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Headquartered in Chennai, TVS Motor Company is a manufacturer of motorcycles, scooters, mopeds, three wheelers, parts and accessories.
On a consolidated quarterly basis, for Q2FY20, the net sales decreased by 9.27 per cent to Rs 4,960.27 crore from Rs 5,466.94 crore in Q2FY19. PBDT increased by 2.85 per cent YoY to Rs 456.14 crore in Q2FY20. In Q2FY20, the net profit grew by 15.7 per cent YoY to Rs 259.62 crore. On an annual front, the net sales increased by 20.71 per cent to Rs 20,159.99 crore for FY19, from Rs 16,701.75 crore in FY18. PBDT increased by 16.80 per cent to Rs 1,522.86 crore for FY19, as compared to Rs 1,303.84 crore for FY18. In FY19, the net profit rose by 8.96 per cent to Rs 723.70 crore, from Rs 664.21 crore recorded in FY18. More the P/E ratio, the more price a shareholder is paying for every rupee of earnings of the company. EPS show how much earnings every share has a right to. The current P/E ratio of TVS Motors is 31, which is on a higher side compared to that of its peers such as Bajaj Auto (18), Hero MotoCorp (13) and of Eicher Motors (29) causing the company’s investors to factor in higher growth expectations in EPS for TVS, as compared to its peers. Over the period from 2015 to 2019, TVS has shown an increase in EPS of 21 per cent CAGR. Hence, we recommend a HOLD.
Transcorp International offers foreign exchange services, focussing mainly on money changing and transfers. It operates through travel, tour and allied segments and offers a range of products, such as currency exchange, travellers’ cheque and travel cards. On a consolidated quarterly front, the net sales in Q2FY20 grew by 77.37 per cent to Rs 656.81 crore from Rs 370.3 crore in Q2FY19. The company reported an operating loss of Rs 2.77 crore in Q2FY20, as compared to an operating loss of Rs 2.44 crore incurred in Q2FY19. Due to investments made in developing systems and pre-paid instrument business, the company incurred a net loss of Rs 2.11 crore in Q2FY20, as compared to a net loss of Rs 1.78 crore in Q2FY19. On an annual basis, the company’s sales grew to Rs 1,475.5 crore in FY19, up by 79.74 per cent as compared to net sales of Rs 820.93 reported in FY18. The company reported an operating loss of Rs 12.71 crore in FY19 as against an operating profit of Rs 34.33 crore in FY18. Net loss amounting to Rs 9.85 crore was incurred in FY19 as against net profit of Rs 25.29 crore gained in the previous fiscal year. Transcorp International has a high operating cost structure which narrows the profit margins of the company to a large extent. Owing to this cost, the company has been reporting operating losses over the last two quarters. Thus, we recommend our investor-readers to SELL.
Jain Irrigation Systems Limited is an agri-business company. The company is engaged in the manufacturing of plastic products and of fruit or vegetable juices and their concentrates, squashes and powder. Its business segments include hi-tech agri input products, industrial products and non-conventional energy. Its products segment consists of micro and sprinkler irrigation systems, Polyvinyl Chloride (PVC) pipes, PVC sheets, Polyethylene (PE) pipes, etc. The non-conventional energy segment consists of wind energy, solar and bio-gas.
Looking at the quarterly trends on consolidated basis, for Q2FY20, the company reported net sales of Rs 1,388.28 crore, a decrease of 26.74 per cent, as against the net sales of Rs 1,895.11 crore for Q2FY19. For Q2FY20, the company incurred an operating loss of Rs 103.44 crore, as against an operating profit of Rs 106.42 crore gained in Q2FY19. Subsequently, Jain Irrigation incurred a net loss of Rs 133.61 crore in the second quarter of FY20, as against a net profit of Rs 18.32 crore gained in the second quarter of FY19.
On the annual front, in FY19, the company reported net sales of Rs 8,576.94 crore, an increase of 8.63 per cent over the net sales of Rs 7,895.54 crore, reported in the previous fiscal. For FY19, the PBDT stood at Rs 683.27 crore as against Rs 634.14 crore for FY18. In FY19, the net profit increased by 15.08 per cent to Rs 250.48 crore from Rs 217.66 crore, posted in the previous fiscal. The company’s working capital and interest payments have been considerably eating up its operating cash flow hence, leaving it with negligible amounts to be used for debt repayment purposes.
Thus, the company can be considered to be caught in a debt trap as total debt (long-term plus short-term), which has been increasing and stood at Rs 5,247.42 crore for FY19, from Rs 4,453.32 crore in FY18. It is assumed that the company’s stocks will continue to see a drag until debt related issues are solved.
Take Solutions is engaged in computer programming consultancy and related activities. The company provides a range of domain knowledge and technologybased solutions and services specifically in business verticals such as life sciences and supply chain management. In the life sciences space, it offers its Clients Internet Protocol (IP) based offerings and solutions to enable clinical, regulatory, safety and content management. In the supply chain domain, the company focusses on mobility and collaboration requirements of customers, including e-business solutions and integrating their supply chains with their distributors, suppliers and contract manufacturers.
