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With the stock market witnessing huge amounts of volatility over the past few weeks, many stocks lost a lot of their value. In these unpredictable times, investors have been picking high dividend yield stocks. Here we take a look at stocks with the highest dividend yields over the past three years. Not surprisingly, many of them are government-owned.  

1. Bharat Petroleum Corp: This state-run oil-marketing company has one of the highest dividend yields in the past three years among the Nifty 500. Its three-year average dividend yield stands at 12.3%. The company increased its dividend payout in FY22. Over the last three years, it has declared eight dividends and in the past 12 months, declared six dividends. Its one-year dividend yield is 22.1%, which is higher mainly due to the special dividend of Rs 35 that got added to the final dividend of Rs 23, taking the total to Rs 58 per share. 

In FY22 the company declared four dividends worth Rs 68 per share, and in FY21 two dividends worth Rs 21 per share. In FY20 it declared two dividends worth Rs 24.5 per share. Overall, in three financial years the company declared dividends worth Rs 113.5 per share. However, the company’s stock fell 8.1% in the same period. Being a public sector company, Bharat Petro is required to pay a minimum annual dividend of 30% of net profit or 5% of net worth, whichever is higher subject to the maximum dividend permissible under law.   

2. Power Finance Corp: This state-run NBFC’s three-year average dividend yield stands at 10.2%, and during the same time period it declared seven dividends worth Rs 31.5 per share. The company increased its dividend payout in FY22. The frequency of dividend pay-outs rose in the last 12 months, as it declared five dividends amounting to Rs 14 per share. 

In FY22, Power Finance declared four dividends amounting to Rs 12.75 per share, while in FY21, the company declared one dividend worth Rs 8 per share and one dividend worth Rs 9.5 per share the year before. Despite a rise in dividend payouts the stock is down 5.9% over the past three financial years. 

3. REC: This infrastructure public sector NBFC’s three-year average dividend yield stands at 9.7%. During FY22, the company declared four dividends worth Rs 12.2 per share, increasing its dividend payout in FY22. In FY21 the company declared two dividends worth Rs 11 per share and one dividend worth Rs 11 per share during FY20. The company has maintained a consistent dividend payout over the past three years. However, the stock fell 15.2% over that period. The company’s net profit in the last two years rose significantly, up 20.1% and 71.1% YoY respectively in FY22 and FY21. 

4. NMDC: This state-owned miner’s three-year average dividend yield stands at 8.8% and it declared four dividends totaling Rs 27.8 per share between FY 20-22. The company has been increasing its dividend payout annually over the past three financial years. During FY22, it declared two dividends amounting to Rs 14.7 per share,  and one dividend worth Rs 7.76 per share in FY21, In FY20 it declared just one dividend worth Rs 5.29 per share. While the company’s stock was volatile during FY 20-22, as a whole its stock rose 51.1% during the same period. Its annual net profit in FY22 rose 49.4% YoY to Rs 9,379.6 crore and in FY21 it rose 75.7% YoY to Rs 6,277 crore. 

5. Indian Oil Corp: This oil marketing company’s three-year average dividend yield stands at 8.1% and over the same period it declared seven dividends amounting to Rs 26.25 per share. The company’s dividend payout has been increasing annually over the past three financial years. In FY22, the company declared three dividends totaling Rs 10.5 per share, another two dividends worth Rs 10.5 per share in FY21 and  two dividends worth Rs 5.3 per share in FY20. However, during these three years the stock fell an overall 26.1%. The company turned profitable on an annual basis in FY21, after incurring a loss in FY20 and FY19. 

1. Medplus Health Services: This healthcare supplies company, which listed on the exchanges in December 2021, hit a lifetime low of Rs 708 in share price in the last week. The stock lost close to 16% in the previous eight trading sessions and is currently trading below its IPO issue price of Rs 796. A combination of the competitive landscape in the pharmacy segment and weakQ4FY22 results led to the price fall.

However, brokerages still have a positive outlook on the company. As a result, it shows up in this screener which lists stocks with high analyst ratings and have an upside of at least 20% from their current price.

