Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Rattan India Power Limited is engaged in the business of dealing in power generation, distribution, trading and transmission and other ancillary and incidental activities. On the consolidated quarterly front, its net sales expanded by 17.23 per cent to Rs 371.79 crore in the quarter ended December 2019 from Rs 317.15 crore in the quarter ended December 2018. The company reported an operating profit of Rs 88.87 crore in Q3FY20, decreasing by 26.91 per cent from Rs 121.59 crore in Q3FY19. Largely on account on exceptional items, the company reported a net profit of Rs 1,657.81 crore in Q3FY20 as against a net loss of Rs 1,378.87 crore in the same period for the previous fiscal year.
On an annual basis, its net sales declined by 6.37 per cent in FY19 and were reported at Rs 1,923.62 crore from Rs 2,054.39 crore in FY18. Operating profit recorded in FY19 was 725.48 crore, up by 3.07 per cent from Rs 703.86 crore in FY18. The company, however, reported a net loss of Rs 3,327.97 crore in FY19 and a net loss of Rs 1,663.47 crore in FY18. The company has reported net losses in the last seven consecutive years and we do not see any reason to stay invested in this stock. Owing to the company’s discouraging yearly performances, we recommend a SELL.
Suzlon Energy Ltd. is a company engaged in providing renewable energy solutions. The company produces wind turbines and offers a range of solar energy solutions. Looking at the consolidated quarterly trends of the company, it reported revenue of Rs 653.57 crore for Q3FY20, which is a decrease of 40.08 per cent compared to Rs 1,090.68 crore reported for Q3FY19. The company has stated the operating loss to be Rs 161.16 crore for Q3FY20 as against an operating profit of Rs 307.06 crore reported for Q3FY19. The net loss incurred for Q3FY20 and Q3FY19 was Rs 743.03 crore and Rs 38.62 crore respectively.
On the annual front the company reported net sales of Rs 4,978.46 crore for FY19 which decreased by 38.34 per cent as compared to the net sales of Rs 8,074.61 crore reported for FY18. For FY19 Suzlon reported an operating profit of Rs 41.20 crore as compared to the operating profit of Rs 1,082.23 crore for the previous fiscal year. The net loss was recorded to be Rs 1,531.09 crore for FY19 and Rs 389.18 crore for FY18. Suzlon Energy has been reporting debt problems and continues to seek solutions to reduce it. Additionally, the company’s financial performance doesn’t seem to be attractive. Hence, we recommend our investor-readers to AVOID.
Sandur Manganese and Iron Ores Limited is engaged in the mining of manganese ore and iron ore and the manufacture of ferroalloys.
On a consolidated quarterly front, the company reported net sales of Rs 137.55 crore in Q3FY20, down by 29.43 per cent from Rs 194.91 crore in the corresponding period for the previous fiscal year. Operating profit for the quarter ended December 2019 came in at Rs 39.65 crore, down by 35.41 per cent from Rs 61.39 crore in the quarter ended December 2018. The company reported a net profit at Rs 19.91 crore in Q3FY20, down by 46.76 per cent from Rs 37.40 crore in the same period for the previous fiscal year.
On an annual basis, net sales saw a growth of 14.66 per cent to Rs 702.15 crore in FY19 as compared to Rs 612.40 crore in the previous fiscal year. The company reported an operating profit of Rs 243.09 crore in FY19 as compared to Rs 186.38 crore in FY18, registering an impressive growth of 30.43 per cent. The company reported a net profit of Rs 147.36 crore in FY19, up by 32.25 per cent from Rs 111.34 crore in the previous fiscal year.
The current lockdown has posed severe challenges to Sandhur Manganese and Iron Ore Limited, which has seen disruption at its ferroalloys plant in Ballari, Karnataka. The company was reportedly producing only about 170-200 tonnes of met coke a day with Rs 66 crore worth of locked up raw material inventory. The industry is slowly limping back to normalcy after the Karnataka government recently allowed continuous process industries to operate. This will help restart some economic activity and bring about much-needed liquidity.
The company’s long-term outlook looks positive with good yearly numbers and a continuously improving ROCE on the back of being debt-free. We, therefore, recommend a HOLD.
South Indian Bank Limited is engaged in providing services related to retail and corporate banking and para-banking activities like debit card, third-party product distribution along with treasury and foreign exchange business. The treasury service segment includes interest earnings on investments portfolio, gains or losses on investment operations and earnings from foreign exchange business. Its corporate or wholesale banking segment mainly includes providing loans to the corporate segment whereas the retail banking segment includes providing loans to non-corporate customers. The bank operates through nearly 830 branches with around 40 extension counters and close to 1,290 automated teller machines in the country.
