Reviews

In this edition, we have reviewed Bandhan Bank and Filatex India Limited. We suggest our reader-investors to HOLD in Bandhan Bank and Filatex India Limited.

We had previously recommended Bandhan Bank in Volume 34, Issue No. 02, dated December 24, 2018 – January 06, 2019 under the ‘Choice Scrip’ segment. The stock was then trading at Rs 556 and was recommended based on its strong balance sheet and increase in market share in micro loans. Bandhan Bank Limited is a commercial bank, which offers a range of assets, liability products and services designed for micro-banking, general banking as well as other banking products and services.

The net interest earned by the bank in Q2FY20 grew by 67.55 per cent to Rs 2,692.27 crore from Rs 1,605.27 crore in Q2FY19. The total income in Q2FY20 was Rs 3,050.55 crore, an increase of 66.14 per cent from Rs 1,836.08 crore in Q2FY19. For Q2FY20, the net profit stood at Rs 971.80 crore as compared to a net profit of Rs 487.65 crore in Q2FY19.

The GNPA ratio was 1.76 per cent and 1.29 per cent for Q2FY20 and Q2FY19, respectively, while the CRAR ratio was 25.09 per cent and 32.59 per cent in Q2FY20 and Q2FY19, respectively.

On the annual front, the net interest earned by the bank in FY19 increased by 38.35 per cent to Rs 6,644.05 crore from Rs 4,802.30 crore in FY18. The total income earned by the bank in FY19 was Rs 7,707.10 crore, an increase of 39.91 per cent from Rs 5,508.48 crore earned in the previous fiscal year. The net profit increased by 45.03 per cent to Rs 1,957.50 crore in FY19 from Rs 1,345.56 crore gained in FY18. The GNPA ratio was 2.04 per cent and 1.25 per cent for Q2FY20 and Q2FY19, respectively, while the CRAR ratio was 29.20 per cent and 31.48 per cent in FY19 and FY18, respectively. Potential synergies from the bank’s merger with Gruh Finance will aid the bank’s growth. Hence, we recommend a HOLD.

We had previously recommended Filatex India Limited in Volume 34, Issue No. 2, dated December 24, 2018 - January 06, 2019, under the ‘Low Scrip’ segment. The stock was then trading at Rs 62 and was recommended based on the company’s diversified product portfolio, low operating cost and integrated operations. Filatex India is engaged in the manufacturing and trading of synthetic yarn and textiles. It manufactures polyester and polypropylene multifilament yarn and polyester chips.

On the quarterly front on standalone basis, the net sales fell by 5.30 per cent to Rs 680.23 crore in Q2FY20 from Rs 718.33 in Q2FY19. The PBT reported for Q2FY20 was Rs 33.08 crore, up by 7.51 per cent from Rs 30.77 crore in Q2FY19. In Q2FY20, the net profit also increased significantly to Rs 61.84 crore from Rs 20.25 crore, reported in Q2FY19 due to an increase in the deferred tax.

On the annual front, the net sales increased by 45.56 per cent to Rs 2,874.09 crore in FY19 from Rs 1,974.45 crore reported in the previous fiscal year. The PBT stood at Rs 131.1 crore in FY19, thus increasing by 41.45 per cent as compared to Rs 92.67 crore reported in FY18.

The net profit grew by 42.24 per cent to Rs 84.97 crore in FY19 from Rs 59.74 crore in FY18.

The company’s plan to increase the Draw Texturised Yarn (DTY) capacity is underway and is set to commence by April 2020. It intends to set up a captive plant in Dahej (Gujarat) to reduce energy cost; the work for which is proposed to begin in Q3FY20. Hence, we recommend a HOLD.