Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Reliance Home Finance Limited (RHFL) is a housing finance company and provides a range of solutions such as home loans, loan against property (LAP), construction finance and affordable housing loans. It also provides property solutions services. On a standalone quarterly front, its net sales decreased by 16.21 per cent to Rs.429 crore in Q3FY20 as compared to Rs.512 crore in Q3FY19. For Q3FY20 the company incurred an operating loss of Rs.106 crore as against an operating profit of Rs.88 crore gained in Q3FY19. Subsequently, RHFL incurred a net loss of Rs.74 crore in Q3FY20 as against a net profit of Rs.55 crore gained in Q3FY19. On an annual basis, the company reported net sales of Rs.1,959.86 crore in FY19, increasing by 20.88 per cent from Rs.1,622.37 crore in FY18. PBDT reduced by 57.84 per cent to Rs.104.98 crore in FY19 from Rs.249.01 crore in FY18.Net profit decreased by 59.71 per cent to Rs.67.42 crore in FY19 as compared to Rs.167.33 crore in FY18. Currently, it has been observed that NBFCs continue to struggle in raising funds. Additionally, there has been lack of clarity about the company’s financial status which seems to be quite unstable based on downgraded ratings of its promoter company and previous delays in repayment of NCDs. Hence, our recommendation is to AVOID the stock.
BAG Films and Media Limited is engaged in the business of motion picture, video and television programs production activities, and leasing of production and broadcast equipment. It operates News 24, a national Hindi news channel through its subsidiary, News 24 Broadcast India Limited. In addition, the company operates E 24, a Bollywood entertainment channel, through its subsidiary, E24 Glamour Limited. On a quarterly consolidated front, its net sales declined by 44.96 per cent to Rs.25.80 crore in Q3FY20 from Rs.46.87 crore in Q3FY19. In Q3FY20, the company reported an operating profit of Rs.0.21 crore which reduced significantly by 98.72 per cent from Rs.16.49 crore in Q3FY19. The company reported a net loss of Rs.5.72 crore in Q3FY20 as against a net profit of Rs.9.33 crore in Q3FY19. On an annual front, the company reported net sales of Rs.144.83 crore in FY19, up by 9.45 per cent from Rs.132.32 crore in FY18.Operating profit for FY19 came in at Rs.31.24 crore, up by 9.93 per cent from Rs.28.42 crore in FY18. The company reported a net profit of Rs.4.99 crore in FY19 as against a net loss of Rs.0.93 crore in the previous fiscal year. BAG Films and Media Limited has posted net losses in three of the last four consecutive quarters and we do not see any fundamental drivers to invest in this stock. Thus, we recommend our investor readers to AVOID this stock.
Vikas Proppant and Granite Limited, which was formerly Vikas Granaries Limited, is currently engaged in manufacturing and grading of guar gum powder and grading of guar splits and its derivatives. The company operates an integrated guar gum powder manufacturing plant with approximately 4,050 metric tons (MT) capacity at Chandisar in Gujarat, India. It also has a prime seed processing plant for the supply of guar gum split. Vikas Proppant and Granite offers ‘Adicol’, which is an organically processed and genetically modified organism (GMO) free guar gum powder. Its offerings in Adicol include Adicol 50 NV, Adicol 50 EV, Adicol 75 EV, etc.
The company also produces technical and industrial grades with varied specification. Mostly the company’s products are used in bakery products, ice-creams, pudding, frozen food, baby food, vital fibre food, instant mixes, sauce soups and pet food, among others. On a standalone quarterly front, the company reported net sales of Rs.4.26 crore in Q3FY20, down by 72.32 per cent from Rs.15.39 crore in Q3FY19. For Q3FY20, PBDT contracted by 82.76 per cent to Rs.2.62 crore as compared to Rs.15.20 crore for Q3FY19. Consequently, the net profit also declined by 86.36 per cent and was reported to be Rs.1.63 crore gained in Q3FY20 as against Rs.11.93 crore gained in Q3FY19.
On an annual basis, net sales for FY19 were reported to be Rs.52.77 crore. The company reported an operating profit of Rs.51.58 crore in FY19 as against an operating loss of Rs.0.45 crore in FY18. Vikas Proppant and Granite incurred a net profit of Rs.44.25 crore in FY19 as compared to a net loss of Rs.1.05 crore incurred in the previous fiscal year. The company is said to have a low promoter holding of 22.43 per cent and also has had a low return on equity of 10.23 per cent for the last three years. Despite these factors, the company has posted good consistent profit growth for the past few years. Since it has also been focusing on reducing its debt, the company is expected to witness positive growth. Thus, HOLD.
Future Consumer Limited is a holding company and part of the Future Group. It is basically a food company which is engaged in branding, marketing, sourcing, manufacturing and distribution of fast moving consumer goods, food and processed food products. The company’s product portfolio includes product categories such as basic foods, ready-to-eat meals, snacks, frozen and processed food products, beverages, personal care and home care under its own portfolio of brands. Future Consumer food and spice products are under the brands Fresh and Pure, Golden Harvest, Sangi’s Kitchen and Karmiq whereas snacks and beverages are under Tasty Treat and Sunkist brands. The home care products come under Clean Mate and Pratha brands and other personal hygiene care products under brands such as Care Mate, Sach, Swiss Tempelle and Think Skin.
