Reviews

In this edition, we have reviewed Thyrocare Technologies and Himadri Speciality Chemicals We suggest our reader-investors to HOLD in Thyrocare Technologies and Himadri Speciality Chemicals 

We had previously recommended Thyrocare Technologies Ltd. in Volume 35, Issue 1 dated December 9 to 22, 2019, in the ‘Choice Scrip’ section. The stock was then trading at Rs 567.35. Belonging to the healthcare segment, Thyrocare Technologies is considered to be India’s first fully automated diagnostic laboratory operating with a centralised processing laboratory in Mumbai for esoteric tests and other regional processing laboratories in major Indian metro cities as well as in certain regions of Asia. The scrip was then recommended based on strong financial performance, better dividend yield and visible growth prospects. On the consolidated financial front, the company posted net sales of Rs 105.79 crore for Q3FY20, up by 9.87 per cent from Rs 96.29 crore in Q3FY19.

The PBDT was Rs 44.24 crore, an increase of 14.29 per cent in Q3FY20 from Rs 38.71 crore, posted in Q3FY19. The company gained a net profit of Rs 27.41 crore in Q3FY20, rising by 37.19 per cent from Rs 19.98 crore, gained in Q3FY19.

On the annual front, the net sales came in at Rs 402.91 crore in FY19, up by 13.08 per cent from Rs 356.32 crore in FY18. In FY19, the PBDT decreased by 0.92 per cent to Rs 163.57 crore from Rs 165.09 crore in FY18. Its net profit in FY19 was Rs 84.48 crore, down by 9.43 per cent from Rs 93.28 crore, posted in FY18. With continuous efforts being taken for the fight against corona virus, the healthcare and pharmaceutical sector is expected to benefit the most.

Thus, we recommend a HOLD.

We had previously recommended Himadri Speciality Chemicals in Volume 35, Issue 1 dated December 9 to 22, 2019, in the ‘Low Scrip’ section. The stock was then trading at Rs 61.95. Himadri Speciality Chemical Ltd. is a coal tar pitch manufacturing company. This product is used in the manufacture of aluminium, which finds application in a variety of industries.

Himadri Speciality offers coal tar pitches, graphite grade binder pitches, graphite grade zero QI pitches and other speciality pitches. The stock was recommended based on the company’s reducing debt, attractive valuation and new plants commissioning in FY20. On the consolidated quarterly front, the company reported net sales of Rs 429.73 crore in Q3FY20, declining by 27.26 per cent from Rs 590.80 crore in Q3FY19. Operating profit was reported at Rs 38.03 crore in Q3FY20 from Rs 163.76 crore in Q3FY19, a fall of 76.78 per cent.

Similarly, its net profit saw a decline of 84.15 per cent from Rs 99.69 crore in Q3FY19 to Rs 15.80 crore in Q3FY20.

On the annual front, the company reported a growth in net sales of 16.92 per cent in FY19 to Rs 2,422.39 crore from Rs 2,071.85 crore in FY18. Operating profit for FY19 was Rs 567.62 crore, increasing by 22.16 per cent from Rs 464.64 crore in FY18. The company reported net profit of Rs 324.24 crore in FY19, up by 30.96 per cent from Rs 247.59 crore in FY18.

Though the sales volume has been impacted due to tepid demand from aluminium, steel and tyre sectors, the company has a reasonably strong balance-sheet and an excellent product profile. As and when the corona virus pandemic subsides, the growth trend is likely to strengthen.

Thus, we recommend a HOLD.

(Closing price as of Apr 22, 2020)