Reviews

Reviews

In this edition, we have reviewed Parag Milk Foods Limited and Bajaj Finance Limited. We suggest our reader-investors to HOLD in Parag Milk Foods Limited and Bajaj Finance Limited.




We had previously recommended Parag Milk Foods in Volume 33, Issue No. 23, dated October 15 – 29, 2018. The stock was then trading at Rs232.10 and it was recommended based on the company’s huge growth potential, new product range and strong financials. The company is engaged in manufacturing and processing of milk and milk products marketed under brand names such as Gowardhan, Go, Pride of Cows, etc.

Looking at the quarterly trends on a consolidated basis, for Q4FY20, the company posted net sales of Rs535.23 crore which is a decrease by 20.37 per cent compared to net sales of Rs672.15 crore for Q4FY19. Parag Milk Foods reported Rs32.05 crore as PBDT for Q4FY20, decreasing by 24.15 per cent compared to Rs42.25 crore calculated for Q4FY19. The company gained net profit of Rs10.11 crore in Q4FY20, contracting by 67.69 per cent compared to Rs31.29 crore gained in Q4FY19.

Taking into consideration the annual financial trend, for FY20, the net sales of the company increased by 1.76 per cent to Rs2437.92 crore from Rs2395.66 crore for FY19. The PBDT decreased by 8.78 per cent and stood at Rs180.60 crore for FY20 as compared to Rs197.97crore for FY19. Net profit decreased by 22.39 per cent to Rs93.69 crore in FY20 from Rs120.72 crore in FY19.

For Q4FY20, the company’s sales were affected because of skewed FMCG sales as result of the lockdown which was implemented to curb the spread of COVID-19. Parag Milks foods was able to gain sales from its fluid milk category. The company has also launched various new products. With offer doorstep deliver services, the company is expecting to boost sales growth. Hence, we recommend HOLD .




We had previously recommended Bajaj Finance in Volume 35, Issue No. 2, dated December 23, 2019 – January 5, 2020 as part of the cover story. The stock was then trading at Rs4,135.20 and was recommended based on the company’s expected AUM growth and strong business model. Bajaj Finance, which is a non-banking finance company (NBFC), is primarily engaged in lending and allied activities focusing on consumer lending.

On the quarterly consolidated front, the company’s net interest income (NII) grew by 38 per cent in Q4FY20 toRs4,684 crore from Rs3,385 crore in Q4FY19. Its assets under management (AUM) expanded by 27 per cent to Rs147,153 crore in Q4FY20 from Rs115,888 in Q4FY19. The net profit of the company fell by 19 per cent mainly on account of the virus pandemic provisions and was reported at Rs948 crore in Q4FY20 as against Rs1,176 crore in Q4FY19.

On an annual basis, its NII grew by 42 per cent to Rs16,913 crore in FY20 from Rs11,877 crore in FY19. The AUM for FY20 was Rs147,153 crore, expanding by 27 per cent from Rs115,888 crore in FY19. The net profit of the company increased to Rs5,264 crore in FY20 from Rs3,995 crore in FY19. The company is wellcapitalised with CRAR of 25 per cent and has a liquidity surplus of Rs15,725 crore as of March 2020. affected Bajaj Finance enjoys a favourable reputation and name in capital markets and also enjoys a referred partner status among retailers. Given the company’s strong liquidity position, healthy CRAR, strong geographical presence, growing AUM and established parentage, we recommend HOLD .
(Closing price as of July 01, 2020)

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