Hot stocks like IRCTC, IndiaMART, Info Edge, ITC corrected up to 10% from their recent peaks

Shares of the fast moving consumer goods (FMCG) major ITC remained weak in the last one week despite posting 13% revenue growth and 10% profit growth in the September quarter.

The government has recently formed an expert panel to mull on ways to raise tax on tobacco to 80% of the retail price in the coming years. Earlier this month, the Union Ministry of Health and Family Welfare constituted an expert panel on future taxation policy for tobacco.

“The company's FMCG business expectedly slowed down, partially due to the base issue. The Union Budget will be a key event for ITC given that the expert panel is deciding on tobacco taxation,” report by said Jefferies.

Revenue for India’s largest software exporter Tata Consultancy Services (TCS) grew 2.9% to $6.3 billion in the September quarter, when compared to the preceding three months. The revenue growth was less than 3.8%, which was the consensus estimate on the street. Even the net margin at 25.6% was less than what the market had hoped for.

Besides, attrition rate for the company remains high at 11.9% in July-September quarter from 8.60% in April-June period.

Last week was not less than a massacre for Indian Railway Catering and Tourism Corporation’s (IRCTC) shares as it slipped 10% in the last five days against 183% gains in 2021 so far. It can be seen as a profit booking session by investors after a stellar rally in stocks.

The stock movement has turned opposite after moving continuously up for one year now. IRCTC has been investors' favourite stock as they value companies operating in a monopolistic business and IRCTC is a true example of that. Currently, one of the major triggers fuelling the rally in the stock is the company starting many special trains for the festive season.

While the B2B e-commerce firm posted an 18% increase in consolidated net profit to ₹82 crore in September quarter, it missed analysts' estimates on revenue growth. Revenue from operations during the quarter grew 12% to 182 crore, less than expected ₹190-194 crore.

IndiaMART is India's largest online B2B marketplace for business products and services. It makes it easier to do business by connecting buyers and sellers across product categories and geographies in India through business enablement solutions.

Internet company Info Edge runs online job portal Naukri.com, matrimony website Jeevansathi.com, real estate classifieds platform 99Acres.com and an educational website Shiksha.com. Shares of the company seem to have taken a pause from the rally and offered a chance for profit booking.

Info Edge is another favourite stock of investors considering investing in its stocks gives exposure to many emerging startups in the country where Info Edge has an investment.

Info Edge, one of India’s oldest internet businesses, has multiple startup investments including two unicorns ⁠— food delivery app Zomato and insurance aggregator Policybazaar ⁠— both of which are headed for a debut in the share market. A unicorn is a private firm with more than a billion-dollar valuation.

Shares of consumer product giant Hindustan Unilever corrected in the last 30 days on rising inflation leading to cautious demand. Although the company reported a 9% year-on-year growth in net profit to ₹2,187 crore as against ₹2,009 crore in the same quarter last year, investors were disappointed on lower than expected volume growth.

The food segment that includes products like Horlicks, Kissan, Bru, Kwality Wall’s saw a slowdown in revenue growth. Adding to it, the company gave a cautious remark on the demand recovery. “Looking forward, we remain cautiously optimistic about demand recovery,” said Sanjiv Mehta, chairman and managing director of HUL.

“Gross margin pressure continued in the September quarter due to elevated commodity costs (crude, crude palm oil, tea, and plastic) and higher freight cost. We expect the margin to remain under pressure in the near term, owing to sustained inflation and calibrated price hikes,” said analysts at HDFC Securities while maintaining a ‘reduce’ rating on the stock.

Shares of the largest oral care company remained weak in the last one month as investors were disappointed with the September quarter earnings that missed estimates on volume, revenue growth and operating margin front.

Margins remained under pressure due to increasing crude based raw material prices and higher advertising spends in the quarter. Advertising and promotional spends were up 12.7% year-on-year.

“The oral care category has been stagnant with the trend towards naturals, ayurveda based toothpaste gaining prominence. Though the company has launched newer products in terms of toothpaste for diabetics, Ved-Shakti mouth spray and gentle range of toothbrushes, the new products has not significantly change the sales growth trajectory in last year due to pandemic related disruption,” said a report by ICICIdirect.