1. Honasa Consumer:

This personal products company has risen by 7% over the past week. This comes after the NCLT (National Company Law Tribunal) approved its amalgamation with two of its subsidiary companies, Just4Kids and Fusion Cosmeceutics. This amalgamation is expected to help prevent cost duplication and enhance financial efficiencies, making the combined operations more cost-effective.

Just4Kids Services is a platform that gives access to information about playschools and schools, sports classes, and similar events for kids across Delhi, Gurgaon, Noida, Faridabad, and Ghaziabad. Meanwhile, Fusion Cosmeceutics is engaged in the formulation and trading of skin care products.

Over the past three months, Mamaearth’s parent company has risen by over 18.1%. During Q1FY25, the firm’s net profit grew by 40.3% YoY to Rs 40.3 crore, beating Trendlyne’s Forecaster estimates by 11.3%. Revenue was up 19.3% YoY at Rs 554.1 crore,  led by faster growth in emerging brands, market share gains (in face wash and shampoo), and aggressive distribution expansion (30% YoY).

Honasa Consumer is currently focusing on expanding its offline distribution, under a project called ‘Neev’. During Q1, the company’s offline distribution increased by 30% YoY, reaching 2 lakh retail outlets. Commenting on this, Ghazal Alaghh, the Co-founder said, “Our target is to double the offline distribution to 4 lakh retail outlets by FY27”.

Goldman Sachs recently initiated coverage on the stock with a ‘Buy’ rating and a target price of Rs 570. The brokerage highlights that the transformation of India's beauty industry presents a multi-year growth opportunity. Goldman Sachs also notes the significant growth opportunity as Honasa plans to double its offline distribution, driving growth in urban and rural markets.

2. One97 Communications (PayTM):

This digital payment player saw its parent company, One97 Communications’ share price rise 12.2% on Friday as it got approval from the Ministry of Finance for foreign direct investment (FDI) into its payment arm. With this approval, the company can re-apply for its payment aggregator license, which was rejected about two years ago due to compliance issues.

The company aims to refocus on its core business as it sells its ticketing arm to Zomato for Rs 2,048 crore. This move will enable PayTM to strengthen its core payments and financial services distribution business. The decision follows a more than 30% drop in PayTM's share price after the RBI cracked down on its payments bank arm due to irregularities in KYC (know your customer) norms and compliance issues. Currently, more than two years after listing at an issue price of Rs 2,150, the company is trading at a discount of about 70%.

As of July 2024, the company’s UPI market share was 7.8% by volume and 6% by value, according to the data released by the National Payments Corporation of India (NPCI). The RBI's action against Paytm Payments Bank has reignited discussions about capping UPI app market share at 30% to prevent any single platform from becoming too dominant. However, the NPCI postponed this proposal until December 31, 2024. If implemented in the end-of-year review, this proposal could significantly boost PayTM's market share.

Founder and CEO Vijay Shekhar Sharma, said, “The company aims to deliver at least one profitable quarter this financial year.” He emphasises that the company’s focus is returning to payments and cross-selling of financial services as its core business. Sharma also notes that the migration (from Paytm Payments Bank to payment service provider banks - Yes Bank, Axis Bank, HDFC Bank and SBI) of its technology and customers is nearing completion, after which the company can request NPCI’s permission to add new and incremental customers.

Motilal Oswal maintains a ‘Neutral’ rating on PayTM as it expects the sale of its entertainment business to strengthen its balance sheet. This transaction is expected to generate significant profits for PayTM, allowing it to reinvest in other high-potential areas. The firm forecasts that the company's EBITDA will turn positive by FY27.

3. Zee Entertainment Enterprises: 

This broadcasting & cable TV company rose 11.6% on August 27 as it resolved disputes related to the scrapped $10 billion merger with Culver Max Entertainment (CMEPL) operating  as  Sony Pictures Networks India (SPNI). ZEE Entertainment Enterprises (ZEEL) and SPNI, along with Bangla Entertainment, agreed to a non-cash settlement, withdrawing all claims, including the $90 million termination fee for the merger.

The merger failed due to disagreements over valuation, control, and governance. ZEEL and SPNI had differing valuations for their companies, leading to conflicts over merger terms. Disputes also rose over how control would be divided in the merged entity, including decision-making authority and board composition. Questions over Zee’s corporate governance practices further complicated the merger.

This resolution ends the Singapore International Arbitration Centre arbitration and legal proceedings at the National Company Law Tribunal (NCLT). ZEEL’s management stated that the settlement allows both companies to independently pursue future growth in the evolving media and entertainment sector.

