QueryBoard

QueryBoard

KARNATAKA BANK 

I bought Karnataka Bank at Rs.124. Should I hold or sell it? 

- Ankush Mundra 

Karnataka Bank Limited is engaged in providing a range of banking and financial services, including retail, corporate banking and para-banking activities, in addition to treasury and foreign exchange business. It operates in four segments: treasury, corporate banking, retail banking and other banking operations. On the financial front, the interest income of the bank stood at Rs.1,514.42 crore in Q3FY19 as compared to Rs.1,332.24 crore, thus witnessing a 13.67 per cent jump YoY. The operating profit in Q3FY19 came in at Rs.400.37 crore, moving up by 24.38 per cent from Rs.321.9 crore in the corresponding period of the previous fiscal. The company’s profit after tax (PAT) stood at Rs.140.41 crore, higher by a substantial 60 per cent approximately in Q3FY19 from Rs.87.38 crore posted in Q3FY18. 

On the annual front, the interest earned by the bank stood at Rs.5,423.75 crore in FY18, up by a marginal 5 per cent as compared to Rs.5,185.4 crore in FY17. The operating profit in FY18 came in at Rs.1,473.17 crore, a jump of 48 per cent from Rs.995.8 crore in FY17. The PAT stood at Rs.325.61 crore in FY18, which was 28 per cent lower from Rs.452.26 crore posted n FY17. On the valuation front, the bank is trading at a PE of 8.63x as against the industry PE of 36.07x. The return on equity (RoE) stood at 6.7 per cent and the return on capital employed (RoCE) stood at 6.61 per cent. We thus recommend a HOLD based on the abovementioned factors. 

DONEAR INDUSTRIES 

I would like to know if it is worth investing in Donear Industries 

- Saurabh Das 

Donear Industries manufactures cotton fabrics and polyester viscose fabrics. Its segments include manufacturing and dealing in textiles and rental property. It offers suitings, trousers and shirting fabrics. It also provides the fabrics to garment makers and wholesalers across 37 countries. Its manufacturing facilities are located at Silvassa and Surat. On a standalone basis, the company’s total income from operations stood at Rs.151.96 crore in Q3FY19 as against Rs.133.59 crore in Q3FY18, posting a growth of 13.75 per cent. EBITDA rose to Rs.16.11 crore in Q3FY19 from Rs.14.80 crore in Q3FY18, thereby rising 8.85 per cent. Net profit climbed to Rs.5.14 crore in Q3FY19 from Rs.4.74 crore in Q3FY18, thereby registering a growth of 8.44 per cent. Profit margin stood at 3.38 per cent in Q3FY19 versus 3.55 per cent in Q3FY18. The EPS increased to Rs.0.99 in Q3FY19 from Rs.0.91 in Q3FY18, registering an increase of 8.79 per cent. 2018 was a modest year for the textile industry. The international demand was subdued on account of the geopolitical threat of a US-China trade war. The domestic industry struggled on account of currency fluctuation. However, the textile and clothing industry is anticipating a turnaround in 2019. There are indications that the international demand will revive next year and this will impact exports favourably. By virtue of the above factors, we recommend a BUY. 

JAIN IRRIGATION 

I have purchased 8700 shares Jain Irrigation at a price of Rs.60. Should I hold or sell the stock at the current level? 

- Ankush Mundra 

Jain Irrigation Systems is a company engaged in agri-business and manufactures plastic products for agriculture, processing of agri products and solar energy generation. The company operates in mainly three segments, hi-tech agri input products, industrial products and non-conventional energy. The high-tech agri input products segment consists of micro and sprinkler irrigation systems, polyvinyl chloride (PVC) pipes, etc. The industrial products segment includes various business lines, such as PVC sheets, polyethylene (PE) pipes for industrial applications and vegetable dehydration. The non-conventional energy segment consists of wind energy, solar and bio-gas. It provides various plastic piping systems that are used in conveyance of fluids, semi-solids, gases and cables. It manufactures a wide variety of precision-irrigation products. 

On the consolidated financial front, the company’s net sales stood at Rs.2,037.69 crore in Q3FY19 as against Rs.1,865.64 crore, witnessing a growth of 9.22 per cent. The profit before interest, depreciation and tax (PBIDT) in Q3FY19 stood at Rs.222.17 crore, expanding by 12.12 per cent from Rs.198.16 crore in Q3FY18. The profit after tax (PAT) of the company was Rs.91.11 crore in Q3FY19, an increase of 36.49 per cent from Rs.66.75 crore in the same quarter of the previous fiscal. 

On the annual front, the company’s net sales stood at Rs.7,964.76 crore in FY18, up by 18 per cent as compared to Rs.6,769.78 crore in the previous fiscal. The PBIDT came in at Rs.111.78 crore in FY18, showing a rise of 11 per cent as against Rs.1000.62 crore in FY17. The company posted PAT of Rs.217.67 crore in FY18, expanding by 25 per cent from Rs.173.98 crore in FY17. On the valuation front, the company is currently trading at a P/E of 11.64x on its TTM earnings, while the industry P/E was 16.67x. The return on equity (ROE) stood at 5.12 per cent and the return on capital employed (RoCE) stood at 9.11 per cent. Based on the company’s improvements in the financials and the valuations, we recommend a HOLD as we expect the company to deliver on the bourses in the coming period. 

ITC 

I have 500 shares of ITC bought at Rs.280 (approx.). Please tell me if as a long term investor I should hold or should I move on to another FMCG stock? 