Looking at the quarterly trends on a consolidated basis, for Q3FY20 the company reported net sales of Rs.923.97 crore, a decrease of 6.79 per cent as against net sales of Rs.991.23 crore for the same quarter of the previous fiscal. PBDT increased by 27.21 per cent for Q3FY20 and was Rs.18.67 crore as compared to Rs.14.67 crore for Q3FY19. For the third quarter of FY20 the company gained a net profit of Rs.2.13 crore which is a significant rise from the net profit of Rs.0.28 crore gained in Q3FY19.
In terms of annual results, net sales saw an increase of 29.03 per cent to Rs.3,880.65 crore in FY19 from Rs.3,007.47 crore in FY18. The company reported PBDT of Rs.58.90 crore in FY19, which is an increase of 73.44 per cent compared to Rs.33.96 crore in FY18. On the other hand, the company gained net profit of Rs.22.31 crore in FY19 as against a net loss of Rs.9.02 crore incurred in FY18. The company has been reporting better financial performance with increase in margins as well since with growing markets it has a higher growth opportunity. Future Consumer continuously strives to broaden its portfolio in order to accurately cater to the growing needs of its consumers. The company is supported by a strong and experienced promoter group. Thus, HOLD.
IOL Chemicals and Pharmaceuticals Limited is engaged in manufacturing and selling of organic chemicals and bulk drugs. It caters to both domestic and international markets and mainly operates through two segments, namely, chemicals and drugs. The chemicals segment produces and sells acetic anhydride, acetyl chloride, mono chloroacetic acid and isobutyl benzene. The drugs segment produces and sells various active pharmaceutical ingredients (APIs) such as ibuprofen and metformin. Its operations include bulk drugs APIs and speciality industrial organic chemicals.
On a standalone quarterly front, the company reported net sales of Rs.511.25 crore in Q3FY20, up by 6.89 per cent from Rs.478.29 crore in Q3FY19. Its operating profit for the quarter ended December 2019 was reported at Rs.163.46 crore, up by 19.87 per cent from Rs.136.36 crore in the quarter ended December 2018. The company reported a net profit of Rs.98.01 crore in Q3FY20, increasing by 19.18 per cent over a net profit of Rs.82.24 crore reported in the same period for the previous fiscal year. On an annual basis, net sales saw growth of 68.37 per cent to Rs.1,685.33 crore in FY19 from Rs.1,000.96 crore in FY18. The company reported an operating profit of Rs.420.02 crore in FY19, up by 233.72 per cent from Rs.125.86 crore in FY18.
Its net profit saw significant growth as well, coming in at Rs.236.70 crore in FY19 as compared to Rs.27.70 crore in the previous fiscal year. The company reported its highest quarterly revenue with strong operational and financial performance during the quarter ended December 2019 largely on account on demand of the company’s flagship product Ibuprofen after the prolonged shutdown of China’s Hubei province. The Ludhiana, India-based firm supplies about a third of the world’s requirement of the drug, with 10 per cent coming from China’s Hubei Biocause Pharmaceutical Company. In addition, the company has also launched new products in the medium and long term with the view of gaining market-share and improving sales. We recommend a HOLD.
NIIT Limited is a skills and talent development company. Its lines of businesses include corporate learning group (CLG), skills and careers group (SNC), and school learning group (SLG). CLG offers managed training services, custom curriculum design and content development, learning administration, learning delivery, strategic sourcing and advisory services. SNC delivers learning and talent development programs in areas of banking, finance and insurance, soft skills, management education, multi-sectoral vocational skills and digital media marketing. SLG provides teaching and learning solutions to schools.
On a consolidated quarterly front, the company reported net sales of Rs.1,073.40 crore in the quarter ended December 2019, up by 10.47 per cent from Rs.971.70 crore reported for the corresponding period for the previous fiscal year. The company reported an operating profit of Rs.209.60 crore in Q3FY20, up by Rs.14.54 per cent from Rs.183 crore in Q3FY19. Net profit for Q3FY20 came in at Rs.128.50 crore, up by 22.26 per cent from Rs.105.10 crore reported in Q3FY19. On an annual basis, net sales grew by 22.89 per cent in FY19 to Rs.3,676.20 crore from Rs.2,991.40 crore in the previous fiscal year. The company reported an operating profit of Rs.702 crore in FY19, up by 29.9 per cent from Rs.540.40 crore reported in FY18. Net profit reported for FY19 was Rs.422.10 crore, up by 36.73 per cent from Rs.308.70 recorded in the previous fiscal year.
With high exposure to the travel, transport and banking vertical, the company’s growth could be impacted due to the outbreak of the coronavirus. However, the recent correction in price factors in most of the negatives. This, coupled with a change in promoters, is expected to lead to healthy capital allocation. The company has a strong order book worth USD 424 million (+13.1 per cent YoY), which is executable over the next 12 months. The deal pipeline is healthy even after four large closures in Q3. As a result, we recommend a BUY on NIIT Technologies.
(Closing price as of Apr 08, 2020)