Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Maan Aluminium Limited is engaged in the business of manufacturing aluminium profiles and other related activities with its principal engagement being the production of basic precious and other nonferrous metals. The company’s products are offered in milled finish, silver matte finish and anodized finish in various shades between light bronze to black. On the standalone financial front, for the third quarter of FY20, the company reported net sales of Rs126.10 crore – a decrease of 14.9 per cent from net sales of Rs148.17 crore for the corresponding quarter of the previous fiscal year. PBDT reduced by 29.79 per cent for the third quarter of FY20 and was Rs2.64 crore as compared to Rs3.76 crore for the third quarter of FY19. For the third quarter of FY20, net profit decreased by 36.59 per cent and was recorded at Rs1.30 crore as compared to Rs2.05 crore posted for the third quarter of the previous fiscal year. On the annual front, net sales for FY19 amounted to Rs651.99 crore – an increase of 45.19 per cent as compared to Rs449.07 crore for FY18. For FY19, the PBDT increased by 44.08 per cent toRs16.54 crore compared to Rs11.48 crore for FY18. Net profit for FY19 was Rs9.22 crore, increasing by 43.61 per cent as compared to Rs6.42 crore reported for the previous fiscal year. Considering the company’s financials for the quarter, we recommend a SELL.
Frontier Springs Limited is engaged in the manufacturing of coil springs, leaf springs, Link-Hofmann Busch (LHB) springs and forging items. The company also manufactures tubes, pipes, hollow profiles and tube and pipe fittings of cast iron and cast steel. On a standalone quarterly front, the company reported net sales of Rs21.75 crore in Q4FY20, declining by 10.55 per cent from Rs24.31 crore reported in the same quarter for the previous fiscal year. The profit before taxes in Q4FY20 came in at Rs4.71 crore, increasing by 44.47 per cent from Rs3.26 crore in Q4FY19. Net profit grew by 65.21 per cent to Rs4.56 crore in Q4FY20 from Rs2.76 crore in the corresponding quarter for the previous fiscal year.
On the annual front, net sales grew by 20.13 per cent to Rs99.87 crore in FY20 from Rs83.13 crore in the previous fiscal year. Profit before tax expanded by 70.48 per cent to Rs17.56 crore in FY20 from Rs10.30 crore in FY19. Net profit increased by 67.14 per cent to Rs14.04 crore in FY20 from Rs8.40 crore in the previous fiscal year. Although the company has given encouraging results for the quarter ended March 2020, it is relatively small and hence is susceptible to volatility, especially in the current market environment.- Hence, we recommend our investor readers to AVOID this scrip.
Edelweiss Financial Services Limited is a holding company engaged in providing investment banking and advisory services along with holding activities and investments. The company’s business segments include agency business, capital-based business and life insurance. Its agency business segment is engaged in providing broking, advisory, product distribution and other fee-based services. Its capitalbased business segment includes income from treasury, investments and financing. Its life insurance segment represents results of Edelweiss Tokio Life Insurance Company Limited, a subsidiary of the company.
On the quarterly consolidated financial front, the income from interest was reported at Rs1,373.45 crore for Q4FY20, which is a decrease of 14.34 per cent as compared to Rs1,603.48 crore reported for Q4FY19. The total income calculated for Q4FY20 fell by 35.35 per cent to Rs1,965.87 crore from Rs3,041.20 crore in Q4FY19. For Q4FY20, the company incurred a net loss of Rs2,281.55 crore as against net profit of Rs246.32 crore gained in Q4FY19.
On the annual front, for FY20 the company posted interest income of Rs5,901.95 crore – a decrease of 13.68 per cent compared to Rs6,837.89 crore for FY19. The total income for FY20 fell by 13.96 per cent to Rs9,602.63 crore from Rs11,161.25 crore for FY19. For FY20, the company reported net loss of Rs2,043.77 crore as against net profit ofRs1,044.37 crore gained in FY19.
The previous quarters have been tough for the financial industry which was already under pressure due to a slowing economy and has been further weakened by the corona virus-triggered crisis. Going forward, the asset quality of the company may be affected due to the current economic and financial stress. Though the company intends to focus on minimising incremental pandemic-related slippage through active portfolio management, it will be a long road ahead. We thus recommend a SELL.
DEN Networks Limited is a cable television company engaged in the distribution of television channels through analogue and digital cable distribution network along with the provision of broadband service. Its segments include cable, which consists of distribution and promotion of television channels, and broadband, which consists of providing internet services.
On the consolidated financial front, in Q4FY20, the company reported sales of Rs327.80 crore, an increase of around 20.03 per cent compared to net sales of Rs273.11 crore reported in Q4FY19. There was a 59.64 per cent rise in operating income from Rs65.32 crore for Q4FY20 to Rs104.27 crore reported in Q4FY19. For Q4FY20, the company gained net profit of Rs25.93 crore as against net loss of Rs213.33 crore incurred in Q4FY19.
