBITDA per tonne for lead stood at Rs 19,321 and for aluminum it stood at Rs 19,414. The management has upped its lead EBITDA/kg guidance, from Rs 17-18/kg to Rs 18-19/kg for FY25.
Yogesh Malhotra, CEO of the firm, said that the company is expecting the launch of the aluminum alloy commodity derivative on MCX shortly. He notes that this development would play a crucial role in managing price volatility risks. He added, “We are setting up a pilot project for lithium-ion recycling and our first Indian tire recycling plant at Mundra, both of which are expected to be operational in H1FY26. The paper recycling plant and steel recycling plants are anticipated to be operational by FY27.” On MCX, aluminum prices are seeing a decline amid concerns over China’s lack of new stimulus. Lead prices have also remained flat. However, analysts predict that global lead production is expected to grow by 4.3% to more than 4.7 million tonnes in 2024. The increase will mainly be fuelled by rising output from key producers such as Australia, the US, and Russia.
The company under its “Vision 2028” has placed targets of revenue CAGR of >25% and PAT CAGR of >35%, and aims to increase the proportion of value added products (VAP) to 50% by entering new verticals. Gravita expects earnings to reach Rs 750-800 crore by 2028.
According to a report by Avendus Capital, the domestic battery recycling market is expected to grow to Rs 8,371.8 crore by FY30. The company has plans to invest Rs 70-100 crore in the Li-ion vertical, over the next 3 years to grab the opportunity.
Emkay has given a “Buy” rating on Gravita India, with a target price of Rs 1,650. The brokerage has raised its target multiple to 25x, from 23x earlier, thanks to implementation of regulatory norms and a strong outlook from diversification into new verticals.
5. Indian Hotels Company:
This hotels company rose by 11.1% in the past week after announcing positive Q1FY25 results on Friday. The company reported net profit growth of 11.7% YoY to Rs 248.4 crore, while its revenue improved by 5.3% YoY to Rs 1,596.3 crore. However, it missed Trendlyne Forecaster’s net profit estimate by 4.4%. The company also appears in the screener for stocks outperforming their respective industry over the past quarter.
Revenue growth was slower compared to growth in Q4FY24 (18% YoY) as extreme heat waves and elections impacted occupancy. However, its EBITDA margin expanded by 103 bps YoY to 29% due to better operating efficiencies. The firm’s revenue per available room for Q1FY25 stood at Rs 6,900, outperforming its industry and competition with a premium of 60%.
Indian Hotels has opened six hotels in Q1FY25 and one new hotel in July 2024, and it has guided to open 25 new hotels in FY25. At present, the company's portfolio of hotels stands at 224 operational hotels with 102 new hotels in the pipeline. Speaking about growth, Managing Director Puneet Chhatwal said, “We expect a 20% plus revenue growth with sustained margins in FY25. We remain confident that we will deliver on our guidance, backed by diversified revenue growth and tailwinds for the industry.” The management expects the new businesses (Ginger, Qmin, amã Stays & Trails) to accelerate growth to 30%, and a focus on asset management should drive profitability.
Axis Securities maintains a ‘Buy’ call on Indian Hotels Company as it expects the hospitality industry upcycle to be long and sustained. Additionally, it believes upcoming events such as the Women's World Cup hockey and kabaddi championships could improve occupancies.
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