1. Avenue Supermarts (DMart):
This department stores chain has declined by 7.6% over the past week, and touched a new 52-week low of Rs 3,399 on Friday. This comes after Goldman Sachs cut the target price on the stock to Rs 3,425 per share, highlighting that Avenue Supermarts’ (DMart) competitive moat is facing increasing pressure amid a rise in quick commerce players. The average target from analysts on the company according to Trendlyne’s Forecaster is Rs 4,442, so Goldman Sachs’ outlook on the business is now especially negative.
The DMart operator is known for offering the lowest prices on branded fast-moving consumer goods. However, the company has had to increase its discounting efforts to sustain its pricing advantage. In December, DMart increased its discounts to 25% over the maximum retail price to counter competitive pressures from Q-commerce players like Zepto, Zomato’s Blinkit, and Swiggy Instamart.
Q-commerce players’ advantages are discounted pricing and 10-minute delivery. This has pressured DMart's growth in metro cities, as consumers in the region now prefer smaller, frequent purchases. Analysts believe the overlap between convenience-seeking consumers and DMart's value-focused shoppers is higher than expected, likely impacting its growth trajectory further.
During Q2FY25, Avenue Supermarts’ revenue grew by 14.4% YoY to Rs 14,444.5 crore. Net profit increased by 5.8% YoY to Rs 659.6 crore. However, revenue growth was slower compared to the previous quarters. The management highlighted that like-for-like (LFL) sales declined to 5.5% during the quarter, driven by slower growth in metro areas. Q-commerce's rising popularity has impacted these markets, which account for 47% of DMart’s revenue. Commenting on this, Neville Noronha, the CEO and MD, said, “We are clearly seeing the impact of online grocery formats on our stores and operations in metro cities”.
Goldman Sachs notes that DMart’s growth prospects are strongest in smaller cities beyond the top 10, where competition is less intense. However, its slower expansion approach may hinder its ability to be the first to market. The brokerage also lowered its earnings estimates for DMart for FY25 by 4.2% to reflect slower revenue growth.
2. Lupin:
This pharmaceutical company rose 3% on December 19 after receiving FDA approval for its drug application for Emtricitabine and Tenofovir Alafenamide tablets. These drugs are used together to treat human immunodeficiency virus (HIV) and as a pre-exposure to reduce the risk of HIV-1 infection. The market size for these drugs was valued at $3.5 billion in 2023 and is projected to grow to $6.2 billion by 2033.
Lupin rose 5.5% in the past month following two key developments. The company acquired trademarks for three anti-diabetes brands—Gibtulio, Gibtulio Met, and Ajaduo to strengthen its diabetes portfolio in India. Additionally, Lupin received tentative approval from the US FDA for its Sitagliptin and Metformin Hydrochloride tablets. These tablets help manage blood sugar levels in adults with type 2 diabetes. It had an estimated annual sales of $1.1 billion in the US as of September 2024.
In Q2FY25, in-licence products made up 12% of Lupin’s sales, down from 15% in Q2FY24. Analysts expect that as the share of in-licensing products decreases, Lupin’s margins and profitability will improve, particularly in India. The company’s EBITDA margin stood at 19% in FY24 and increased to 23% in Q2FY25, driven by product launches like Mirabegron. CEO Vinita Gupta said, “We have achieved higher margins despite a nearly 190bps QoQ increase in our R&D spend. We expect EBITDA margins to range between 22-23% for H2FY25 and aim for a margin of 23-25% in the medium term.”
Gupta highlighted that Lupin has a pipeline of over 20 respiratory and 40 injectable products in development in the US. This is expected to push complex generics above 50% of total sales in the next few years. This signals a growing moat for Lupin, from more sales in advanced, harder-to-make medicines. Gupta is confident of achieving its FY25 double-digit revenue growth target in the US markets.
BOB Capital Markets maintains its ‘Buy’ rating on this pharma stock with a target price of Rs 2,438, suggesting a potential upside of 13.4%. The brokerage expects the proportion of in-licence sales to decrease to 10% by FY26, down from 12% in Q2FY25, with margins in the India business improving. It anticipates Lupin’s sales to grow at a 9% CAGR and net profit at 19% over FY25-27, driven by a strong product pipeline for the US market.
3. KFIN Technologies:
This financial services provider surged 15.8% over the past week following the announcement that it has joined BlackRock’s Aladdin Provider network in a bid to make its offerings for asset managers more standardised and efficient. This collaboration will enable KFintech to offer enhanced fund administration and accounting services to clients.
If we look at the revenue mix as of Q2 FY25, around 70% of the revenue comes from the domestic mutual fund business, which is up 39.4% YoY. As of September 30, KFintech had a market share of 32.4% in India’s asset management services industry, as it serves 6 of the top 10 asset management companies.