On the quarterly front, the net interest earned by the bank in the third quarter of FY20 came in at Rs 1,967.31 crore as against Rs 1,735.16 crore in the corresponding quarter of the previous fiscal, clocking a growth of 13.38 per cent. The total income in Q3FY20 was Rs 2,187.73 crore, an increase of 13.83 per cent from Rs 1,921.93 crore in Q3FY19. The profit after tax rose by 7.98 per cent to reach Rs 90.54 crore in Q3FY20 as against Rs 83.85 crore in Q3FY19. For Q3FY20 the GNPA percentage was 4.96 per cent as compared to 4.88 per cent in Q3FY19. The CRAR ratio in Q3FY20 was 12.02 per cent and in Q3FY19 it was 11.81 per cent.
On the annual front, the net interest earned by the bank in FY19 came in at Rs 6,876.52 crore, an increase of 11.04 per cent from Rs 6,192.81 crore in FY18. The total income earned by the bank in FY19 was Rs 7,602.73 crore, an increase of 8.15 per cent from Rs 7,030.06 crore earned in the previous fiscal. The profit after tax in FY19 decreased by 26.09 per cent to reach Rs 247.53 crore as against Rs 334.89 in FY18. The company reported GNPA ratio of 4.92 per cent for FY19 and 3.59 per cent for FY18. In FY19, the CRAR ratio was 12.61 per cent whereas in FY18 it was 12.70 per cent. Hence, we recommend HOLD.
Tata Motors Limited is an automobile company that manufactures motor vehicles and operates in 160 countries around the world. The company is engaged mainly in the business of automobile products consisting of all types of commercial and passenger vehicles, including financing of the vehicles sold by the company. Its segments include automotive operations and all other operations.
On a consolidated quarterly front, net sales fell by 6.84 per cent to Rs 71,051.42 crore in Q3FY20 from Rs 76,264.69 crore in Q3FY19. The company reported an operating profit of Rs 8,293.85 crore in Q3FY20, increasing substantially by 22.09 per cent from Rs 6,793.36 crore in Q3FY19. The company reported a net profit of Rs 1,954.51 crore in Q3FY20 as against net loss of Rs 2,6823.22 crore incurred in Q3FY19.
On an annual front, the company reported net sales of Rs 299,190.59 crore in FY19, expanding by 3.39 per cent from Rs 289,386.25 crore in FY18. On the other hand, operating profit saw a decline of 21.98 per cent to Rs 27,629.64 crore in FY19 from Rs 35,415.27 crore in FY18. A net loss of Rs 28,933.70 crore was incurred in FY19 as against net profit of Rs 6,813.10 crore in the previous fiscal year.
Currently, the automotive industry has been facing a severe downturn led by highly subdued volumes on the back of a nationwide lockdown. This ‘black swan’ event coincided with the transition to BS VI emission norms, thereby affecting liquidation of BS IV inventory as well as the ramp-up of BS VI production. At the retail level, closure of showrooms has taken a heavy toll on registrations despite hefty discounting amidst what is normally a festive period in some regions. However, as and when the pandemic comes to an end, recovery is expected in the second half of FY21. Selling now will only result in adverse losses due to idiosyncratic and systematic risks. Hence, we recommend a HOLD.
Ashok Leyland is a manufacturer of commercial vehicles such as medium and heavy commercial vehicles, light commercial vehicles, passenger vehicles and automobile components and services related to automotive aggregates, vehicle financing and engineering design services. It offers a range of trucks, which include long-haul trucks, mining and construction trucks and distribution trucks. The company designs, develops and manufactures defence vehicles for the armed forces as well.
The automotive giant recently accomplished its mission to be amongst the top 10 manufacturers of medium and heavy commercial vehicles and among the top five bus manufacturing companies globally in terms of volume. It has more than 10 successful new product launches.
On a quarterly consolidated front, the net sales dropped by 30.48 per cent in Q3FY20 to Rs 5,148.15 crore from Rs 7,405.78 crore in Q3FY19. For Q3FY20 the PBDT decreased as well by 59.96 per cent at Rs 301.24 crore as compared to Rs 752.42 crore for Q3FY19. Similarly, net profit also fell by 86.79 per cent to Rs 56.64 crore in Q3FY20 as compared to Rs 428.73 crore gained in the same quarter for the previous fiscal year. On an annual front, the company reported net sales of Rs 32,753.24 crore in FY19, up by 10.94 per cent from Rs 29,522.13 crore reported in FY18. PBDT grew by 10.35 per cent to Rs 3,535.94 crore in FY19 as compared to Rs 3,204.25 crore reported in the previous fiscal year. In FY19, the company gained net profit of Rs 2,183.32 crore in FY19, which is an increase by 20.81 per cent from Rs 1,807.25 crore gained in FY18.
It is implied that the automotive industry has reached its bottom potential and a revival from the troublesome economic conditions caused by the virus pandemic will result into high growth earnings as well as valuation expansion for the long term. Based on our analysis, we recommend our investorreaders to HOLD.
(Closing price as of May 06, 2020)