Query Board

This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.

IOL Chemicals and Pharmaceuticals Limited is a pharmaceutical company engaged in manufacturing and selling of organic chemicals and bulk drugs. It caters to both domestic and international markets and operates through two segments. Its operations include bulk drug APIs and speciality industrial organic chemicals. On a quarterly standalone front, its total income increased by 5 per cent to Rs446.81 crore in Q4FY20 from Rs424.49 crore in Q4FY19. In Q4FY20, the company reported an operating profit ofRs142.20 crore which reduced by 11 per cent fromRs159.34 crore in Q4FY19. The company reported a decrease in net profit by 11 per cent to Rs90.03 crore in Q4FY20 as against net profit ofRs101.65 crore in Q4FY19. On the annual front, the company reported total income ofRs1,910.49 crore in FY20, up by 13 per cent fromRs1,695.70 crore in FY19. Operating profit for FY20 came in at Rs589.90 crore, up by 40 per cent from Rs420.02 crore in FY19. The company reported an increase in net profit by 51 per cent to Rs361.29 crore in FY20 as compared to Rs236.70 crore in FY19.

The company has become debt-free as of March 31, 2020 by pre-paying its outstanding term loan. Since the company has a well-established business position leading to continued generation of healthy profits, we recommend HOLD.

Asian Granito India Limited is engaged in the business of manufacturing various tiles such as wall, ceramics, marble and quartz. The company manufactures several types of vitrified tiles, including glazed, that are polished in over 1,200 designs. It also exports its products to approximately 50 countries. On the consolidated quarterly front, the company reported net sales of Rs297.86 crore in Q3FY20, increasing by 0.55 per cent from Rs296.22 crore reported in Q3FY19. The operating profit of the company came in at Rs34.33 crore in Q3FY20 as compared to Rs24.98 crore in Q3FY19, showcasing a growth rate of 37.43 per cent. The net profit of the company was reported at Rs11.04 crore in Q3FY20, increasing by more than two-fold from Rs4.97 crore in Q3FY19. On an annual basis, net sales grew by 1.3 per cent in FY19 to Rs1,186.66 crore from Rs1,171.40 crore in FY18. The operating profit of the company was down by 36.14 per cent on YoY basis and was reported at Rs90.63 crore in FY19 from Rs141.92 crore in FY18. Similarly, the net profit saw a fall of 65.53 per cent and came in at Rs18.74 crore in FY19 fromRs54.36 crore in FY18. The sectoral slowdown will pose challenges for Asian Granito in the quarters ahead and given that the company is not a market leader in its space, the slowdown is likely to have a bigger impact. Given the current valuations, we would recommend BOOK PROFIT on this scrip.

Larsen and Toubro Limited is a technology, engineering, construction, manufacturing and financial services company. It manufactures engineering equipment, undertakes large-scale engineering projects and acts as the Indian representative for a number of overseas’ manufacturers of heavy machinery.

On a quarterly consolidated front, the company reported net sales of Rs44,245.28 crore in the quarter ended March 2020, increasing by 2.18 per cent from Rs43,303.40 crore in the corresponding quarter for the previous fiscal year. Growth in revenue was mainly on account of the company’s IT services, hydrocarbon and financial services’ segments. In terms of operating profit, the company reported Rs7,717.15 crore in Q4FY20 and Rs7,856.76 crore in Q4FY19 – a decline of 1.78 per cent. Net profit came in at Rs3,415.84 crore in Q4FY20, declining by 12.78 per cent fromRs3,916.13 crore in the same period for the previous fiscal year.

On an annual basis, net sales saw growth of 7.57 per cent in FY20 to Rs145,452.36 crore fromRs135,220.29 crore in the previous fiscal year. The operating profit of the company was reported at Rs26,731.76 crore in FY20, up by 8.88 per cent from Rs24,551.80 crore in FY19. Net profit came in at Rs10,822.32 crore in FY20, expanding by 5.71 per cent from Rs10,237.57 crore in the previous fiscal year.

The domestic order inflow grew 9.3 per cent on YoY basis, more than offsetting the subdued inflow for international orders which fell by 4.6 per cent on YoY basis. On the whole, the company’s order book rose 4.5 per cent YoY to Rs303,857 crore in FY20. The company has a strong order book and the order inflow momentum is expected to improve post the lockdown phase. It is likely to emerge stronger in the post-pandemic era to further consolidate its market share in the Indian construction industry. Given the current upside potential following a recent correction, we recommend HOLD on this scrip.

Chemicals and Fertilisers Limited is a fertiliser and chemical manufacturing company. It manufactures urea, complex fertilisers, bio-fertilisers, micro-nutrients, water-soluble fertilisers, soil conditioners and a range of industrial chemicals.

