Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
SHAILY ENGINEERING PLASTICS LTD
Shaily Engineering produces plastic products applicable to diversified segments. It has recently forayed into steel furniture. It includes more than 175 machines. The company’s quarterly consolidated financials recorded net sales and other operating income for Q2FY22 at Rs144.86 crore, recording a strong rise as compared to net sales and operating income of Rs98.72 crore for Q2FY21. The company recorded operating profit for Q1FY22 at Rs23.82 crore as compared to operating profit of Rs17.7 crore registered for Q2FY21, 34.59 per cent higher. The net profit of Q2FY22 improved 43.21 per cent at Rs10.49 crore as compared to net profit of Rs7.32 crore in Q2FY21. In terms of annual performance, the net sales and other operating income were reported to be Rs360.60 crore for FY21, which ascended by 7.31 per cent when compared to Rs336.04 crore for FY20. FY21 reported an increase of 5.15 per cent in operating profit at Rs62.14 crore as compared to Rs59.09 crore for FY20. The net profit stood at Rs22.02 crore in FY21 in comparison with net profit of Rs23.59 crore reported in FY20, slipping by 6.66 per cent. The performance ratios of the company, namely, ROE, ROCE and ROA have declined in FY21 as compared to FY20. The stock is also trading at a decently higher PE ratio as compared to peers. Hence, we recommend EXIT.
STATE BANK OF INDIA
State Bank of India (SBI), a Fortune 500 entity, is an Indian multinational, public sector banking and financial services’ statutory body headquartered in Mumbai. In the quarterly results declared for Q2FY22, net interest income for Q2FY22 increased by 10.65 per cent on a YoY basis. The operating profit increased by 9.84 per cent to Rs18,079 crore in Q2FY22 from Rs16,460 crore in Q2FY21. The bank has registered its highest quarterly net profit of Rs7,627 crore in Q2FY22. This represents increase of 66.73 per cent YoY. The net NPA ratio is at 1.52 per cent, down by 7 bps YoY whereas the gross NPA ratio at 4.90 per cent slipped by 38 bps YoY. The capital adequacy ratio (CAR) as at the end of Q2FY22 stood at 13.35 per cent. On an annual basis, the interest income zoomed 3.04 per cent on a YoY basis from Rs2,57,324 crore to Rs2,65,151 crore. The operating profit grew by 5.02 per cent in FY21 as compared to FY20. Meanwhile, profit after tax ascended 40.88 per cent from Rs14,488 crore to Rs20,410 crore. The GNPA ratio decreased as well as the capital adequacy ratio improved during FY21 as compared to FY20. The bank’s earnings surprised positively despite fully accounting for a one-time accelerated pension cost, given a sustained improvement in asset quality. Owing to steady state asset quality, we recommend HOLD.
JINDAL STEEL & POWER LTD.
Jindal Steel and Power Limited is an industrial powerhouse with a dominant presence in steel, power, mining and infrastructure sectors. The company produces economical and efficient steel and power through backward and forward integration. From the widest flat products to a whole range of long products, JSPL today sports a product portfolio that caters to markets across the steel value chain. The company produces the world’s longest (121 metres) rails and it is the first in the country to manufacture large-size parallel flange beams.
The latest consolidated quarterly financials of the company show that it recorded 67.04 per cent increase in net sales and operating income, which stood at Rs13,611.71 crore for Q2FY22 as compared to the net sales and operating income of Rs8,148.77 crore reported for Q2FY21. The quarter recorded an operating profit of Rs4,597.90 crore in Q2FY22 as compared to the operating profit of Rs2,540.83 crore posted in Q2FY21 – a robust rise of 80.96 per cent. The company reported net profit of Rs2,678.42 crore in Q1FY22, converting positively from net loss of Rs706.51 crore recorded in Q2FY21. In terms of the annual consolidated financials, net sales expanded by 27.98 per cent from Rs30,464.56 crore in FY20 to Rs38,988.63 crore in FY21.
The operating profits jumped up by 119.02 per cent to Rs14,983.17 crore in FY21 versus Rs6,840.90 crore in FY20. The company recorded a net profit of Rs4,267.04 crore in FY21 as against a net loss of Rs727.18 crore in FY20. Enhancing backward integration, JSPL has been declared a preferred bidder for the Kasia iron ore mine, leading to significant enhancement of iron ore security. Initially the company will mine 5 MTPA (EC permission 7.5 MTPA). The company aims to be a net debt-free company by extracting more value from its assets. JSPL’s visibility on volume growth remains robust on the back of a healthy balance-sheet and proven execution. Going forward, plans to continue deleveraging the balance-sheet as it benefits from a strong steel cycle. Hence, we recommend HOLD
MARKSANS PHARMA LTD '
Marksans Pharma Ltd. is a global pharmaceutical company. It is actively engaged in research and development and offers CRAMS to global pharmaceutical companies. The research and development capabilities include dossier development, chemical synthesis, process optimisation, formulation development, analytical development and conducting stability studies. The company works with a team of over 50 experienced scientists specialising in formulation development and analytical development.
The company’s quarterly consolidated financials recorded net sales and other operating income for Q1FY22 at Rs348.96 crore, recording a rise of 5.38 per cent as compared to net sales and operating income of Rs331.15 crore for Q1FY21. The company recorded an operating profit for Q1FY22 at Rs83.22 crore in comparison with operating profit of Rs70.20 crore registered for Q1FY21. The net profit of Q1FY22 stood at Rs62.60 crore as compared to net profit of Rs49.37 crore in Q1FY21, 26.81 per cent higher. In terms of annual performance, the net sales and other operating income were reported to be Rs1,376.18 crore for FY21, which ascended by 21.33 per cent when compared to Rs1,134.21 crore for FY20.
FY21 reported an increase of 79.82 per cent in operating profit at Rs346.30 crore as compared to Rs192.58 crore for FY20. The net profit stood at Rs238.54 crore in FY21 in comparison with net profit of Rs120.75 crore reported in FY20, zooming upward by 97.54 per cent. The sales growth of the company was led by increased penetration in regulated markets despite pandemic- induced logistics’ issues. The company gained from operating efficiencies and a debt-free balance-sheet leading to a decent increase in the bottom-line on a YoY basis. The company has brought on board OrbiMed as a financial partner in its mission to become a global pharmaceutical company. The company focused in continuing to invest in its businesses with OrbiMed’s global network and resources enabling it to accelerate growth momentum in the long term. Hence, we recommend HOLD.