On the annual front, net sales for FY20 have increased by 7.08 per cent to Rs1,291.45 crore from Rs1,206.07 crore in FY19. Operating profit for FY20 expanded by 69.11 per cent to Rs387.33 crore from Rs229.04 crore posted for FY19. In FY20, the company gained net profit of Rs57.51 crore as against net loss of Rs295.16 incurred in FY19.
In October 2018, Reliance Industries (RIL) announced that it had acquired 66 per cent stake in DEN Networks for Rs2,290 crore. The acquisition received approval from the Competition Commission of India in January 2019. Additionally, RIL acquired a 12.05 per cent stake in DEN Networks in March 2019, taking its total stake in the company to 78.62 per cent. With the appointed date of merger being February 1, 2020, RIL merged its businesses TV18 Broadcast, Hathway Cable & Datacom and DEN Networks into Network 18 Media and Investments. As a result, RIL’s stake in Network 18 Media and Investments reduced from 75 per cent to 64 per cent. This move is a growth driver for DEN Networks as its opens up various growth opportunities. Hence, we recommend a HOLD.
Dr. Lal Path Labs Limited (DLPL) is engaged in offering medical diagnostic, cardiology, radiology, pathology and imaging, health check-up, blood test and customer care services. In addition, the company is engaged in the business of running laboratories for carrying out pathological investigations of various branches of biochemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology and other pathological and radiological investigations. On a quarterly consolidated front, the company’s net sales saw minuscule growth of 0.2 per cent toRs301.70 crore in Q4FY20 from Rs301.10 crore in the same quarter for the previous fiscal year. Operating profit was reported at Rs69.30 crore in Q4FY20, registering a fall of 13.05 per cent from Rs79.70 crore in Q4FY19. Net profit came in at Rs32.60 crore in Q4FY20, down by 31.22 per cent from Rs47.40 crore in the corresponding period of the previous fiscal year.
In terms of annual trends, the company reported net sales of Rs1,330.40 crore in FY20, up by 10.55 per cent from Rs1,203.40 crore in the previous fiscal year. The operating profit in FY20 was Rs398.60 crore, increasing by 17.37 per cent from Rs339.60 crore in FY19. Similarly, net profit saw growth of 13.52 per cent to Rs227.60 crore in FY20 from Rs200.50 crore in the previous fiscal year.
DLPL is all set to benefit from the current corona virus situation as its Delhi laboratory has been approved for virus testing. Meanwhile, the number of walk-in patients has reduced and demand has been subdued across the B2B and B2C channels owing to lockdown. However, once the lockdown is lifted, logistics and number of walk-in patients are likely to improve as around 60 per cent of its business depends on outside Delhi NCR. DLPL continues to grow inorganically with the recent acquisition of two laboratories, one each in Sangli and Yavatmal in Maharashtra. Moreover, its debt-free balance-sheet and solid operating performance should remain the keys to drive growth in the future. Thus, we recommend a HOLD.
Sagarsoft (India) Limited is a provider of business information technology (IT) services, consulting, technology and generation services. The principal business activity of the company is software development and consultancy services. It offers various solutions such as mobile competency, enterprise web applications, testing and quality assurance, analytic and business intelligence and workforce solutions. Its methodology includes domain expertise, execution models, engagements models and delivery models.
On the standalone quarterly front, the company reported net sales of Rs8.97 crore in Q4FY20, down by 14.59 per cent from Rs10.51 crore reported in the same period for the previous fiscal year. The company reported an operating profit of Rs1.73 crore in Q4FY20, down by 26.16 per cent from Rs2.35 crore in Q4FY19.The company’s net profit saw a fall of 68.56 per cent toRs0.48 crore in Q4FY20, from Rs1.52 crore in the corresponding period for the previous fiscal year.
Looking at the annual trends, the company reported net sales of Rs36.73 crore for the fiscal year ended March 2020, down by 10.34 per cent from Rs40.97 crore reported in the fiscal year ended March 2019. The company’s operating profit declined by 50.47 per cent in FY20 to Rs4.86 crore from Rs9.82 crore in FY19. Profit after tax came in at Rs2.34 crore in FY20, down by 62.5 per cent from Rs6.23 crore in the previous fiscal year.
The corona virus pandemic has negatively impacted the performance of the company and may continue to do so, possibly resulting in postponement, termination or suspension of the company’s ongoing projects. Furthermore, restrictions on travel may impact the company’s ability to assign and deploy people at required locations and times to deliver contracted services, thereby impacting its revenue and profitability in the quarters ahead. Owing to this uncertainty, we recommend a SELL.
(Closing price as of July 15, 2020)