On a consolidated quarterly front, net sales were reported atRs2,606 crore in Q4FY20, up by 14.95 per cent from Rs2,266.98 crore in Q4FY19. The operating profit of the company came in at Rs424.32 crore in Q4FY20 as compared to Rs156.76 crore in Q4FY19, representing an impressive growth rate of 170.68 per cent. Similarly, in Q4FY20, its net profit jumped nearly three-fold and was reported at Rs142.28 crore from Rs48.47 crore in the same period for the previous fiscal year.

On an annual basis, net sales expanded by 9.14 per cent in FY20 to Rs9,697.95 crore from Rs8,885.47 crore in FY19. The company reported an operating profit ofRs711.96 crore in FY20, increasing by 36.04 per cent from Rs523.35 crore in the previous fiscal year. The company reported a net profit of Rs208.15 crore in FY20, showcasing growth of 49.57 per cent from Rs139.17 crore in FY19.

Despite various challenges, the financial performance of the company has been quite impressive in FY20 as compared to the previous year, even going on to post its highest growth in revenue since its inception. The farming sector is expected to get help from a good monsoon forecast in FY 2020-21, while the fertiliser industry will benefit from a relief package authorised by the centre – an approved vintage allowance of Rs150 per tonne of urea to certain plants and additional fixed cost of Rs350 per tonne of urea as per Modified NPS III which was long-awaited and will provide cost advantage to the company, As a result, the company looks fully geared up to face the upcoming challenges despite the ongoing pandemic crisis. Hence, we recommend HOLD.

IndiaMART InterMESH is an online marketplace connecting buyers with suppliers. The company’s online channel focuses on providing a platform to small and medium enterprises (SMEs), large enterprises as well as individuals. Its product categories include industrial plants and machines, electronics and electrical, industrial supplies, building and construction, apparel and garments, food and beverages, medical and healthcare, packaging machines and goods, chemicals, dyes and solvents, mechanical parts and spares, etc.

On the consolidated financial front, the nets sales for the fourth quarter of FY20 amounted to Rs170.10 crore, an increase of 23.26 per cent as compared to net sales ofRs1,338 crore for the fourth quarter of FY19. The PBDT for the fourth quarter of FY20 was reported to be Rs67.80 crore, which is an increase of 99.14 per cent as compared to Rs34.90 crore reported for the same quarter of the previous fiscal year. There was a significant increase in net profit by 59.57 per cent for the fourth quarter of FY20 to Rs45 crore from the net profit ofRs28.20 crore gained in Q4FY19.

Looking at the annual trend, net sales amounted to Rs638.90 crore for FY20, thus increasing by 25.92 per cent when compared to Rs507.40 crore for FY19. In FY20, PBDT also increased significantly to Rs234.20 crore from Rs58 crore reported for FY19.

The company calculated the net profit for FY20 at Rs149 crore, which is a tremendous increase compared to the net profit ofRs20.10 crore gained in FY19. The company was able to maintain modest growth in revenues in these turbulent times of the virus pandemic. However, going forward there could be a decline in demand, but in the long term this will be offset as business houses now prefer to adapt to online deals and transactions.

The company is well-diversified over various product categories and also has a strong balance-sheet, which will aid its growth potential. Thus, we recommend HOLD.



Tata Consultancy Services Limited (TCS) provides information technology (IT) services and digital and business solutions. Its business segments include banking, finance and insurance services (BFSI), manufacturing, retail and consumer packaged goods (CPG), telecom, media and entertainment, among others.

Looking at the quarterly trends on a consolidated basis, for the fourth quarter of FY20, the company reported net sales ofRs39,946 crore, an increase of 5.09 per cent as compared to the net sales of Rs38,010 crore for the same quarter of the previous fiscal. PBDT also increased by 1.99 per cent for the fourth quarter of FY20 and was Rs11,463 crore as compared to Rs11,239 crore for the fourth quarter of FY19. For the fourth quarter of FY20, the net profit decreased by a mere 0.72 per cent to Rs8,093 crore when compared to Rs8,152 crore in the fourth quarter of the previous fiscal.

On the annual front, in FY20, the company reported net sales of Rs156,949 crore, an increase of 7.16 per cent over net sales of Rs146,463 crore reported in the previous fiscal year. For FY20, the PBDT stood at Rs45,777 crore, which is an increase of 4.95 per cent compared to Rs43,619 crore for FY19. In FY20, the company reported a rise in net profit by 2.8 per cent to Rs32,447 crore from Rs31,562 crore posted in the previous fiscal.

For the company, Europe has been a key growth region for the exploration and expansion of its business operations. Though the company displayed minimal impact of the pandemic during Q4FY20, the management has stated that the peak of the virus outbreak impact on TCS will be seen in H1FY21 and following it will be a recovery period during H2FY21. Owing to successful contract wins and market-share gains, TCS is expected to witness positive revenue growth levels. Hence, we recommend HOLD.
(Closing price as of July 01, 2020)