The pharmacy segment (both offline and e-commerce) is under intense competition from companies from different industries. While peers like PharmEasy are expanding aggressively in this segment, hospital companies like Apollo Hospital Enterprises and Aster DM Healthcare are also after market share in the pharmacy space. Apollo Hospital Enterprises’ arm, Apollo Healthco boasts of a larger network compared to Medplus, With a total store count of 4,529 against Medplus’ 2,748 as of March 2022. However, Medplus is expanding its network at a faster clip, adding 667 stores in FY22 (on a net basis). Apollo Healthco added 411 net new stores in FY22. Both companies’ margins fell in Q4FY22 as a result of increased discounts to gain market share from the unorganized sector. Medplus’ EBITDA margin fell 120 bps YoY to 6.8% in Q4FY22. With 27% of the total stores being less than 12 months old, improvement in margins from these new additions could help ease the margin pressure for Medplus.

2. JSW Steel: This steel maker’s output in May rose 22% YoY to 16.67 lakh tonnes. However, with the mayhem in markets over the past few trading sessions, the stock rose only marginally by 0.2%, despite strong volume growth. In fact, this stock is down over 30% from its lifetime high seen in April and is currently trading less than 5% away from its 52-week low. But, mutual funds are optimistic, increasing their holdings in JSW Steel in the past month.

The steep fall in the company’s share price over the past many trading sessions is not entirely due to the choppy market. There is also the weak outlook and muted Q4FY22 results. On May 23, the Centre imposed export duties on iron ore and some steel intermediaries to curb rising prices in the domestic market. Exports contributed to 28% of total volumes in FY22. This export duty imposition comes at a time when the company’s margins are already under pressure. Operating profit margin fell 11.8 percentage points YoY in Q4FY22 to 19.6% on the back of high input costs. Going forward, a fall in coking coal prices can help the company sustain its margins. Trendlyne’s Forecaster estimates a 10% revenue growth in FY23. This is a muted forecast, considering that JSW’s revenue grew 87% YoY to Rs 1,47,902 crore in FY22.

Brokerages downgraded this company’s stock on the back of falling margins in Q4FY22 and new export duty imposition by the Centre. While Motilal Oswal downgraded its rating from ‘Buy’ to ‘Neutral’, Prabhudas Lilladher has a ‘Reduce’ rating. 

3. G R Infraprojects: This roads & highway builder’s stock was doing well on Monday morning when it was trading almost 28X its weekly average trading volumes. However, the stock plunged 18% in the next three consecutive sessions, after news broke of raids conducted by the Central Bureau of Investigation (CBI) at various company locations. It was alleged that there were anomalies found in an Assam highway project.

On June 14, 2022, its wholly owned-subsidiary GR Bandikui Jaipur Expressway executed the concession agreement with the National Highways Authority of India worth Rs 1,368 crore. The stock touched a 52-week low on the same day. The stock fell further on Wednesday when the company’s exchange filing revealed that the CBI filed an FIR against the company and some of its officials under the Prevention of Corruption Act. Despite these developments, the stock closed 2% above on Thursday, even though the Nifty fell below the 15,400 mark on Thursday.

4. Tata Communications: This telecommunication service provider’s stock fell 7% in intra-day trade to touch a 52-week low of Rs 856 on Wednesday. The stock fell after its investor day 2022 event held on Tuesday, as the company’s management did not give guidance or any outlook on its revenue growth for FY23. This did not enthuse investors and brokerages. The company’s revenue conversion cycle has slowed down due to deal closure delays caused by the shortage of chips and component supplies.

The company stock also made it to this screener which shows broker downgrades in price or recommendations in the past month. Its target price was downgraded by ICICI Securities after its Investor Day 2022 event. The brokerage still has a ‘Buy’ rating on the stock.

5. Varun Beverages: This soft drink bottler’s stock rose over 5% in intra-day trade and touched an all-time high of Rs 805.6 on Wednesday. The stock surged by around 25% over the past three months, in an otherwise weak market. It shows up on a screener with companies whose shares rose by more than 10% in over three months, with rising net profit growth. The stock has been rising on expectations of robust profitability in Q1FY23.

