1. Zen Technologies:
This defense company has jumped 11.2% since the declaration of its Q1FY25 results on July 28 and has risen 32.5% over the last month. In Q1FY25, the company’s net profit grew 68.8% YoY to Rs 79.5 crore, and its operating revenue increased 92.2% YoY to Rs 254.6 crore during the quarter. However, its EBITDA margin decreased by 10%. On 26 July, Zen Technologies hit a 5% upper circuit as it launched four AI-powered robots for the global defense market. The IP-owned robot products are Hawkeye, Barbarik-URCWS (Ultralight Remote Control Weapon Station), Prahasta, and Sthir Stab 640.
Ashok Atluri, Chairman and Managing Director of the firm said, “Training and simulation, including virtual simulators and live ranges, are our cornerstone. Recently, the armed forces have recognized the need for tactical training, preparing soldiers for combat. This shift is expected to drive significant growth for our company and we are confident about meeting our guidance of Rs 900 crores of turnover in the current financial year.“ The company has an outstanding order book valued at Rs 1,158.5 crore as of June 30, a 113% YoY growth. This includes orders worth Rs 647.9 crore for training simulators and Rs 510.9 crore for anti-drone systems. Typically, the company receives a higher number of new orders in Q2 and Q3.
Motilal Oswal has given a ‘Buy’ rating on Zen Technologies with a target price of Rs 1,820. The brokerage states that the current valuation of ZEN is still cheaper than that of other comparable companies in the private defense sector and expects a CAGR of 63% in revenue, 57% in EBITDA, and 57% in PAT during FY 25-27.
2. Navin Fluorine International:
This commodity chemicals company fell by over 4.4% after it announced its results on Tuesday. The company’s net profit fell by 16.8% YoY to Rs 51.2 crore in Q1FY25, while its revenue rose by 6.9% YoY. The firm missed Trendlyne’s forecaster estimates for revenue by 9.2% and for net profit by 17.1%. The stock shows up in a screener for stocks with PE higher than the industry PE.
A big driver of the profit decline was the company’s specialty chemical segment revenue falling by 30% YoY. It was affected by poor demand and inventory optimization efforts by global clients. By H1FY24, chemical companies lowered their expectations due to weak global demand from a European recession, U.S. inflation, and a slow recovery in China.
High inventory levels from over-ordering in previous years has resulted in less than 1% YoY growth in chemical output. In response, companies are focusing on cost reduction and improving efficiencies to counter falling production. It was the less profitable High-Performance Product (HPP) segment that was the primary revenue driver for Navin Fluorine, with a 66% YoY growth attributed to stable operations at the Dahej plant and increased utilization and sales of new R32 gas for compressors and refrigerators.
Anish P Ganatra, CFO of the firm, said: “To strengthen the product pipeline in the specialty chemicals vertical we have established an R&D center in Surat and have introduced a new agro molecule in this center for a global major, with an annual peak revenue potential of Rs 40-50 crore over the next three years.” Ganatra also highlighted the signing of a supply agreement for a patented agrochemical product catering to the Japanese market, with an incremental annual revenue potential of Rs 20-30 crore in CY25. The firm’s priority for the coming quarter is to commission the Agro Specialty project, with a capex of Rs 540 crore.
Axis Direct has given a “Sell” rating on Navin Fluorine International, with a target price of Rs 3,135. The brokerage has revised estimates downward due to the slower-than-expected recovery in the Specialty Chemicals. The brokerage believes that long term growth prospects remain strong and the growth is likely to pick up towards the end of FY25 – but this is subject to project stabilization and optimal capacity utilization. It values the stock at 27x FY26E, which implies a downside of 17% from the CMP.
3. Dixon Technologies:
This smartphone manufacturer rose 6.8% in the past week as its Q1 results beat estimates on all fronts. The company reported a revenue growth of 101.2% YoY to Rs 6,588 crore, beating Trendlyne’s Forecaster estimate by 13%. Net profit rose 94.2% YoY to Rs 133.7 crore, beating forecasts by 20.6%.
Dixon’s rise in sales was driven by their mobile and electronic manufacturing services (EMS) division. This division saw revenue growth of 189% YoY to Rs 5,192 crore and contributed 79% to the total revenue in Q1FY25, compared to 55% during the same period last year. The company currently manufactures smartphones and feature phones for brands such as Xiaomi, Motorola, and Samsung. Notable growth was seen in volumes of Motorola smartphones during Q1, driven by rising export orders. In the past four fiscal years, Dixon’s smartphone production capacity has increased at a CAGR of around 100%, thanks to their aim to add capacity of 15 million units on an annual basis.