In Q1FY25 the company reported a net profit of Rs 118.1 crore compared to a loss of Rs 53.4 crore in Q1FY24, surpassing Trendlyne's Forecaster estimates by 24.3%. The surge in profit was driven by lower finance cost and employee benefit expenses. Revenue grew 7.6% YoY to Rs 2,149.5 crore during the quarter, driven by higher sales from subscription and movie releases. However, the company only released 13 titles, a 60% YoY fall.

ZEEL's total ad revenue decreased by 17.9% QoQ and 3.1% YoY to Rs 910 crore. Post results, MD and CEO Punit Goenka noted Q1FY25 ad revenue was low due to cricket and elections. He expects ad revenue to improve in H2FY25 driven by rural demand recovery, supported by a good monsoon and festive season.

ICICI Securities had retained its 'Buy' rating despite persistent concerns about financial weakness, governance challenges, and unresolved litigation. The brokerage is optimistic due to the improving balance sheet, which is a potential boost to investor confidence.

4. Sonata Software: 

This IT solutions provider rose over 5% on Thursday after it won a multi-million-dollar IT outsourcing deal with a US-based healthcare provider. The AI-powered deal is to upgrade the client’s technology through better IT budget management, and the use of automation and cloud services. Commenting on this, MD & CEO Samir Dhir said, “The deal will impact short-term margins for the next two to four quarters due to the upfront AI investment, but won’t dilute long-term profitability. We expect AI services to account for 20% of our revenue over the next three years.”

Sonata Software won two more large deals in Q1FY25. The company was chosen as a partner to modernize outdated systems to the latest Microsoft technology for a client in Australia. The other cloud deal is with a major US financial firm.

In Q1FY25, the company reported a net profit decline of 12.1% YoY to Rs 105.6 crore due to higher raw material costs. Revenue grew 24.6% YoY to Rs 2,527 crore, surpassing Forecaster estimates by 56.1%. The company generated 27% of its revenue from overseas markets, with 7.5% YoY revenue growth in the International business.

Sonata’s share price has risen by 30.9% over the past year. The company has pushed its $1.5 billion revenue target for its international business to FY27, extending the timeline by two to four quarters due to the macro-economic slowdown. Dhir highlights that the company is “focused on modernization”, noting that cloud and data segments now make up 52% of Sonata's pipeline, up from 15% two years ago. The company also experienced growth in its partnership with Microsoft Fabric, which generated a pipeline of 385 crore across 80 clients.

Post results, KR Choksey downgraded its rating to ‘Accumulate’ as the stock surged 23% since the last rating, limiting further upside. However, it raised the target price to Rs 694, highlighting the company's focus on large deals and AI investments. The brokerage expects long-term growth to be driven by progress with Microsoft Fabric and effective client management.

5. Aether Industries:

This specialty chemicals company rose by 1.2% today and announced its results on July 19th. For Q1FY25, the company’s net profit increased by 0.4% YoY to Rs 29.9 crore, while its revenue rose by 17.5% YoY on the back of a 16.2% YoY rise in revenue in the large scale manufacturing vertical. The firm beat Trendlyne’s forecaster estimates for revenue by 14.7%. It appears in a screener for stocks with improving net cash flow for the last 2 years.

The firm has recently entered into an Exclusive Manufacturing Agreement with Chemoxy International, a subsidiary of the SEQENS group from France, which specializes in Health, Personal Care, and Specialty Ingredients. This three-year contract involves Aether supplying raw materials to Chemoxy, with production starting in 10 months and a volume of over 100 MT per year. Last month, Aether also commissioned site 4 for a strategic supply agreement with Baker Hughes (an energy technology firm). This deal includes six products to be manufactured in India for the first time and supplied globally, with a notable portion allocated for the Indian domestic oil and gas sector.

The company holds an estimated market share of 8-10% in the speciality chemicals space in India.Faiz Nagariya, CFO of the firm, guides the capex run rate of around Rs 300-350 crore for both FY25 and FY26.  

Rohan Desai, whole time Director of the firm said: “During the quarter under review, we witnessed growth in overall volumes, but the prices have been impacted due to China's dumping. We feel the prices have already bottomed out and we are optimistic for an upswing in the business scenario. “ 

He added,  With respect to Aether's business model, we have seen 66% contribution of the total top line coming from large scale manufacturing, 18% coming from contract/exclusive manufacturing, and 14% coming from contract research and manufacturing services business model during Q1FY25. Our export revenues stood at 42% of the total revenue and domestic sales stood at 58%.”

HDFC Securities has maintained a “Buy” rating on Aether Industries, with a target price of Rs 1,117. The brokerage notes that the company’s strategic capital investments are being fuelled by internal accruals and money raised (Rs 750 crore) through QIP. It expects a revenue CAGR of ~43% and an earnings CAGR of ~58% over FY25-27E.

Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations