Tale of the Tape 

Howdy folks. Markets were volatile AF today!

Nifty (+0.2%) and Sensex (+0.1%) pulled back from the day’s low to end with minor gains. Midcaps (+0.4%) and Smallcaps (-0.4%) traded mixed. The advance-decline ratio was evenly split.

It was a mixed-bag kinda day for sectors. Pharma (+1.8%), Metals (+1.3%) and Real Estate (1.2%) saw the most gains. Auto (-1.7%), PSU Banks (-1.2%) and Oil & Gas (-0.7%) saw selling pressure.

Tata Motors (-8%) was the top Nifty loser after guiding for a weak FY25. Meanwhile, UPL (+8%) gained on strong Q4 results and bullish management commentary. 

After a weak 2022-23, are Dr Lal PathLabs and other diagnostic stocks gearing up for a solid year ahead? Read our story below to find out.

Syrma, ABB India and BEML all saw BIG movements today. Check out our chart section below to find out why.

Indegene had a solid market debut, with the stock closing at +32% over its IPO price of Rs 430 p/sh.

VA Tech Wabag was up +5% after it bagged a repeat $49 million order in Nepal for wastewater treatment.

Results reaction. Zomato (-2%) was volatile AF. Bank of India cracked -10% after its Q4 margins took a hit.

GM Breweries will consider allotting bonus shares on May 27.

Here are the closing prints: 

Earnings
Earnings Roundup

Tata Motors NOSEDIVED -10% intraday and was the top Nifty loser! FYI - this comes after both the company and experts projected a weak FY25. Yikes! 🚨

At its Q4FY24 earnings call, Tata Motors’s CFO bluntly stated that elections & poll uncertainty could hurt auto sales in H1FY25. FYI - dealer body FADA said the same thing last week. The company’s CFO also went on to note that operating margins for Jaguar Land Rover (JLR), a core cash cow for Tata Motors, would be FLAT in FY25 mostly due to higher marketing expenses. JLR volumes are expected to also slow down sharply on a high base, which is a negative. 👎

Then there’s the brokerage blows. Both Nomura and Goldman Sachs have downgraded the stock. Goldman has also cut its target price to Rs 1,040 p/sh (vs Rs 1,100 p/sh earlier). Most analysts are worried about the future outlook. UBS specifically has noted that Tata’s EV biz is unlikely to see future market gains + its commercial vehicle vertical will remain “subdued” in the short term. Overall, a pretty rough double whammy for Tata Motors. 😵

For Tata Motors bulls, this may suck because the company had a decent Q4 and wrapped up FY24 on a solid note. A good reminder that markets are ALWAYS forward-looking:

• Revenue: Rs 1.2 lakh cr; +14% YoY (Est: Rs 1.2 lakh cr) 

• Net Profit: Rs 17,407 cr (one-time gain of Rs 8,159 cr) 

UPL gained +8% after its management guided revenue growth of +4% to +8% in FY25! ICYMI - the chemical sector has been in the dumps and UPL hasn’t managed to escape weak global demand & other headwinds. The company reported a -20% YoY topline decline for FY24, so any growth at all in FY25 is a BIG positive! ✅

UPL CEO Mike Frank said: “As we look ahead to FY25, we expect a return to growth and normalization in margins driven by the agchem market returning to normality.”

Beyond this, UPL Q4FY24 results also BEAT Street estimates! Stronger growth in European markets helped restrict the overall fall in its topline. Lower expenses helped its margins beat projections. 📊

Here are its key stats:

• Revenue: Rs 14,078 cr; -15% YoY (vs Est: Rs 11,720 cr)

• EBITDA: Rs 1,933 cr; -36% YoY (vs Est: Rs 1,213 cr)

• EBITDA Margin: 13.7% vs 18.3%

• PAT: Rs 40 cr vs Rs 356 cr loss last year.

UPL is -20% over the last year.

Stock

Prescription For Profit

Are diagnostic companies on the verge of a MAJOR inflection point? ICYMI - after an insane Covid boom, growth fell off a cliff in 2022-2023. Pricing wars kicked in, made worse by competition from new-age digital players, and margins + profits took a hit. That said, valuation multiples for key stocks are now down significantly. Experts feel this provides a window of opportunity to get back in and bet on India’s long-term health story. 🩺

Firstly, players like Tata1MG and PharmEasy have realised there’s no point burning VC money and started to hike prices of key diagnostic tests. For example: key diabetes & kidney tests are up 30%-60% over the last two years. This has taken the pressure off listed players like Dr Lal PathLabs or Metropolis. 🚀

Secondly, post-Covid health awareness has stuck around. More people are ordering preventive & ‘wellness’ tests. Fun fact: wellness packages made up only 10% of Dr Lal’s FY18 revenue but will clock in at 20% in FY24. This crazy demand has allowed listed firms to hike prices, which is a positive. 👍

And yes, in case you were wondering, the results are clear to see. Dr Lal PathLabs rallied +7% intraday after its blockbuster Q4 numbers. Dr Lal saw a double-digit bump in topline, helped by greater demand. But the real sexy stat was its net profit +49% YoY. Margin also saw a healthy jump (26.5% vs 23.5% last year), which in turn was helped by the ability to charge more for tests! PS - Vijaya Diagnostic was up +20% last week on strong earnings. 📈 

Big Picture: There are a bunch of positive triggers at play here. Analysts project the diagnostics industry to grow at a 15% CAGR over FY21-FY26. An ageing population + an increase in chronic diseases and greater prevention awareness will all end up being important growth levers. FYI - Emkay Global is bullish on all 3 big listed stocks: Dr Lal PathLabs (it sees a +12% upside), Metropolis (+21%) and Vijaya Diagnostics (the stock has overshot the target price in its recent rally). 🔥

Charts

Chartbusters

Life comes fast, both for humans and stocks. Here are three companies that saw BIG movements today:

1) Syrma SGS Technology was the top NSE500 loser after its Q4 margins slipped by 222 bps. This is mostly due to higher commodity costs and its focus on automotive & consumer businesses (which is a lower margin biz). Higher finance costs also took a toll. FYI - ICICI Securities has cut its target price to Rs 600 p/sh (vs Rs 675 p/sh earlier). ✂️

2) ABB India hit a new all-time high after its Q4 numbers beat all Street estimates. Its topline was up +82% YoY; bottom line rose +29% YoY. Margins also surprised on the upside. FYI - Jefferies has a target price of Rs 8,845 p/sh; +11% upside from current levels. 🙏

3) BEML was the top NSE 500 gainer after a solid Q4 show. Its net profit jumped 63% YoY. But the real star of the show were margins going up to 24.5% vs 20.7% last year. The PSU firm, which operates in defence, infra & power sectors, has been able to squeeze money out of penny-pinching GOI projects; not an easy task! 💪

Check out their charts below:

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