Hem Securities expects the company to benefit from the strong recovery in consumer demand led by the opening up of offices and colleges, increasing travel demand, rising out-of-home consumption, and traction in new products. 

The company has been trading at higher levels since it posted its Q4FY22 results, with its profit rising 96.6% YoY to Rs 254.2 crore and revenue by 26.2% YoY to Rs 2,827.5 crore helped by a scorching summer. The management believes it can deliver healthy profit growth in the coming quarters as the economy recovers. In FY23, the management expects high raw material and commodity prices to increase margin pressure. To counter this, Varun Beverages undertook advanced stocking for the summer season. The management expects to achieve 1.5X sales volume in Q1FY23 compared to Q4FY22.

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

The month of May 2022 saw a high degree of volatility in the markets. The indices lost around 8% in the first two weeks, followed by a partial recovery by the end of the month, closing 3% lower than April 2022. The decline has continued into June, and many stocks across the board have lost more than 15% of their stock value.

During the last month, as valuations improved, domestic institutions bought into sectors and stocks that may be outperformers over the medium to long term. Some of the stocks mutual fund managers bought in May 2022 include tech companies (including some of the leading IT services players), a highly beaten-down asset management company, and a newly minted stock that debuted on the bourses last month.

Infosys - Strong order wins and upbeat guidance by management

Infosys is the second-largest Indian IT services company in terms of market capitalisation. It is also among the fastest-growing IT services firms in the world, and a leader in the offshore services space.

Interacting with analysts during its analyst day, the company said that it is exploring newer growth areas beyond cloud migration i.e., cybersecurity, data analytics, building cloud-based platforms, etc.

The management re-iterated delivering on its guidance for revenue growth of 13–15% on a constant currency basis for FY23. It also confirmed EBIT margin guidance to be in the range of 21–23% for FY23. It has bagged strong deals, added 6 new $100 million clients and 5 new $200 million clients during FY22.

Fund Managers who bought shares of Infosys

Shares were added by Manish Banthia, Sankaran Naren and Priyanka Khandelwal to ICICI Prudential Equity & Debt Fund Growth, Prashant Jain and Sankalp Baid toHDFC Flexi Cap Fund Growth,Kotak Equity Arbitrage Fund Growth and Manish Banthia, Rajat Chandak and Priyanka Khandelwal toICICI Prudential Balanced Advantage Fund Growth.

Tata Motors - Resumption of economic activity boosts passenger and commercial vehicle sales

Tata Motors is a leading automobile manufacturer in India that designs, manufactures, and sells commercial vehicles and passenger vehicles. Its subsidiary JLR’s order book grew to a record high of 168,000 units in Q4FY22. 

In Q4FY22, its retail sales for cars and buses recovered. Tata Motors sold 43,341 cars in May 2022 as compared to 41,587 in April 2022. Tata Motors is the largest electric car player in India, and its wholesales are growing at a rapid pace every month. In May, Tata Motors replaced Hyundai as the second-largest seller of passenger vehicles in India based on wholesale dispatches to dealers.

The management intends to maintain its target of near-zero net debt by FY24, with improvement in operating performance, FCF (free cash flow) in all the businesses, possible asset monetization, and raising equity, if required.

Fund Managers who bought shares of Tata Motors

Shares were purchased by Hiten Shah for Kotak Equity Arbitrage Fund Growth, Sailesh Jain for Tata Arbitrage Fund Regular Growth, Kayzad Eghlim, Priyanka Khandelwal and Nikhil Kabra for ICICI Prudential Equity Arbitrage Fund Regular Growth and Kinjal Desai and Anand Gupta for Nippon India Arbitrage Fund Growthschemes respectively.

Tech Mahindra - Leveraging telecom domain expertise with 5G services

Tech Mahindra is among the top five IT services companies in India. It provides IT and full-form services for telecommunication equipment manufacturers, telecom service providers, software vendors, and systems integrators.

In Q4FY22, it won new deal wins of $1 billion, constituting $366 million worth of deals from the enterprise segment, and the remaining $645 million from CME (communications, media and entertainment) segment.

Bharti Airtel and Tech Mahindra announced a strategic partnership to set up a joint 5G innovation lab to co-develop and market 5G use cases in India. With the government’s plan for auction of 5G spectrum in place, Tech Mahindra will be a direct beneficiary.

Fund Managers who bought shares of Tech Mahindra

Shares of Tata Motors were added to respective schemes by Manish Gunwani and Kinjal Desai for Nippon India Growth Fund - Growth, Manish Banthia, Sankaran Naren and Priyanka Khandelwal forICICI Prudential Equity & Debt Fund Growth, Vaibhav Dusad and Priyanka Khandelwal forICICI Prudential Technology Fund Growth and Venkat Samala and Meeta Shetty for Tata Digital India Fund Regular Growth respectively.

Jubilant Foodworks - Change of leadership  and expansion plans for FY23

Jubilant Foodworks is a quick-service restaurant company (QSR). It owns the franchise for Domino’s in India, Nepal, Sri Lanka, and Bangladesh, and also for Dunkin’ Donuts and Popeyes in India.

The company recently had a change in the top management. The board of directors appointed Sameer Khetarpal as the Chief Executive Officer and Managing Director. He has over 25 years of experience with companies like Amazon, McKinsey, GE, and Hindustan Unilever in various leadership roles.

The company opened 80 new Domino's stores in Q4FY22 India, the highest ever in a quarter, taking the store count to 1,567 and entering 17 new cities. In FY23, it plans to open another 250 new stores. It is also expanding its brand portfolio beyond Domino’s and added seven new stores to its emerging brand portfolio during Q4FY22 with four Popeyes stores and one store each of Dunkin Donuts, Hong's, and Ekdum. The latter is a brand developed specifically for the Indian market with biryani as the mainstay product.

Fund Managers who bought shares of Jubilant Foodworks

Addition of shares to schemes was done by Gaurav Misra and Gaurav Khandelwal forMirae Asset Large Cap Fund Regular Growth, Hiten Shah forKotak Equity Arbitrage Fund Growth, Anand Radhakrishnan and R.Janakiraman for Franklin India Flexi Cap Fund Growth and R.Janakiraman and Sandeep Manam for Franklin India Opportunities Fund Growthrespectively.

Orient Electric - Switchgear and new product launches deliver a stellar FY22

Orient Electric is one of the leading consumer electrical brands in India with a diverse portfolio of fans, lighting, home appliances, and switchgears. Orient Electric today is the largest manufacturer and exporter of fans from India, with more than 60% export share, and a dominant presence in 35 international markets

Orient Electric recorded its highest ever annual revenues in FY22 at Rs 2,452.2 crore and also its highest ever net profit of Rs 126.6 crore. The switchgear segment delivered revenue growth of over 50% during FY22. The company introduced a new range of switches, catering to the mass-premium segment, which is, according to management, well received by channels and consumers alike.

Fund Managers who bought shares of Orient Electric

Fund managers buying Orient Electric shares include Gaurav Misra forMirae Asset Focused Fund Regular Growth, Priyanka Khandelwal and Harish Bihani for ICICI Prudential Smallcap Fund Growth, Sanakaran Naren and Anand Sharma for the new launchICICI Prudential Housing Opportunities Fund Regular Growth and Aniruddha Naha and Anandha Padmanabhan forPGIM India Flexi Cap Fund Regular Growthschemes respectively.

Cyient - Large deal wins and acquisitions add to future revenue streams 

Cyient offers engineering and development services to aerospace & defence, transportation, energy and utilities, communication, and others. In Q4FY22, it won seven large deals with a total contract potential of $134.9 million, six from services and one from composite B2S(business to specification). It won 23 large deals in FY22, with a total contract potential of $308.6 million.

Cyient last month completed the acquisition of Celfinet, a Portugal-based international wireless engineering services company focused on providing end-to-end network planning and performance optimisation services for euro 41 million.

Celfinet is Cyient’s third acquisition since January 2022, the previous two being Citec, a plant and product engineering company, and Grit Consulting with expertise in metal mining and energy. The three acquired companies will together contribute 21% to Cyient’s revenues from FY23.

Fund Managers who bought shares of Cyient

Shares of Cyient were added by Vinit Sambre, Jay Kothari, and Resham Jain toDSP Small Cap Fund Regular Plan Growth, Vaibhav Dusad and Priyanka Khandelwal toICICI Prudential Technology Fund Growth, Sachin Padwal-Desai and Umesh Sharma toFranklin India Equity Hybrid Fund Growth and Pankaj Tibrewal to Kotak Small Cap Growthscheme respectively.

Campus Activewear - IPO received well by mutual fund AMCs

Campus Activewear is among India’s fastest-growing sports and athleisure footwear brands. The company made its debut on the stock exchanges on May 9. The IPO saw an oversubscription of 51X. The stock delivered 30% ingain on listing but has lost most of this in the recent market fall, and is trading 6% higher than its issue price on June 16.

The company’s Q4FY22 revenues were up 28.1% YoY at Rs 3,523.4 crore and FY22 revenues were up 67.9% YoY at Rs 11,941.8 crore. 

The average selling price per pair of Campus shoes has been rising from Rs 485 in FY19 to Rs 620 in FY22. The company expanded its installed annual assembling capacity to 28.8 million pairs in FY22 from 25.6 million pairs in FY21. Campus Activewear has invested Rs 74.5 crore in FY22 towards various initiatives aimed at improving brand perception and recall.

Fund Managers who bought shares of Campus Activewear

Shares of Campus Activewear were purchased by Abhiroop Mukherjee and Siddharth Bothra for Motilal Oswal Flexicap Fund Regular Plan Growth, Abhiroop Mukherjee and Niket Shah for Motilal Oswal Midcap 30 Regular Growth, Vishal Gajwani and Nitesh Jain for Aditya Birla Sun Life Small Cap Fund Growth and Prashant Jain forHDFC Balanced Advantage Fund Growthschemes respectively.

KIMS (Krishna Institute of Medical Sciences) - Massive expansion plans in the pipeline

KIMS is a hospital chain headquartered in Hyderabad. It is the largest corporate healthcare group in Andhra Pradesh and Telangana. It covers a whole array of specialities across its network of hospitals.

KIMS will incur a capex of Rs 500 crore over the next one-and-a-half years on new projects. For instance KIMS Manavata hospitals, a 51:49 joint venture between KIMS and Manavta Healthcare to set up a hospital in Nashik, is allocated a capex of Rs 200–250 crore, and Rs 160–180 crore will be spent in the first phase. KIMS will incur Rs 325–355 crore for its Bangalore project.

The company recently acquired 51.07% stake in Sunshine Hospitals (600-bed capacity) based in Telangana at an enterprise value of Rs 730 crore. The objective of KIMS is to scale up other specialties, which would improve occupancy. The acquisition was done in October 2021. Apart from these, the company is looking at expanding its presence in other states like Maharashtra and Karnataka.

Fund Managers who bought shares of KIMS

Shares of KIMS were added to respective schemes by Gaurav Misra and Gaurav Khandelwal for Mirae Asset Large Cap Fund Regular Growth, Anupam Tiwari and Hitesh Das forAxis Small Cap Fund Regular Growth, Anupam Tiwari and Sachin Jain forAxis Multicap Fund Regular Growth and Shreyash Devalkar and Hitesh Das for Axis Flexi Cap Fund Regular Growth.

Navin Fluorine - Key player in a niche chemical segment 

Navin Fluorine is a commodity chemicals company focused on fluorine-based chemicals - producing refrigeration gas, chemicals, inorganic bulk fluorides, and specialty organofluorines and offers contract research and manufacturing services at Surat in Gujarat and Dewas in Madhya Pradesh.

NFASL (Navin Fluorine Advanced Sciences), a wholly-owned subsidiary of Navin Fluorine, entered into a multi-year contract to manufacture and supply a key fluoro-specialty chemical. This project will require setting up of new capacity at Dahej, with an investment of Rs 540 crore to be financed through a mix of debt and internal accruals. The project is expected to be completed by the end of CY23.

