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Sagar Bhosale

MARUTI SUZUKI 

Please let me know the future of Maruti Suzuki over the next 5 years. 

- H. Singh 

The company is engaged in the purchase, manufacture and sale of motor vehicles, its components and spare parts (automobiles). The other activities of the company include facilitation of pre-owned car sales, fleet management and also car financing. It has approximately five plants located at Palam-Gurgaon Road, Gurgaon, Haryana, and at Manesar Industrial Town, Gurgaon, Haryana, with an installed capacity of over 1.5 million vehicles per year. On the financial front, the company's net sales increased by 13 per cent to Rs.22,459 crore in Q1FY19 as against Rs.19,777 crore in the same quarter of the previous year. In terms of PBDT, there is a rise by 20 per cent to Rs.3,602 crore in the first quarter of FY19 versus Rs.2982.60 crore in the first quarter of FY18. The net profit of the company has witnessed a 26 per cent growth in Q1FY19 to Rs.1975 crore as against Rs.1556 crore in the same quarter of the previous year. On the annual front, there is a marginal increase of 6 per cent in the net sales to Rs.81,994.40 crore in FY18 versus Rs.77,266 crore in FY17. The PBDT rose by 9.7 per cent to Rs.13,761 crore in FY18 as against Rs.12,543.40 crore in the previous fiscal. The net profit of the company has remained stable YoY to Rs.7,721 crore in FY18 as against Rs.7.337 crore. Looking at the financial performance and the growth of the company, we would recommend a HOLD to our reader-investors.

CASTROL 

I have 150 shares of Castrol bought at Rs.212 . Please share your views on this 

- Rishish 

Castrol India Limited is an India-based company engaged in providing coke and refined petroleum products. The company is involved in manufacturing lubricating oils. The company operates through two segments: automotive and non-automotive. The company offers non-automotive lubricants like industrial lubricants, marine and energy lubricants. The company operates across three market sectors of the lubricants industry: automotive, industrial, and marine and energy applications. On the financial front, the company's revenue remained stable at Rs.1,017.20 crore in Q1FY18 versus Rs.1,007.70 crore in the same quarter of the previous year. The PBDT of the company increased by 19 per cent YoY in Q1FY19 to Rs.268.70 crore versus Rs.224.90 crore in the same quarter of the previous year. The net profit of the company has gone up by 19 per cent in the first quarter of FY19, while in the same quarter of the previous year it was Rs.178.20 crore. On the annual front, the company‘s revenue has grown by 14 per cent to Rs.3,851.50 crore in FY18 as against Rs.3,370.40 crore in FY17. The PBDT of the company has marginally gone up by 2 per cent in FY18 to Rs.1115.50 crore as against Rs.1090.70 crore in the previous fiscal. The net profit of the company has gone up by over 2.5 per cent in FY18 versus Rs. 674.90 crore in FY17. We recommend a HOLD looking at the current position of the company.

AVANTI FEEDS 

Should I hold Avanti Feeds post the earnings report ? 

- vhchowdary 

Avanti Feeds Limited is a manufacturer of prawn and fish feeds, and shrimp processor and exporter. The company's principal products/services are shrimp feed and processed shrimp. Its segments are shrimp feed and wind mills. It is engaged in the of manufactures shrimp feed and markets it to farmers, which is used in aqua culture to grow shrimp. Shrimps are purchased from the farmers and are further processed and exported to various countries. It has installed over four mills of over 3.2 megawatts capacity at Chitradurga, Karnataka.

On the financial front, the net sales of the company witnessed a 3 per cent growth to Rs.915.51 crore in first quarter of FY19 as against Rs.881.78 crore in the same quarter of the previous year.

The PBDT of the company has dropped by almost 42 per cent in Q1FY19 to Rs.127.36 crore as against Rs.220.53 crore in same quarter of the previous fiscal. Meanwhile, the net profit of the company has fallen by over 44 per cent in the first quarter of FY19 to Rs.79.44 crore versus Rs.142.41 crore in Q1FY18.

On the annual front, the company has shown a 6 per cent growth in terms of net sales, posting Rs.2,815.33 crore in FY18 versus Rs.2,654.19 crore in the previous fiscal. The PBDT of the company has also grown by over 100 per cent to Rs.643.82 crore in FY18 as against Rs.302 crore in FY17. The net profit of the company in FY18 has surged to Rs.414.94 crore versus just Rs.195.34 crore.

On the valuation front the company has return on equity (RoE) of 53.10 per cent and return on capital employed (RoCE) of 149 per cent.

The company has performed well on an annual basis, although the quarterly performance showed less growth. The company is expected to show growth in the coming quarters. Thus, we recommend our reader-investors to HOLD on to the stock.

SANGHVI MOVERS 

I bought Sanghvi Movers at Rs.220 one year back, but now it is falling day-by-day. Please advice what to do. 

- Arun Kumar 

Sanghvi Movers Limited (SML) is engaged in the business of providing cranes on rental basis. The company is also engaged in power generation. It provides hydraulic and crawler cranes to various industries in the infrastructure sector and has a fleet of close to 430 medium to large size hydraulic truck mounted telescopic and lattice boom cranes and crawler cranes with lifting capacities ranging from 20 tonnes to 800 tonnes.

The company offers a range of equipments, such as crawler mounted cranes with lattice boom, truck mounted cranes with telescopic boom, truck mounted cranes with lattice boom, hydraulic multi axle modular trailers and forklifts.

On the financial front, Sanghvi Movers posted a 9 per cent hike in its net sales to Rs.71.56 crore in the first quarter of FY19 as compared to Rs.65.35 crore in the same quarter of the previous year. The company 's PBDT decreased by 26.14 per cent to Rs.21.02 crore in the first quarter of FY2019 on a year-on-year basis. Also, the company reported a loss of Rs.10.6 crore in the first quarter of FY19 as compared to a loss of Rs.3.64 crore in the same quarter of the previous fiscal.

On an annual basis, the company posted a 58.71 per cent decrease in its net sales to Rs.228.40 crore in FY18 as compared to Rs.553.14 crore in FY17. The PBDT of the company decreased by over 84.3 per cent to Rs.48.87 crore in FY18, as against Rs.311.48 crore in FY17. The company posted a loss of Rs.57.4 crore in FY18 as against a profit of Rs.109.18 crore in FY17.

The company has a low interest coverage ratio. Also, the company has delivered a negative growth rate of 7.60 per cent over the past five years. Sanghvi Movers also had a low return on equity of 6.69 per cent for the last three years. The company has a debt-to-equity ratio of 0.68x. The stock is likely to surpass its short term aberrations. We recommend our reader-investors to HOLD the stock.

AMTEK AUTO 

I have been holding 250 shares of Amtek Auto bought at Rs.55.58. Please let me know whether to hold or exit. 

-kardeepak.kumar 

Amtek Auto is one of the largest integrated automotive component manufacturers in India with a strong global presence. Amtek Auto has expertise in forging, grey and ductile iron casting, gravity and high-pressure aluminium die casting and machining and sub-assembly. The company emerged as one of the 12 companies identified by the RBI for liquidation to repay debts. The company's market cap has shrunk from a high of $1.6 billion in 2007 to just a fraction of that today. Between 2005 and 2014, the company made a total of 22 acquisitions across the globe mostly through debt. The company has been finding it difficult to repay these loans.

Amtek has a total debt of Rs.12,603 crore and the liquidation value of its assets was determined at Rs.4,119 crore. Liberty House has offered Rs.3,225 crore affront and fresh infusion for stabilising and improving operations to the tune of Rs.500 crore. The total resolution amount stands at Rs.4,025 crore. In the month of July, on recommendation of the Committee of Creditors (CoC) of the company, the Chandigarh bench of National Company Law Tribunal (NCLT) approved the bid of UK-based Liberty House to acquire the debt-ridden Amtek Auto.

Recently, the company declared its financial result for the second quarter of FY18. It posted a 30 per cent fall in its net sales to Rs.343.62 crore in the second quarter of FY18 as compared to Rs.497.04 crore in the same quarter of FY17. The company reported a negative PBDT of Rs.9608 crore in the second quarter of FY18 as compared to a negative PBDT of Rs.923.49 crore on a year-on-year basis. Also, the company reported a loss of Rs.10,652 crore in the second quarter of FY18 as compared to a loss of Rs.755.18 crore in the same quarter of the previous fiscal. Further, the company has delivered a negative growth of 23.34 per cent over the past five years. It also has a negative return on equity of 20.66 per cent for the last three years. Further, the stock has been recently added to the ASM framework. We recommend our reader-investors to EXIT the stock.

JAIN IRRIGATION

I have 100 shares of Jain Irrigation Systems bought at Rs.107. Kindly advice on this stock. 

- S.S Kumar 

Jain Irrigation Systems (JISL) is the largest micro irrigation systems (MIS) company in the country and second largest globally. It is engaged in providing solutions in agriculture, piping, infrastructure through manufacturing of micro irrigation systems, PVC pipes, HDPE pipes, plastic sheets, agro processed products, renewable energy solutions, tissue culture plants, financial services and other agricultural inputs. In term of financial performance, Jain Irrigation Systems reported revenue of Rs.2092 crore in the first quarter of FY19 as against Rs.1681.2 crore in the corresponding quarter of last year, representing 24 per cent growth. Its EBITDA for the first quarter FY19 was at Rs.270.3 crore as against Rs.234.3 crore in core in corresponding quarter of the preceding fiscal. Notably, the company's net profit for the quarter surged almost 85 per cent from Rs.44.33 crore in Q1FY18 to Rs.81.8 in Q1FY19.

Looking at the annual performance, the company's revenue for FY18 rose almost 17 per cent YoY to Rs.7946.8 crore. Its EBITDA for FY18 was Rs.1055.4 crore as against Rs.940.3 crore in FY17. The net profit for the full year surged almost 29 per cent YoY to Rs.219.3 crore. On the valuation front, the stock seems to be undervalued at P/E multiple of 15.4x on TTM earnings, which is at lowest median P/E level in the last five years. Also, looking at price-to-book, the stock is available at attractive valuation of 0.85x.The company holds strong global order of Rs.4637.4 crore and continues to bag pipe orders from infrastructure sector, which bodes well for the company. Besides, the company expects project business of micro irrigation systems segment to almost double from Rs.500 crore to almost Rs.1,000 crore due to many state governments making drip irrigation mandatory and high value orders from states like MP and Maharashtra. Besides, the company's recent acquisition of Innovafood N.V. Belgium would provide access to key growth markets in the European Union. However, the key risks that overhang on the company are elevated crude oil prices and volatility in rupee. Considering all these factors, we urge our reader-investors to HOLD the stock. 

(Closing price as on Aug 28, 2018)

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