Reviews

In this edition, we have reviewed KNR Constructions Limited and Godrej Consumer Products Limited We suggest our reader-investors to HOLD in KNR Constructions Limited and Godrej Consumer Products Limited

KNR Constructions Ltd. is a multi-domain infrastructure project development company providing EPC services across numerous sectors such as road and highways, irrigation and urban water infrastructure management.

We had previously recommended the scrip in Volume No. 34, Issue No. 14, dated June 10 – 23, 2019 under the ‘Choice Scrip’ section. The scrip was then trading at Rs. 287.25 and was recommended based on strong order pipeline, healthy revenue and a clean balance-sheet. Looking at the consolidated quarterly results, its net sales posted growth of 24.78 per cent to Rs. 603.75 crore in Q3FY20 from Rs. 483.85 crore in Q3FY19.

The company reported an operating profit of Rs. 170.14 crore in Q3FY20, up by 21.90 per cent from Rs. 139.57 crore in Q3FY19. For Q3FY20, KNR Constructions gained a net profit of Rs. 49.96 crore, which is a slight decrease of 1.07 per cent compared to Rs. 50.50 crore in Q3FY19.

Looking at the annual trend, its net sales increased by 10.72 per cent to Rs. 2,291.50 crore in FY19 from Rs. 2,069.60 crore in FY18.The company reported an operating profit of Rs. 611.02 crore for FY19, expanding by 21.71 per cent compared to Rs. 502.04 crore in FY18. Its net profit rose by 14.38 per cent to Rs. 261.81 crore gained in FY19 as against Rs. 228.89 crore gained in FY18.

Apart from a healthy order book, the company’s performance is being driven by decent execution and physical performance of its projects.

Hence, we recommend a HOLD.

We had previously recommended Godrej Consumer Products Limited (GCPL) in Volume 34, Issue No. 3, dated January 7 – 20, 2019, under the ‘Choice Scrip’ segment. The stock was trading at Rs. 807.65 then and was recommended based on attractive valuations and boost in growth of the company due to new product launches.

It had also posted strong growth and recovery in key international markets. The company engages in manufacturing personal and household care products such as Cinthol soap, Good Knight mosquito repellent, Hit pesticide, Protekt hand wash, etc. On the consolidated financial front for Q3FY20, the company posted net sales of Rs. 2,755.08 crore which is an increase by 2.10 per cent compared to net sales of Rs. 2,698.50 crore for Q3FY19. The PBDT increased by 3.90 per cent to Rs. 602.09 crore in Q3FY20 as against Rs. 579.47 crore in Q3FY19.

The company’s net profit rose by 5 per cent to Rs. 444.63 crore in Q3FY20 compared to net profit of Rs. 423.47 core in Q3FY19. As for the annual financial trend for FY19, the net sales of the company increased by 3.6 per cent to Rs. 10,221.07 crore from Rs. 9,865.90 crore in FY18. The PBDT increased by 2.79 per cent to Rs. 2,254.68 crore for FY19 as against Rs. 2,193.48 crore for FY18.

The net profit increased by 43.28 per cent Rs. 261.81 crore gained in FY19 as against Rs. 228.89 crore gained in FY18. Apart from a healthy order book, the company’s performance is being driven by decent execution and physical performance of its projects. Hence, we recommend a HOLD. to Rs. 2,341.53 crore in FY19 from Rs. 1,634.18 crore in FY18. New product launches and balanced product mix provide a strong platform for the company’s growth along with increase in demand on the global front. Hence, we recommend a HOLD.