Fund Managers who bought shares of Navin Fluorine

Shares were bought by Manish Gunwani and Kinjal Desai forNippon India Growth Fund - Growth, Rama Iyer Srinivasan and Mohit Jain forSBI Multicap Fund Regular Growth, Aniruddha Naha and Vivek Sharma forPGIM India Midcap Opportunities Fund Regular Growth and Shridatta Bhandwaldar for Canara Robeco Flexi Cap Fund Growthschemes.

HDFC AMC - Trying to regain lost market share

HDFC AMC, part of the HDFC group, is among the largest and most profitable mutual fund companies in India, with an AUM (assets under management) of around Rs 4.3 lakh crore as of March 31, 2022. Being one of the early movers in the industry, its strong distribution network, with 228 branches and over 75,000 empanelled distribution partners, are its strength. The company, however, has been losing its market share in the past few years.

In an investor call, the management said that the launch of new schemes (New Fund Offers or NFOs) across various segments could aid AUM growth. It also plans to come out with more NFOs in the AIF (alternative investment funds) segment. The AMC recently got SEBI's approval to launch nine more ETF fund schemes. It has also filed for defence fund, MNC fund, and business cycle fund NFOs. In order to improve its market share, it plans to introduce portfolio management services or PMS in the next few quarters.

Despite a lackluster performance in FY22, the company’s revenues are growing consistently, with it posting its highest-ever annual revenues in FY22 at Rs 2,433.2 crore. It is also a very high return business with a net profit margin of above 50% in the last three years closing, with FY22 net margin of 65.8%.

Fund Managers who bought shares of HDFC AMC

Buying interest in shares of HDFC AMC came from Neeraj Kumar forSBI Arbitrage Opportunities Fund Regular Growth, Bhavesh Jain and Dhaval Dalal forEdelweiss Arbitrage Fund Regular Growth, Harshal Joshi and Nemish Sheth forIDFC Arbitrage Fund - Regular Plan - Growth and Hiten Shah forKotak Equity Arbitrage Fund Growth schemes respectively.

The market opened in the red on Monday after inflation in the US came in hot at 8.6%, a 40 year high. In this volatile market with rising interest rates, analysts are moving towards relatively safer sectors like energy and financials in their picks, as well as sectors with beaten down valuations like hotels.  

Here are five analyst picks that outperformed the Nifty 50 over the month and have a buy call.

1. Oil India: Prabhudas Lilladher retains its ‘Buy’ call on this oil explorer, with a target price of Rs 344. This indicates an upside of 19.1%. This stock outperformed the Nifty 50 index by 37.5% over the past month. 

“Oil India has aggressive growth plans as it expects a 30% increase in oil volumes to 4 million tonnes per annum by FY25, with the commencement of brownfield expansion projects in Assam,” says analyst Avishek Datta. The company doesn’t expect any cap on gas prices and remains hopeful of another price hike in October 2022. The Numaligarh Refinery (NRL) (Oil India has a 69% stake in the crude oil refiner) is a highly complex refinery and is a prized asset for Oil India, according to the analyst. In FY22, NRL posted an EBITDA of Rs 5,050 crore (up 16% YoY) and profit of Rs 3,560 crore (up 17% YoY).

Datta added that the company invested $990 million in Russian oil and gas fields in CY16. Till the end of FY22, the company received $660 million in dividends from its investment in these fields. The company spent Rs 4,280 croreon capex in FY22 and Datta expects a similar capex in FY22.

2. City Union Bank: HDFC Securities maintains its ‘Buy’ call on this bank’s stock with a target price of Rs 218, indicating an upside of 62.6%. This stock outperformed the Nifty 50 index by 13.2% over the past month. 

“Despite a higher credit cost (1.8% annualized), City Union Bank’s Q4FY22 earnings were 8% ahead of our estimates on account of higher recoveries from written-off accounts and lower employee costs,” say analysts Krishnan ASV, Deepak Shinde and Neelam Bhatia. The bank’s net interest income grew 16.8% YoY to Rs 500 crore in Q4FY22. The analysts added that “on the back of healthy repayment trends and a highly-secured loan book (99% of loans), the management has guided for higher recoveries and lower credit costs.”

The bank’s gross non-performing assets and net non-performing assets improved QoQ in Q4FY22 to 4.7% and 2.9% (from 5.2% and 3.4%), respectively.  They conclude that  “with credit costs gradually reducing, a stable margin outlook, sustained market share gains will remain a key monitorable for the bank”.  

3. HDFC Life Insurance: Geojit BNP Paribas reiterates its ‘Buy’ call on this life insurer with a target price of Rs 750, indicating an upside of 29.1%. The company outperformed the Nifty 50 index by 6.8% over the past month. 

In Q4FY22, the company’s gross premium income rose 11.7% YoY to Rs 1,442 crore, (vs. 11.1% industry growth). This, according to the brokerage, was driven mainly by growth in renewal premium (up 15.6% YoY to Rs 734 crore) and first-year premium (up 7.8% YoY to Rs 257 crore). 

The brokerage feels that the “macro drivers for the life insurance sector remain positive, and growth can be witnessed in the significantly under-penetrated prosperous middle class for life insurance in India. Favourable regulatory environment and rapid digitalization initiatives could boost the product mix in the protection business”

4. Bharat Electronics (BEL): ICICI Direct maintains a ‘Buy’ rating on this defence electronics maker with a target price of Rs 290, indicating an upside of 21.8%. The company outperformed the Nifty 50 index by 9.8% over the past month.

Analysts Chirag Shah and Vijay Goel expect the company’s revenue growth to be driven by growth in orders, a robust balance sheet, and a strong order book. They added that the strategy to diversify into non-defence areas, and a focus on improving exports and services share in revenue would boost long-term revenue growth and reduce risk in its business. The company plans to increase the revenue contribution of the non-defence segment to 20% in 2-3 years from 12% at present, they noted.

BEL bagged orders worth Rs 19,200 crore in FY22, taking its total order backlog to Rs 57,750 crore as of March 2022  The company received export orders worth $179 million in FY22, and the analysts expect the company’s revenue to grow at a 16.8% CAGR over FY22-24.

5. Lemon Tree Hotels: ICICI Securities maintains a ‘Buy’ rating on this hotel chain and increases its target price to Rs 84 from Rs 80, indicating an upside of 32.8%. The company outperformed the Nifty 50 index by 11.3% over the past month.

The analyst Adhidev Chattopadhyay increased his target price for the stock “owing to the better-than-expected average room rates (ARRs) and occupancies across assets.” According to the analyst, in Q4FY22 ARR grew 54% YoY to Rs 4,093 and in March 2022 occupancies rose to 60%. He added that a strong recovery in business travel and resumption of international flights led to the improvement in occupancy rates in Q4FY22.

Chattopadhyay noted, “based on the strong recovery in demand between March and May 2022, the company now expects FY23 consolidated revenue to grow 100% YoY to Rs 800 crore”. He expects the company’s occupancy rate and ARR to increase further during H1FY23 led by an uptick in business travel. He estimates the company’s revenue to grow at a 52.5% CAGR over FY22-24.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne

Considering the volatility in the markets, five analyst picks looks at stocks that outperformed the Nifty 50 over the past week and have a buy call from analysts in the past month. 

1. Bata India: Edelweiss maintains a ‘Buy’ call on this footwear company with a target price of Rs 2,365. This indicates an upside of 26%. The company outperformed the Nifty 50index by 4.1% over the past seven days.

“Bata India's performance in Q4FY22 was better than expected on the margin front,” say analysts Kapil Jagasia and Praveen Sahay. Gross margin increased 450bps YoY to 57.6% and  EBITDA margins expanded 540bps YoY to 24.4%. According to the analysts, margins improved on account of price hikes, lower discounting and manufacturing efficiencies. In Q4FY22, revenue grew 13% YoY to Rs 665 crore (10% lower than analysts’ estimates) but profit was up 11.3% YoY to Rs 63 crore (25% higher than estimates).

“The management’s continuous focus on cost control measures, distribution expansion, and cash-rich balance sheet (Rs 1,092 crore as of March 2022) are key positives for the company,” Jagasia and  Sahay said. They further added that Bata’s strong market leadership, revival of formal footwear along with strong growth in casual portfolio and various distribution initiatives, would help it recoup its lost revenue in FY23.