- Velayutham Somu 

ITC Limited is a holding company, which is engaged in the marketing of fast moving consumer goods (FMGC). The Company operates through four segments: FMCG, Hotels, Paperboards, Paper and Packaging, and Agri Business. The FMCG segment includes Cigarettes, Apparel,Education and Stationery Products, Personal Care Products, Safety Matches, and Agarbattis. TheHotels segment includes Hoteliering. Its Paperboards, Paper and Packaging segment includes paperboards,paper etc. The Agri Business segment includes Agri commodities, such as soya, spices, coffee and leaf tobacco. Its brands include Aashirvaad, Sunfeast Dark Fantasy, Bingo!, Yumitos, YiPPee! among many others. 

On the financial front, the company posted net sales at Rs.11,340.15 crore in Q3FY19 as against Rs.9,852.74 crore, expanding by 15.10 per cent on a YoY basis. The profit before interest depreciation tax (PBIDT) came in at Rs.4,325.77 crore in Q3FY19, up by 11.23 per cent from Rs.3,889.06 crore posted in the same quarter of the previous year. The profit after tax (PAT) climbed by 3.85 per cent in Q3FY19 to reach Rs.3,209.07 crore as compared to Rs.3,090.2 crore posted in the same quarter of the previous year. 

On the annual front, the net sales of the company in FY18 came in at Rs.40,627.54 crore, showing a marginal one per cent growth from Rs.40,088.68 crore posted in FY17. The PBIDT in FY18 was Rs.17,693.77 crore, an increase of 7 per cent from Rs.16,586.33 crore in FY17. The company posted a 10 per cent rise in its PAT, which reached Rs.11,223.25 crore in FY18 as compared to Rs.10,200.9 crore posted in FY17. On the valuation front, the company is currently trading at a P/E of 30.79x as against the industry P/E of 30.49x. The return on equity (ROE) stood at 24.07 per cent and the return on capital employed (RoCE) stood at 35.051 per cent. 

The stock price has been showing some recovery and also the financials exhibit a growth momentum. We, therefore, recommend a HOLD to our reader-investors.

SYMPHONY 

Would it be a good time to buy Symphony at the current level? 

- Rajesh Dhoot 

Symphony Limited is engaged in the manufacturing and trading of residential, commercial and industrial air coolers, both in the domestic as well as international markets. The company operates through mostly two segments, viz., air coolers and corporate funds. 

It offers air coolers in various categories, such as residential air coolers, packaged air coolers and central air coolers. It provides tower, personal, desert, room and window air coolers for residences, shops, showrooms and offices etc. 

On the financial front, on a consolidated basis, the company posted net sales of Rs.240 crore, showing an increase of 9.59 per cent in Q3FY19 as compared to Rs.219 crore posted in Q3FY18. The profit before interest, depreciation and tax (PBIDT) in Q3FY19 came in at Rs.43 crore, falling by around 45 per cent on a YoY basis from Rs.79 crore posted by the company in Q3FY18. The profit after tax (PAT) in Q3FY19 also fell by 43 per cent to Rs.37 crore versus Rs.65 crore posted in Q3FY17. 

On the annual front, the company posted net sales of Rs.798.25 crore in FY18, up by 4 per cent from Rs.764.75 crore posted in FY17. The PBIDT came in at Rs.273.83 crore in FY18, witnessing a growth of 13 per cent from Rs.242.53 crore posted in FY17. The PAT came in at Rs.192.55 crore in FY18 as against Rs.166.28 crore in FY17, a rise of 16 per cent. 

On the valuation front, the company is currently trading at a P/E ratio of 71.20x, while the industry P/E is 45.68x. The return on equity (ROE) stood at 35.77 per cent and the return on capital employed (RoCE) stood at 47.62 per cent. 

We recommend a BUY to our reader-investors at this level as the stock is likely to gain some momentum in the future. Also, as the summer approaches, the company is likely to post some decent financials in the upcoming quarters. 

BAJAJ AUTO LTD. 

I hold some shares of Bajaj Auto Ltd. Could you please advise if I should remain invested? 

- Prasanna Venkatesh 

Bajaj Auto is one of the leading two-wheeler and threewheeler manufacturers in India. The company is India’s largest exporter of two-wheelers and three-wheelers. The company’s business segments include automotive, investments and others. The company has plants in Waluj, Chakan and Pantnagar. 

On a consolidated basis, the company’s total income from operations stood at Rs.7,409.36 crore in Q3FY19 as against Rs.6,387.64 crore in Q3FY18, posting a growth of 15.99 per cent. The company’s 95.39 per cent of the total revenue was generated from the automotive segment, which registered a revenue growth of 16.83 per cent YoY. The balance 4.60 per cent of the total revenue was generated by the investments segment, which delivered revenue growth of a whopping 124.56 per cent. EBITDA was reported at Rs.1,155.35 crore in Q3FY19 in comparison to Rs.1,248.91 crore in Q3FY18, down 7.49 per cent. The company’s PAT rose to Rs.1,220.77 crore in Q3FY19 from Rs.1,013.14 crore in Q3FY18, registering an increase of 20.49 per cent. Total volumes were reported at 12.6 lakh units in Q3FY19, up 26 per cent YoY. Total sales volume of two-wheelers stood at 10.8 lakh units in Q3FY19, up 32 per cent YoY. The sales volumes of three-wheelers stood at 1.8 lakh units in Q3FY19, down by one per cent YoY. 

On the annual front, the consolidated sales of the company stood at Rs.25098 crore in FY18, as against Rs.22988 crore in FY17, registering a growth of 9.18 per cent. The company’s net profit stood at Rs.3931 crore, up 2.79 per cent YoY from Rs.3825 crore in FY17. The company management indicated that the underlying demand conditions are reasonably healthy, with the industry expected to clock 8 to 10 per cent YoY volume growth in Q4FY19. An increase in export realisation, revival in threewheeler space and easing raw material prices are expected in the coming quarters. Looking at these factors, we recommend a HOLD.