Given the heavy reliance on Indian markets, CFO, Vivek Mathur, said, “We continue to de-risk the domestic business by expansion in the international market.” The company witnessed the highest revenue growth of 44% YoY from the services provided in the international market and other investor solutions. The firm saw an average AUM growth of 27.5% YoY in this segment. They also aim to capture 100% of the market opportunity in Thailand as there is no competition. The company has also won service contracts from funds in Malaysia and a trust in the Philippines.
Forecaster estimates revenue and net profit growth to be over 35% for Q3. The company stands to benefit from the ‘financialization’ trend of Indians moving money from savings into investments. MD & CEO, Sreekanth Nadella, expects this trend to continue to play out into the coming quarters and years.
Jefferies maintains a ‘Buy’ rating on KFintech as they believe that the firm offers a long-term opportunity. They are optimistic about the opportunities in international business as the company receives licenses to operate in the Southeast Asian markets.
4. HG Infra Engineering:
This construction & engineering company rose 3.4% on Monday after its wholly-owned subsidiary, HG Chennai-Tirupati (II) Highway Private Ltd, secured an order worth Rs 862.1 crore from the National Highways Authority of India (NHAI). The project is for building 4-lane and 6-lane highways in Andhra Pradesh.
Last week, the company received a letter of acceptance (LoA) for a Rs 763.1 crore project from the Ministry of Road Transport and Highways (MoRTH). This project focuses on upgrading National Highway 227B, in Uttar Pradesh, to a two-lane road.
Despite the huge order book of Rs 16,985 crore in Q2FY25, HG Infra Engineering’s net profit declined 16% YoY to Rs 80.7 crore, due to high cost of materials. However, net profit beat Trendlyne’s Forecaster estimates by 25.1%. Its revenue for the quarter also fell 5.5% YoY to Rs 902.4 crore. Regarding the fall in revenue, Harendra Singh, Chairman and Managing Director of the company said, “Progress of highway (construction) was slowed down due to erratic and good rainfall during the monsoon.” However, the management expects revenue to grow 17-18% in the upcoming quarters.
Commenting on the order book, Harendra Singh said, “We are targeting an order inflow of between Rs 11,000-12,000 crore for FY25.” In H1FY25, the company reported an order inflow of Rs 6,280 crore, reflecting over 2X YoY growth, leading the order book to grow by 56% YoY. The company appears in a screener of stocks with high analyst ratings and a potential upside of at least 20%.
Geojit BNP Paribas has a ‘Buy’ rating on HG Infra Engineering with a target price of Rs 1,791. The brokerage expects a CAGR of 16.8% in revenue, 15.7% in EBITDA, and 18.3% in net profit over FY25-27. They also expect the order book to grow at a CAGR of 31% over the same period.
5. Coromandel International:
This fertilizer company has risen by 4% in the past week. On December 17th, the company entered into a partnership with Mahindra Group’s ‘Krish-e Partner’ to provide drone spraying services for Indian farmers. Along with this, on December 5th, the company signed a strategic research agreement with the US-based International Fertilizer Development Center (IFDC) to address agricultural challenges with next-generation fertilizers, that improve nutrient efficiency and reduce environmental impact.
CRIN posted a nominal 6.6% YoY increase in revenue in Q2FY25, however it reported a 12.3% YoY decline in net profit to Rs 664.1 crore due to rise in raw material prices and lower government subsidies. The company however beat the Trendlyne Forecaster estimates for revenue by 12.7% and the net profit estimate by 2.7% due to a rise in net manufacturing volumes by 6% YoY to 1.1 MMT. It appears in a screener of stocks having strong momentum.
The company’s management highlights the improving monsoons in India, contributing towards demand appreciation of fertilizers. On this aspect, the company’s MD & CEO, S. Sankarasubramanian, said, “The monsoon has been good at 108% of the long-term period average and we have witnessed a strong Kharif season. Actually, our south markets received 114% of the normal rains. Northeast monsoon which is likely to bring rains to Rayalaseema and Coastal Andhra has started on a strong note, and we do expect a very strong Rabi season.”
The company has maintained its EBITDA per ton guidance of Rs 4,500-5,000 per ton for manufactured fertilizer (NPK and DAP) for FY25. On the guidance front, S. Sankarasubramanian adds, “Our enhanced value addition and increased intermediate capacities help us maintain margins despite significant global commodity price volatility. By boosting our captive manufacturing of phosphoric and sulfuric acid, we can absorb price shocks and subsidies. If market conditions improve, margins are expected to rise.”
Motilal Oswal has maintained its ‘Buy’ rating on CRIN with a target price of Rs 2,000. The brokerage expects the company’s fertilizer business to show strong growth with improved margins YoY in H2FY25. Additionally, the crop protection business is expected to recover and maintain growth momentum. It also adds that the Agrochemical prices have bottomed out globally and are expected to rise in the next calendar year, as Chinese suppliers won't be able to sustain the low prices for long.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