2. Dr. Reddy's Laboratories: Axis Securities maintains a ‘Buy’ call on this pharmaceuticals company but has reduced the target price to Rs 4,500 from Rs 5,100, now indicating an upside of 3%. The stock outperformed the Nifty 50index by 0.3% over the past seven days. 

In Q4FY22, the company reported revenue growth of 14.8% YoY (vs the brokerage’s expectation of 8%) to Rs 5,475 crore. Analyst Ankush Mahajan believes that it was “led by strong performance in geographies such as the US, India, and Emerging Markets.” Mahajan adds, “Dr. Reddy is currently investing in various businesses that may provide excellent growth in the long term.” According to him, the company is building a global pipeline of biosimilars, developing a new chemical entity for Immuno-oncology, and building up a neutraceuticals portfolio, vaccines, CDMO (contract development and manufacturing company), and digital healthcare platforms. However, Axis cautions that high inflation could decrease margins.

3. Container Corporation of India: Motilal Oswal maintains a ‘Buy’ on this warehousing and logistics company but has reduced its target price to Rs 710, indicating an upside of 6.9%. The stock outperformed the Nifty 50 index by 13.4% over the past seven days.

Analysts Alok Deora and Dhirendra Patro said, “Container Corp reported a weak operational performance in Q4FY22 with margin contracting 20.2% (versus estimate of 23.8%) due to higher provisions made towards employee costs and higher other expenses.” Volumes and revenue were in line with their estimates.  In Q4FY22, the company’s revenue grew 5% YoY to Rs 2,043 crore and total volumes remained flat YoY at 1.07 million twenty-foot equivalent units (TEUs). The analysts note that the company is planning a capex of Rs 8,000 crore over the next 3-4 years to be funded through internal accruals. “We expect volumes to pick up with commissioning of DFCs, thereby leading to 19% revenue CAGR during FY22-24,” they added. They also believe that with the pick-up in domestic volumes, EBITDA margin is likely to be stable at 23%, resulting in a 20% EBITDA CAGR over FY21-24.

4. Britannia Industries: Geojit BNP Paribas maintains a ‘Buy’ rating on this FMCG company’s stock with a target price of Rs 3,890, indicating an upside of 8.9%. The stock outperformed the Nifty 50 index by 1.1% over the past seven days. 

Analyst Vincent K.A. is positive about the company’s prospects. He adds, “Britannia has a robust portfolio and efficient distribution network”. In Q4FY22 net profit rose by 4.3% YoY to Rs 380 crore and revenue rose by 15.5% YoY to Rs 3,508.4 crore. The analyst noted revenues rose because of price hikes and an increase in volumes, adding that the number of rural distributors increased 13% YoY to 26,000 in FY22. However, EBITDA margins fell by 90 bps YoY to 15.7% due to input cost inflation in Q4FY22 and Vincent expects inflation in commodity prices to put pressure on margins in the near term. The management is expected to undertake price increases and grammage cuts to offset the pressure on margins. Geojit estimates the company’s profit to grow at a 16.8% CAGR over FY22-24.

5. Ashok Leyland: LKP Securities maintains a ‘Buy’ rating on this commercial vehicle maker with a target price of Rs 173, indicating an upside of 23.9%. This stock outperformed the Nifty 50 index by 4.4% over the past seven days. 

Analyst Ashwin Patil said “the company posted a superb set of numbers in Q4 with all the underlying parameters falling in place”. The company’s standalone net profit rose 3.7X YoY to Rs 901.4 crore and revenue 25% YoY to Rs 8,744.3 crore. Patil believes higher realisations were the main drivers of this growth which were up 13% YoY due to price hikes and a better product mix. Patil expects the company to maintain this growth momentum on pick up in CV (commercial vehicle) demand due to an increase in infrastructure projects. “New launches also should help Ashok Leyland to further improve sales and fill in the gaps within the portfolio,” Patil added. LCV (light commercial vehicles) and bus demand are expected to rise as Covid-19 restrictions are lifted. LKP expects the company’s profit to grow at a 106.5% CAGR over FY22-24.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.