Reviews
In this edition, we have reviewed JMC Projects (India) Ltd. & Asian Paints Ltd. We suggest our reader-investors to hold in JMC Projects (India) Ltd. and Asian Paints Ltd.
We had recommended JMC Projects (India) Ltd in Volume 36 Issue No. 13 datedMay 24 to June 06, 2021under the “Low Scrip” segment. The recommended price for the stock was Rs 98.45.We had recommended the stock on the basis of factors predicted to drive growth through a healthy order book and comfortable balance sheet. JMC Projects (India), a subsidiary of Kalpataru Power Transmission, is India’s one of the leading contracting companies. JMC has contributed towards country’s infrastructure by constructing highways, expressways, bridges, flyovers, townships, high-rise buildings, hospitals, industrial units, power plants among others. JMC provides services across the construction sector i.e. civil, structural & MEP for all major industries and project types Analysing the financial performance of the company in the recent quarter, on a consolidated quarterly basis the net sales and other operating income was recorded at Rs. 1362.31 crore in Q2FY22 as compared to Rs 842.67 crore in Q2FY21, giving a rise of 61.67 per cent. The operating profited descended 26.4 per cent from Rs 104.75crore in Q1FY21 to Rs 77.10crore in Q1FY22.
Q2FY22 recorded net profit ofRs 8.25 crore asagainst net loss of Rs 10.26 crore reported in Q2FY21. On the annual front the net sales slipped 0.57 per centto Rs3,844.46 crore in FY21 over FY20. The operating profited descended 1.02 per cent in FY21to Rs467.27 crore from Rs 472.09 crore in FY20. The net profit of Rs 6.01 crore was reported in FY21 as comparison to net profit of Rs 24.58 crore reported in FY20, plunging 75.55 per cent. JMC’s order inflows for the current financial year has crossed Rs 9,750 crore, giving a confidence to deliver good growth in the coming quarters.Recently, CARE Ratings, had reaffirmed the rating of long-term bank facilities and short-term bank facilities of the JMC with stable outlook.Taking into consideration strong order book position majorly from reputed clientele and demonstrated execution capability of JMC in civil construction as well as infrastructure projects, the growth momentum is expected to accelerate along with healthy cash generation. Hence, we recommend HOLD.
We had recommended Asian Paints in Volume 36 Issue No. 13 dated May 24 to June 06, 2021 under the “Choice Scrip” segment. The recommended price for the stock was Rs 2,816.65. We had recommended the stock on the basis of new product launches through which the company intended to focus on increasing penetration in the undercoat paint business. Analysing the financial performance of the company in the recent quarter, on a consolidated quarterly basis the net sales and other operating income was recorded at Rs 7096.01 crore in Q2FY22 as compared to Rs 5,350.23 crore in Q2FY21, growing 32.63 per cent. The operating profit declined 22.64 per cent from Rs 1,347.83 crore in Q1FY21 to Rs 1,042.65 crore in Q1FY22. The net profit for Q2FY22 was reported at Rs 594.97 crore as compared to net profit of Rs 840.12 crore reported in Q2FY21. On the annual front the net sales jumped by 7.43 per cent to Rs21,712.79crore in FY21 over Rs20,211.25 crore in Q2FY21. The operating profited accelerated by15.51per cent in FY21 to Rs5158.65crore from Rs 4466.08crore in FY20.A net profit of Rs 3,178.15crore was reported in FY21 in comparison to net profit of Rs 2,723.45 crore reported in FY20.
The company has continued strong topline momentum in Q2FY22, which is evident from strong 2 to 3-year compounded growth rates in volume as well as value. Moreover, piled up demand from metros and Tier1/2 cities supported the growth in top-line. Economy product experienced strong demand whereas new launches in luxury product and premium space underpinned the luxury paint revenue. Meanwhile, water proofing and wood finishes segment have reported decent growth in H1FY22. Also, the company has added 40,000+ new retail outlets in past 18 months. As the management hold optimistic views regarding demand environmentand is keenly focusing on market share as well as market expansion, we recommend HOLD.
(Closing price as of Dec 10, 2021)