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Titagarh Rail Systems Ltd. (TRSL), founded in 1997 (formerly Titagarh Wagons Limited), is a leading Indian manufacturer of railway equipment catering to both domestic and international markets. As regards the financials, TRSL has a market capitalisation of over ₹24,000 crore and as of March 31, 2024 its order book was at ₹14,750 crore. In its Quarterly Results (Q4FY24) and annual results, the company reported positive numbers with median sales growth at 22 per cent in the last 10 years. The company achieved its highest-ever quarterly revenue of over ₹1,000 crore in Q4 and produced around 2,700 wagons in the same period. 

It is expecting to ramp up production to 950-1,000 margins per month in the coming quarters. Recently, two foreign institutional investors, namely, Blackrock Global Funds and BNP Paribas Financial Markets, bought 2,173,181 and 520,294 shares, respectively, via block deals. The company’s strong financials, robust order book and positive developments like the production of traction motors along with capacity expansion for metro coaches and involvement in Vande Bharat trains spell good future potential. We are optimistic about the rail industry’s growth, expecting sustained demand and government support. Hence, we recommend HOLD. 

Lancer Containers Lines Ltd., founded in 2011, is a major player in India’s shipping and logistics industry. The company functions as a non-vessel operating common carrier (NVOCC) and has a market capitalisation of over ₹1,000 crore with a current debt of ₹112 crore. In FY24, the company reported consistent quarterly net sales of over ₹150 crore with net profit ranging between ₹14 crore and ₹16 crore per quarter. However, for the full fiscal year FY24, its net sales declined by 24.4 per cent to ₹633 crore, while the net profit increased by 7.4 per cent to ₹58 crore as compared to FY23. 

Despite appearing undervalued on some metrics, the company’s financial health raises significant concerns. Its debt has skyrocketed from ₹4.09 crore to a substantial ₹93.7 crore, which could limit its ability to manoeuvre financially (leverage) and potentially lead to insolvency. While the company plans strategic investments in areas like fleet and infrastructure to capitalise on the growing global trade, these improvements require significant upfront costs that may strain resources and not provide immediate returns. Additionally, ongoing insider selling by company leaders (promoters) is another red flag. Overall, the company’s weak financials and concerning debt situation warrant caution. Hence, we recommend AVOID. 

Zomato Ltd., founded in 2010, is a leading online food service platform that connects users with restaurants through food delivery, dining-out services and loyalty programmes. As of December 2020, Zomato boasted a presence in 23 countries with over 131,000 active delivery restaurants, 161,000 delivery partners and an average of 10.7 million monthly food orders. The company also owns subsidiary brands like Hyperpure (B2B supplies for restaurants), Blinkit (for quick commerce) and Feeding India (non-profit). Zomato, despite high valuation with a market capitalisation of ₹1.80 lakh crore, a PE of 513 times and low profitability metrics of 2 per cent ROE and ROCE, has shown significant financial improvement. 

Its quarterly net sales jumped 73.3 per cent to ₹3,562 crore in Q4FY24, turning a net loss of ₹188 crore in Q4FY23 into a net profit of ₹175 crore. Following this trend, the annual net sales increased 71.1 per cent to ₹12,114 crore in FY24 compared to FY23, with a net profit of ₹351 crore, a major improvement from the net loss of ₹970 crore in FY23. Zomato recently revealed ambitious plans for Blinkit, the quick commerce subsidiary. Blinkit aims to nearly double its store network within a year, reaching 1,000 stores and is confident in finding real estate and innovating store formats. 

It plans to gain market share through quality service rather than discounts with a focus on both expanding in leading cities where it already dominates and entering new markets to grow the overall quick commerce sector. Employee costs have been optimised and advertising revenue is expected to keep growing as a key driver of unit economics. Overall, Zomato’s financial strength and Blinkit’s aggressive expansion positions it for continued growth, with Blinkit being a key driver for Zomato’s future success. This strategy aims to solidify the company’s lead in major cities and capture market share in under-penetrated areas. Hence, we recommend HOLD. 

NBCC (India) Limited, a government-owned construction leader under India’s Ministry of Housing and Urban Affairs, tackles diverse projects across three main areas: a) project management consultancy (PMC) for civil construction ventures like buildings, hospitals and government redevelopments, b) engineering procurement and construction (EPC) for complex projects like chimneys and power plants, handling everything from concept to handover, and c) real estate development encompassing both residential (apartments, townships) and commercial (offices, malls) construction. NBCC, a company with a market capitalisation exceeding ₹28,000 crore and an order book of ₹70,000 crore as of March 2024, has started FY25 on a strong note by securing new orders worth over ₹1,400 crore in Q1. 