Dixon’s shares took a hit on Budget day after the Finance Minister proposed to cut import duty on mobile phones and chargers from 20% to 15%. However, Dixon Tech MD, Atul Lall says that the mobile manufacturing ecosystem has matured in India and expects the ‘Made In India’ trend to continue. He also said that India should make all the components going into the smartphones domestically, and expects a package for the component sector soon.
During the earnings call for Q1, Lall said, “We are looking to capture 55-60% of the smartphone market after the Ismartu acquisition, which will add 10-12 million to the current production capacity of 45 million.” He also highlighted that the company plans to deepen its manufacturing capabilities by partnering with HTC for display module technology, with production anticipated to begin in FY26.
BOB Capital Markets maintains a ‘Buy’ rating on Dixon Technologies. The brokerage is upbeat on the company’s outlook because of the strong performance in the mobile & EMS segment. They raised their EPS estimates for FY25/26 by 7% due to the company’s leading position in the electronics manufacturing sector. With a target price of Rs 13,800, the stock has a potential upside of 18.4%.
4. Colgate-Palmolive (India):
This FMCG company has risen by 6.8% over the past week after announcing positive Q1FY25 results on Monday. The company reported net profit growth of 33% YoY to Rs 364 crore, helped by inventory destocking and lower finance costs. Revenue rose 13% YoY to Rs 1,496.7.1 crore, driven by improvements in the toothpaste, toothbrush, and personal care segments. Net profit beat Trendlyne’s Forecaster estimates by 9.6%, while revenue surpassed estimates by 4.5%. EBITDA margins also expanded 238 bps YoY to 34% during the quarter.
During the quarter, the company reported double-digit sales growth in the toothpaste segment, led by a 7-9% volume growth. The personal care brand Palmolive, which consists of body wash and hand wash, continued to experience strong growth but currently lacks a significant presence in rural areas. The company aims to expand its personal care footprint in India, focusing on the high-growth body wash segment.
Over the past month, Colgate-Palmolive has risen by 17.6%, outperforming its sector’s by 11.5%. The company witnessed a pick-up in domestic demand in Q1. According to Prabha Narasimhan, the Managing Director & CEO, “We have seen continued demand pickup in rural markets outpacing growth in urban markets for the second quarter in a row”. The re-launch of the Colgate Strong Teeth toothpaste brand helped drive rural growth. Colgate has continued to add new products, increase investments in advertising, and expand its distribution network. During the quarter, ad spends rose 10% YoY.
The company’s peers like Hindustan Unilever, Dabur, and Emami reported a good first quarter and also highlighted signs of rural recovery. Dabur’s CEO said, “The timely arrival of monsoon coupled with a rural-centric Budget with a focus on rural infrastructure, agriculture, and employment is a key positive for the overall sector”.
Post Colgate’s earnings announcement, Axis Securities has a ‘Hold’ rating with a target price of Rs 3,050. But the brokerage believes the recent sharp rise in share price has capped its upside potential. It anticipates that increasing competitive intensity may further impact long-term growth prospects.
5. Kaynes Technology:
This electrical equipment manufacturer rose by 4.3% over the past week, following the release of its Q1FY25 results. The company’s net profit rose 106.6% to Rs 50.8 crore, surpassing Trendlyne’s Forecaster estimates by 14.7%. The company appears in a screener of stocks with growth in quarterly net profit with increasing profit margin YoY.
Revenue grew 74.3% to Rs 532.3 crore, beating Forecaster estimates by 4.6%. This was led by strong growth in the automotive (up 56% YoY) and industrial & EV (up 2.7x YoY) verticals. The industrial vertical's revenue contribution increased by 19 percentage points YoY, reaching 55% during the quarter.
Kaynes’ order book has grown to Rs 5,040 crore during the quarter, including major orders in aerospace, EV, and medical sectors. It has onboarded a leading medical equipment provider for exports to Europe and the US, anticipating significant revenue growth from this partnership.
The company plans to expand its business into the outsourced semiconductor assembly and test (OSAT) sector, focusing on modern chip packaging. This expansion is expected to boost exports, which currently makes up 15% of the order book. Commenting on this, Director and Chief Financial Officer Jairam Sampath said, “We anticipate exports to climb from 15% to about 20-25% by FY26, driven by chip packaging in the OSAT sector and expansion in aerospace and medical electronics segments.”
Motilal Oswal retains a “Buy” rating on the stock with a target price of Rs 5,000. The brokerage notes that the Telangana facility, starting by the end of August 2024, will boost the company’s EMS capabilities, especially in the smart meter sector. It remains positive on Kaynes’s strong order book growth, projecting a revenue CAGR of 62% and a PAT CAGR of 78% for FY25-26.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations
