Query Board

LT FOODS 

I hold 300 shares of LT Foods bought at Rs. 70. Should I continue to hold or exit?
 - Vijaya S.



LT Foods is a specialty food company engaged in milling, processing and marketing of branded Basmati rice and manufacturing of rice food products. The company operations include contract farming, storage, procurement, processing, packaging and distribution. The company has a large rice product portfolio including brown rice, white rice, steamed rice, pot boiled rice, among others. The company owns some famous brands, namely, Daawat, Gold Seal Indus Valley, Rozana and 817 Elephant. LT Foods reported consolidated sales of Rs. 1113.93 crore in Q3FY19, up by 20.06 per cent as against Rs. 927.78 crore in the corresponding quarter last year. The net profit for the company came in at Rs. 38.47 crore, up 2.39 per cent as against Rs. 37.57 crore in the corresponding quarter last year. The company’s PBT stood at Rs. 65.82 crore, up 16 per cent as against Rs. 56.74 crore in the corresponding quarter last year. On the annual front, the company reported sales of Rs. 3613.70 crore in FY18 on a consolidated basis, up by 11.36 per cent as against Rs. 3244.78 crore in FY17. The net profit for the company came in at Rs. 136.42 crore in FY18 as against Rs. 117.52 crore in FY17, registering a growth of 16.08 per cent. The PBT for the company stood at Rs. 216.24 crore in FY18 as against Rs. 194.46 crore in FY17, registering a growth of 11.2 per cent. We recommend a HOLD as the company’s financials in the latest quarter showed recovery.

NAVKAR CORP

I have 300 Navkar Corp shares bought at Rs. 65. Should I hold or exit?
 - Sagar 



Navkar Corporation is engaged in the business of container freight station (CFS). The company enjoys a major presence in the logistics space in western India. The company’s principal product and service include cargo handling, cargo storage, maintenance and repairs of containers. The company has 3 CFSs with an aggregate installed capacity of 310,000 twenty-foot equivalent units (TEUs) per annum. The company provides cold storage facilities at its CFS and custom clearance services, handling and temporary storage of import/ export laden and empty containers. The company reported net sales of Rs. 123.37 crore in Q3FY19, up by 42.69 per cent, as against Rs. 86.46 crore in the corresponding quarter last year. The company reported a net profit of Rs. 9.19 crore in Q3FY19, down 63.26 per cent as against Rs. 25.02 crore in the corresponding quarter last year. The PBT for the company came in at Rs. 15.68 crore in Q3FY19 as against Rs. 31.54 crore in the corresponding quarter last year. On the annual front, the company’s net sales came in at Rs. 428.27 crore for FY18 as against Rs. 370.91 crore in FY17, registering a growth of 15.43 per cent. The net profit for the company jumped 13.66 per cent to Rs. 100.92 crore as against Rs. 88.79 crore in FY17. We believe that the company would witness improvement its performance in the coming quarter which in turn would improve investors’ sentiments. Thus we recommend a HOLD.

ICICI SECURITIES

I have bought 225 shares of ICICI Securities at Rs. 520 each in the IPO. Should I hold or sell? Can I hold for one to two years?
 - Ayush Mathur



ICICI Securities Limited offers a range of financial services including brokerage, financial product distribution and investment banking and focuses on both retail and institutional clients. The company’s segments include broking and commission, which consists of equity, currency and derivative brokerage services, distribution of third-party products, research, and fees from financial planning. Another segment is the advisory services, which consist of equity capital markets services and financial advisory services that cater to corporate clients, the government and financial sponsors. The investment and trading segment consists of treasury and proprietary trading activities. On the financial front on a consolidated basis, the net sales stood at Rs. 404.75, posting a drop of 18.04 per cent in Q3FY19 as against Rs. 493.85 crore in the same quarter of the previous year. The profit before interest depreciation and tax (PBIDT) came in at Rs. 170.43 crore in the quarter ending December 2018, showing a fall of 32.19 per cent from Rs. 251.34 crore in the same period of the previous year. The profit after tax (PAT) for Q3FY19 was reported at Rs. 101.17 crore, reflecting a drop of 34 per cent from Rs. 153.94 crore in the corresponding period of the previous fiscal. On the annual front, the company posted net sales of Rs. 1,859.33 crore in FY18, an increase of 32 per cent from Rs. 1,404.23 crore in FY17. The PBIDT was reported at Rs. 919.66 crore, reflecting an expansion of 62 per cent in FY18 from Rs. 566.46 crore reported in FY17. The PAT stood at Rs. 557.73 crore in FY18, showing a rise of 65 per cent as compared to Rs. 338.59 crore in FY17. On the valuation front, the company is trading at a P/E of 14.06 as against the industry PE of 23.42x. The return on capital employed (RoCE) for the company stood at 75.63 per cent and the return on equity (ROE) stood at 84.26 per cent. Looking at the above mentioned reasons, we would recommend our reader-investors to HOLD and can exit at the level of Rs. 270. 

TATA MOTORS

I have some shares of Tata Motors, but the stock price is showing a downward trend and has declined by 50 per cent. Please advice what to do at this level.
- Anil Kumar Jain 



Tata Motors is an automobile company engaged mostly in the business of automobile products consisting of all types of commercial as well as passenger vehicles, including financing of the vehicles sold by the company. The company’s segments include automotive operations and all other operations. The company’s automotive segments include activities pertaining to the development, design, manufacture, assembly and sale of vehicles, including vehicle financing, as well as sale of related parts and accessories. In the automotive segment, the company manufactures and sells passenger cars, utility vehicles, light commercial vehicles, and medium and heavy commercial vehicles. On the financial front, on a consolidated basis, the net sales stood at Rs. 76,264.69 crore in Q3FY19 as compared to Rs. 72,083.91 crore in the same quarter of the previous year, witnessing a growth of 5.80 per cent. The PBIDT of the company in the third quarter of FY19 came in at Rs. 6,040.64 crore as against Rs. 7,753.38 crore, portraying a 22 per cent drop YoY. Also, the company posted a net loss of Rs. 26,823.22 crore for the latest quarter ending December 2018 as against a net profit of Rs. 961.42 crore in the corresponding quarter of the previous year. On the annual front, the company posted net sales of Rs. 2,94,619.18 crore in FY18 as against Rs. 2,69,692.51 crore in FY17, a rise of 9 per cent. The PBIDT came in at Rs. 35,415.27 crore as against Rs. 30,343.23 crore in FY17, thereby expanding by 17 per cent. The PAT in FY18 was reported at Rs. 6,813.10, an increase of 12 per cent from Rs. 6,063.56 crore in FY17. On the valuation front, the company is trading at a P/E of 56.75x as against the industry PE of 15.68x. The return on capital employed (RoCE) for the company stood at 9.87 per cent and the return on equity (ROE) stood at 8.88 per cent. We recommend a HOLD only if the investor-reader has a holding capacity for a longer period of approximately 2-3 years, as partial recovery is possible although full recovery is unlikely.

CADILA HEALTHCARE 

I have some shares of Cadila which have fallen by over 20 per cent. What should I do?
 - Gayatri 



Cadila Healthcare operates in areas of active pharmaceutical ingredients (API) to formulations and animal health products to cosmeceuticals. The company has in-licensing alliances with global multinationals such as Schering AG, Boehringer Ingelheim, Viatris, etc. Its product range includes formulations that cater to various therapeutic areas such as cardiovascular, gastrointestinal, respiratory, pain management, CNS, anti-infectives, oncology, neurosciences, dermatology and nephrology segments and consumer product division-brands like Sugar Free, Nutralite and Everyuth. On the consolidated financial front, the net sales have gone up by 10.58 per cent to Rs. 3,516 crore in the quarter ending December 2018 from Rs. 3,179 crore reported in the same quarter of the previous fiscal. The profit before interest depreciation and tax (PBIDT) came in at Rs. 839 crore in Q3FY19 as against Rs. 858.6 crore in Q3FY18, displaying a fall of 2 per cent. In terms of profit after tax (PAT), the company witnessed a drop of almost 6 per cent as it stood at Rs. 513 crore in Q3FY19 as against Rs. 545.4 crore in Q3FY18. The PAT margin has fallen to 14.34 per cent in Q3FY19 from 16.73 per cent in Q3FY18. On the annual front, the net sales shot up 27 per cent to Rs. 11,904 crore in FY18 as against Rs. 9,376.5 crore in FY18. In FY18, the PBIDT has gone up 45 per cent to Rs. 2,961.60 crore as against Rs. 2,048.66 crore in FY17. The PAT jumped 18 per cent to Rs. 1,747.60 crore in FY18 as compared to Rs. 1,483 crore reported in FY 17. On the valuation front, the company is currently trading at a PE multiple of 17.07x while the industry PE stood at 22.10x. The ROCE stood at 18.41 per cent and the ROE was at 22.26 per cent. The company has a good return on equity (ROE) track record in three years at 27.16 per cent. It also has a healthy dividend payout of 19.72 per cent. After reviewing the company we would recommend a HOLD keeping in mind the growth trajectory of the company’s financials.

AMARARAJA BATTERIES

I bought 50 shares of Amararaja Batteries at Rs. 724. Please advise whether I should hold or sell.
 - Ramaswamy 



Amara Raja Batteries Limited is engaged in the manufacture of lead acid storage batteries for industrial and automotive purposes in India. The company’s products are supplied to various user segments, such as telecom, railways, power control, solar and uninterruptible power supply (UPS) under industrial battery business and to automobile original equipment manufacturers (OEMs), replacement market and private label customers under automotive battery business. The company also provides installation, commissioning and maintenance services. The company’s automotive and industrial battery brands include Amaron, PowerZone, etc. On the financial front, on a consolidated basis, the company reported net sales of Rs. 1,694.66 crore in Q3FY19, an increase of 9.09 per cent from Rs. 1553.46 crore in the same quarter of the previous year. The profit before interest depreciation and tax (PBIDT) stood at Rs. 252.77 crore in the third quarter of fiscal year 2019 as against Rs. 134.45 crore reported in the same quarter of the previous year, reflectiong a 4.63 per cent growth. The profit after tax (PAT) in Q3FY19 stood at Rs. 130.89 crore as compared to Rs. 134.45 crore in the corresponding quarter of the previous year showing a marginal fall of 2 per cent. The PAT margin stood at 7.72 per cent in Q3FY19 as against 8.65 per cent in Q3FY18. On the annual front, the net sales expanded by 14 per cent at Rs. 6,059.15 crore in FY18 versus Rs. 5,317.15 crore in FY17. The PBIDT stood at Rs. 949.60 in FY18, a growth of 6 per cent as compared to Rs. 899.15 crore in FY17. The PAT however marginally fell by 1 per cent to Rs. 471.32 crore in FY18 as against Rs. 478.49 crore in FY17. Currently, the 4-wheeler and 2-wheeler segments are experiencing lacklustre demand due to rising cost of insurance and increasing cost of new safety measures. Therefore, it would be a good call to EXIT and book the profits now.

(Closing price as of Mar 07, 2019)