Looking back at the previous fiscal year, its financial performance shows steady growth. The net sales climbed by 43 per cent to ₹4,024.50 crore and net profit rose by 24 per cent to ₹141.43 crore in Q4FY24 as compared to Q4FY23. Similarly, for the entire H2FY24, net sales and net profit increased by 31 per cent to ₹6,437.11 crore and 38 per cent to ₹255.03 crore, respectively, as against H2FY23. The FY24 results were even more impressive, with a 17.5 per cent rise in net sales to ₹10,432.64 crore and a significant 49.5 per cent jump in net profit to ₹414.27 crore as compared to FY23. 

Furthermore, LIC holds a 6.55 per cent stake in the company as of March 2024, and the stock has delivered phenomenal multibagger returns exceeding 300 per cent in just a year. NBCC (India)’s future is promising due to several growth triggers, including a potential BHEL land redevelopment order, progressing international projects in Maldives and Mauritius, and exploring new ventures in Dubai, Africa and Arabian countries. The company is aiming for an ambitious top-line of ₹12,500 crore to ₹13,000 crore in the next financial year, with healthy EBITDA and PAT margins. Hence, we recommend BUY. 

Established in 1774, Mazagon Dock Shipbuilders Limited (MDL) in Mumbai has grown from a small dry dock into a renowned shipbuilding and Navratna status company, constructing over 800 vessels since 1960. These include warships, submarines, cargo ships, passenger ships and offshore platforms, making it a key contributor to India’s shipbuilding industry, especially the defence sector. The company has a market capitalisation of over ₹80,000 crore with a strong order book worth ₹38,561 crore. According to its quarterly results, the net sales increased by 49.3 per cent to ₹3,103.7 crore and net profit increased by 111.2 per cent to ₹626.9 crore in Q4FY24 over Q4FY23. 

Its annual results show that net sales increased by 21 per cent to ₹9,466.6 crore and net profit increased by 73 per cent to ₹1,809 crore in FY24 over FY23. While future projects and revenue growth look promising for Mazagon Dock Shipbuilders, there are uncertainties regarding project timelines, competition and government budget allocations. To navigate these uncertainties, the company is focusing on improving operational efficiency, expanding its capacity to handle larger projects and maintaining strong cash flow to ensure financial stability. 

The president of India is the only promoter in the company, holding an 84.83 per cent stake in the company, while as of March 2024 the FIIs decreased their stake to 2.38 per cent and DIIs increased their stake to 0.66 per cent as compared to March 2023. The company plans significant investments of ₹2,500-3,000 crore over the next few years to expand shipbuilding and ship repair capabilities for this the company and has acquired 15 acres of land. This suggests an ambitious growth strategy. However, its current margins are impacted by liquidated damages of around ₹300 crore for delayed submarine deliveries. Future revenue depends on completing the existing projects (frigates, destroyers and submarines) and securing new ones (next-generation destroyers, follow-on frigates, P 75I submarines). Hence, we recommend BUY. 

Founded in 1975, S & S Power Switchgear is a major force in supplying electrical solutions for power transmission and distribution. They design, manufacture, and service switchgear, protection and control systems and a range of associated equipment. Their reach extends beyond India, targeting emerging markets, developing economies and the UK. S & S Power Switchgear caters to various industries including power grids, railways and manufacturing. Their product portfolio includes disconnectors, vacuum circuit breakers, and control and relay panels. Additionally, they offer services like retrofits, refurbishments and modernisation of high-voltage substations. The company has a market cap of over ₹160 crore. 

In May 2024, the promoters of the company bought a 24.85 per cent stake in the company and increased their stake to 74.97 per cent as compared to 50.12 per cent in March 2024. According to its quarterly results, the net sales decreased by 7.1 per cent to ₹43.10 crore while net profit increased by 2.2 per cent to ₹0.97 crore in Q4FY24 as compared to Q4FY23. Its annual results reveals that the net sales increased by 14.2 per cent to ₹159.38 crore and net profit increased by 105.4 per cent to ₹4.32 crore in FY24 as compared to FY23. The shares of the company have a negative PE multiple and ROE. 

The stock is over 300 per cent in just one year and a whopping 1,000 per cent in three years. The company’s financial health is poor and recent stock price movements suggest manipulation. A quick turnaround is unlikely, and you should wait for more information. We have to monitor the company’s financial performance, especially after restructuring, and seek independent verification of the Hamilton Research Partnership. Investing in S & S Power Switchgear now carries significant risk due to a lack of clarity and potential manipulation in the stock price. Hence, we recommend SELL. 

(Closing price as of July 03, 2024)