Stocks to Watch: Tech Mahindra, Bajaj Auto, Axis Bank, JSW Energy, United Spirits

Here are a few stocks likely to be in focus on Wednesday, January 24:

Tech Mahindra: According to StoxBox, Tech Mahindra may see sequential revenue decline marginally due to persistent softness in demand within the communication and enterprise segments in Q3FY24. However, EBIT margins are poised for substantial improvement, primarily attributed to the absence of one-time costs worth 260 bps witnessed in the previous quarter, although soft growth may partially offset this gain. On an adjusted basis, excluding non-recurring charges, a marginal sequential improvement in margins of ~20 bps is anticipated. The subdued trend in deal wins is likely to persist, posing challenges to the near-term growth. Further, we would be looking out for comments on - 4QFY24E / FY24E sales growth and margin outlook, demand outlook on 5G technology, deal pipeline and new business, and update on strategy and capital allocation under the new management.

Axis Bank: The private lender on January 23 reported a net profit of ₹6,071 crore in the December quarter of FY24, reflecting a 4 per cent increase compared to the corresponding period last year. However, the reported net profit of ₹6,071 crore fell slightly short of the market consensus estimate of ₹6,114 crore. Its net interest income (NII) in the third quarter stood at ₹12,532 crore, up by 9%, which is almost in line with the market estimate of ₹12,555 crore. Meanwhile, the net interest margin (NIM) stood at 4.01 percent for the quarter ended on December 31, 2023.

Tata Elxsi: Design and technology services provider Tata Elxsi reported a 6% year-on-year (YoY) increase in net profit at ₹206.4 crore during the quarter ending December 2023 from ₹194.6 crore during the year-ago period. Revenue from operations jumped 11% YoY to ₹914.2 crore from ₹817.7 crore during the same period last fiscal year. Sequentially, the net profit of the company rose 3% from ₹200.2 crore reported during the quarter ending September 2023, while revenue from operations witnessed a 3% jump quarter-on-quarter as that stood at ₹881.6 crore during Q2FY24. In terms of revenue from operations, the growth was 16% from ₹2,355 crore in December 2022 to ₹2,734.5 crore in the March-December 2023 period.

Bajaj Auto: Ahead of Bajaj Auto's Q3FY24 results, StoxBox expect a robust ~30% annual rise in sales owing to robust volume growth due to strong performance of two wheelers and higher ASPs. However, this positive momentum is likely to be partially counterbalanced by a decline in volumes of three-wheelers and a lower export contribution. As a result, the expected realization is set to decline sequentially, primarily attributed to subdued geographic and product mix. The implementation of festival discounts is expected to exert additional pressure on realizations, although mitigated to some extent by the benefits of rupee depreciation. In the light of these challenges, the EBITDA margin is projected to decrease slightly to ~19%. However, this will be partially offset by the positive impact of operating leverage and soft commodity prices. Further, StoxBox says, investors would be looking for comments on exports recovery in key markets, 2W demand scenario in the medium term and new launches in the pipeline.

JSW Energy: The company reported over 28% rise in its consolidated net profit to ₹231 crore in the December 2023 quarter. During the quarter, total revenue increased 13% year-on-year to ₹2,661 crore from ₹2,350 crore in Q3FY23, driven by incremental contribution from renewable portfolio and strong thermal performance. The consolidated net worth and net debt as of December 31, 2023, were ₹20,976 crore and ₹26,286 crore, respectively, resulting in a net debt-to-equity ratio of 1.3X. Liquidity continues to be strong, with cash balances at ₹2,867 crore as of December 31, 2023, it stated. The company has one of the strongest balance sheets in the sector, which gives it the headroom to pursue value-accretive growth opportunities, it noted.

Cyient DLM: The electronic manufacturing services company reported a 21.6% year-on-year (YoY) rise in net profit at ₹6.2 crore for Q3FY23. In the corresponding quarter last year, it had posted a net profit of ₹5.1 crore, the company said in a regulatory filing. The company's revenue from operations increased 10% to ₹321 crore against ₹291.8 crore in the corresponding quarter, driven by the aerospace and defence segment. At the operating level, EBITDA jumped 30.4% to ₹23.6 crore in the third quarter of this fiscal, over ₹18.1 crore in the second quarter of this fiscal. The EBITDA margin stood at 7.4% in the third quarter against 6.2% in the second quarter of this fiscal.

Bharti Airtel: The Indian multinational telecommunications services company on Tuesday announced that it'd be prepaying ₹8,325 crores to the Department of Telecom (Government of India) towards spectrum dues. This prepayment is directed towards addressing part of the deferred liabilities associated with the spectrum acquired in the auction of 2015. The liabilities carried an interest cost of 10 per cent, as disclosed by the company in an exchanges filing.

United Spirits: Diageo-controlled liquor maker United Spirits reported a 63.5% year-on-year (YoY) rise in net profit at ₹350.2 crore for the third quarter ended December 31, compared to ₹214.2 crore in the corresponding quarter last year. Its revenue from operations increased 8% to ₹3,002 crore as against ₹2,778.7 crore in the corresponding period of the preceding fiscal. At the operating level, EBITDA jumped 30.8% to ₹486.5 crore in the third quarter of this fiscal over ₹371.8 crore in the corresponding period in the previous fiscal. United's net sales stood at ₹3,002 crore, up 8% year-on-year, while its standalone net sales was up 7.5% at ₹2,989 crore.

Rural Electrification Corporation: The state-run company reported an 18% growth in its Net Interest Income (NII) to ₹4,159 crore for the October-December period. Net profit for the quarter also grew by 14% from last year to ₹3,269.3 crore. REC's asset quality improved on a sequential basis, with gross NPA improving to 2.78% from 3.14% in September, while Net NPA stood at 0.82% from 0.96% in the previous quarter. REC's Assets Under Management (AUM) grew by 21% year-on-year and 4.9% sequentially to ₹4.97 lakh crore. The company's Net Interest Margin and spreads were the highest in five quarters at 3.61% and 2.85%, respectively.

JSW Group: The Competition Commission of India has approved the proposed acquisition of up to 38 per cent stake in MG Motor India by Sajjan Jindal-led JSW Group. "The Acquirer is a newly incorporated entity and is not engaged in any activities as on date. It is a wholly owned subsidiary of JSW International Tradecorp Pte. Limited and belongs to JSW Group," the CCI stated in its order. "The Target is a company incorporated in India, engaged in the automobile original equipment manufacturing business and after sale services. The Target is primarily engaged in the manufacture and sale of passenger cars (including electronic vehicles) under the Target’s brand ‘MG’," it further said.