On a quarterly consolidated front, the net sales grew by 17.93 per cent in Q2FY20 to Rs 608.38 crore, from Rs 515.87 crore in Q2FY19. The company reported an operating profit of Rs 61.99 crore in Q2FY20, decreasing by 15.98 per cent as compared to the operating profit of Rs 73.78 reported in Q2FY19. Similarly, net profit fell by 16.14 per cent to Rs 50.98 crore in Q2FY20 as compared to Rs 60.79 gained in the same quarter for the previous fiscal year.
On an annual front, the company reported net sales of Rs 2,038.99 crore in FY19, up by 28.46 per cent from Rs 1,587.24 crore reported in FY18. Operating profit grew by 14.74 per cent to Rs 215.68 crore in FY19, as compared to Rs 187.97 crore reported in the previous fiscal year. Net profit saw a growth of 11.59 per cent to Rs 178.39 crore in FY19, as compared to Rs 159.86 crore reported in FY18.
The revenues from the company’s segment namely core life science which contributes by 92 per cent to the total revenue, grew by an impressive 38 per cent CAGR over the last 5 years and is likely to continue this growth trend in the future. Moreover, with acquisitions of KAI Research and DataCeutics, the growth in the company is driven both by organic and inorganic expansion. Thus, we recommend a HOLD.
Sanghi Industries is engaged in the manufacturing and sale of cement and clinker. It operates in both domestic and export markets and offers products, including Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC) under the brand name Sanghi Cement. Additionally, the company also provides a service called Shakti Rath, which is a mobile concrete testing laboratory having all the necessary equipment and facilities required for onsite concrete testing.
On a quarterly front, the net sales reported for the second quarter of FY20 were Rs 204.65 crore, decreasing by 16.16 per cent from Rs 244.11 crore in Q2FY19. The company was not required to make any income tax provision due to carried forward set-offs available to it under the Income Tax laws. Hence, it reported a significant increase in the net profit of Rs 6.21 crore gained in the second quarter of the current fiscal year compared to net profit of Rs 1.96 crore gained in the corresponding quarter of the previous fiscal year. Reduction in depreciation expenses for Q2FY20 attributed to the immense increase in net profit.
On an annual basis, the reported net sales stood at Rs 1,060.61 crore, increasing marginally by 0.87 per cent from Rs 1,051.45 in FY18. In FY19, the net profit registered a degrowth of 43.63 per cent to be Rs 52.6 crore as compared to Rs 93.31 crore gained in the previous fiscal year.
Sanghi Industries has a large percentage of shares pledged by the promoters at 94.41 per cent as of September 2019. This is a red flag in terms of corporate governance of the company and is likely to keep the stock beaten in the future. Moreover, sales have been on a downward trend since the last two quarters owing to a subdued demand growth in Gujarat. Since sales are a key driver of growth, the decrease in sales does not bode well for the financial viability of the company in the long-term.
Hence, we recommend a SELL.
Bayer CropScience Limited is engaged in manufacturing of insecticides, rodenticides, fungicides and herbicides by operating through the Agri Care segment. It offers crop solutions for various crops, such as cotton, fruits, millet, mustard, pulses, rice, soybeans, sugar cane, vegetables, wheat and also various pest management solutions like professional pest management for household or structural pests and vector management for pests that pose a threat to public health.
On the standalone financial front, in Q2FY20, the net sales increased by 9.11 per cent to Rs 1,346.30 crore from Rs 1,233.90 crore in Q2FY19. PBDT decreased by 7.69 per cent to Rs 232.90 crore in Q2FY20, as compared to Rs 252.30 crore in Q2FY19. The company reported a mere growth of 1.8 per cent in net profit of Rs 169.80 crore gained for Q2FY20, compared to Rs 166.80 crore, gained in Q2FY19.
On the annual front, net sales in FY19 fell by 2.30 per cent to Rs 2,685.70 crore from Rs 2,749 in Q2FY19. PBT for FY19 decreased by 9.28 per cent to Rs 366.3 crore as compared to Rs 403.8 crore of FY18. In FY19, the company’s profit was Rs 237.6 crore, a decrease by 20.82 per cent, compared to Rs 300.1 crore in FY18.
Majorly, the stock is displaying a bullish trend as it is trading above its weekly pivot and short & long-term moving averages, that is, 20-week EMA, 50-week EMA, 100-week EMA, and 200- Week EMA. Three days ago, the 50-DMA crossed over the 200-DMA and was termed as the ‘golden crossover’, which is a long-term bullish signal. Last week, the volumes recorded were above 50-week average, which is a sign of accumulation. Among the momentum indicators, the 14-period weekly RSI is currently quoting at 61.01 and it is in super bullish zone. The weekly and daily MACD stays bullish as it is trading above its zero line and signal line. Moreover, the stochastic oscillator is also suggesting some bullish strength as per cent K is above the per cent D. Hence, we recommend to HOLD.