Query Board

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

PTC India Limited (PTC) is engaged in the business of power and investment. It is involved in the trading of electricity and offers power trading solutions in India as well as business solutions for generators, utilities, cross-border projects, retail, project financing, renewable energy and energy efficiency and consultancy. On a quarterly consolidated front, the company reported net sales of Rs3,551.68 crore in Q4FY20, up by 21.13 per cent from Rs2,932.09 crore in the same quarter for the previous fiscal year. The operating profit of the company came in at Rs382.41 crore in Q4FY20, down by 18.48 per cent from Rs469.08 crore in Q4FY19. The company reported net profit ofRs47.82 crore in Q4FY20, down by 35.6 per cent from Rs74.26 crore in the corresponding period for the previous fiscal year. As for the annual trends, the net sales of the company expanded by 20.87 per cent in FY20 to Rs17,824.51 crore from Rs14,746.61 crore in the previous fiscal year. Operating profit declined by 11.29 per cent to Rs1,846.23 crore in FY20 from Rs2,081.23 crore in FY19. Net profit came in atRs406.10 crore in FY20, down by 17.08 per cent from Rs489.75 crore in the previous fiscal year. The stock is trading at a significant discount to book value, which is likely to change over the long term. Thus, we recommend investor-readers to HOLD this scrip.
 

United Drilling Tools Limited (UDTL) is a manufacturer of wire line and well service equipment, gas lift equipment, down-hole tools and large outside diameter (OD) casing connectors. Its main products are winch, stabiliser and casing pipe and the company manufactures and supplies various kinds of oil drilling tools, equipment and accessories. On a quarterly standalone front, its net sales decreased by 6.28 per cent in Q4FY20 to Rs22.25 crore fromRs23.73 crore in Q4FY19. The company reported operating profit of Rs9.65 crore in Q4FY20, contracting by 24.78 per cent as compared to the operating profit of Rs12.83 reported in Q4FY19. Similarly, net profit fell by 36.18 per cent to Rs8.13 crore in Q4FY20 as compared to Rs12.74 gained in the same quarter for the previous fiscal year. On an annual front, the company reported net sales of Rs111.75 crore in FY20, down by 28.46 per cent from Rs156.20 crore reported in FY19. Operating profit grew by 91.81 per cent to Rs55.96 crore in FY20 as compared to Rs29.17 crore reported in the previous fiscal year. Net profit saw a growth of 82.81 per cent to Rs45.22 crore in FY20 as compared to Rs24.73 crore reported in FY19. Compared to previous years, financial margins have improved for the recent year and hence we recommend investor-readers to BUY this scrip.

SREI Infrastructure Finance Limited is engaged in the business of financing companies and providing infrastructural facilities. The company’s three main business activities can be categorised as fund-based including infrastructure equipment services and project finance; fee-based which includes project advisory, project development, investment banking, alternative investment funds and insurance broking; and lastly, strategic investments consisting of telecommunication infrastructure, transportation, rentals, rural information technology infrastructure and special economic zones (SEZs) and industrial parks.

On a quarterly consolidated financial front, the income from interest was reported at Rs930.66 crore for Q3FY20 which is a decrease of 5.90 per cent as compared to Rs989.06 crore reported for Q3FY19. The total income calculated for Q3FY20 fell by 18.56 per cent to Rs1,402.81 crore from Rs1,722.52 crore in Q3FY19. For Q3FY20, PBT stood at Rs91.89 crore, thus contracting by 38.93 per cent compared to Rs150.47 crore reported for Q3FY19. The company gained net profit of Rs60 crore for Q3FY20, decreasing by 34.36 per cent from the net profit of Rs91.41 crore gained in Q3FY19.

On the annual front, for FY19 the company posted interest income of Rs4,213.68 crore, which is an increase by 9.03 per cent compared to Rs3,864.37 crore for FY18. The total income for FY19 rose by 19.79 per cent to Rs6,469.70 crore from Rs5,400.54 crore for FY18. For FY19, the PBT stood at Rs667.88 crore, thus expanding by 15.86 per cent compared to Rs576.43 crore reported for FY18. It gained net profit of Rs486.85 crore for FY19, which is an increase of 28.94 per cent from the net profit of Rs377.57 crore gained in FY18. The company’s management has indicated that going forward there will be an improvement in collections as operations restart in a phased manner. Thus, we recommend our investor-readers to HOLD the scrip.

Rail Vikas Nigam Limited (RVNL) is a special purpose vehicle (SPV) engaged in undertaking development projects. It is basically an organisation associated with Indian Railways whose task is to build engineering works required for deployment of rail service across India. The company is focused on mobilising financial resources and implementing projects pertaining to reinforcement of the Golden Quadrilateral. It is engaged in creating and improving rail communication links to ports through the construction of bridges and development of multi-modal transport corridors. A few of its rail infrastructure projects include Gooty-Renigunta patch doubling, Gandhidham-Palanpur gauge conversion, Vallaparpadm-Idapally new lines, Renigunta-Guntakal railway electrification, etc.

In financial terms, on a consolidated basis the net sales of the company for Q3FY20 amounted to Rs3,699.27 crore as compared to net sales of Q3FY19 of Rs3,018.74 crore. This indicates a 22.54 per cent increase in total revenue of Q3FY20 as compared to Q3FY19. For Q3FY20 its PBDT stood at Rs283.78 crore – an increase of 15.49 per cent as compared to Rs245.72 crore for Q3FY19. For Q3FY20 the company recorded net profit of Rs197.94 crore, a 3.47 per cent increase in the net profit compared to Rs191.30 crore for the same quarter of the previous fiscal year.

On the annual front, for FY19 the company recorded net sales of Rs10,068.68 crore which is a 32.53 per cent increase when compared to net sales of Rs7,597.36 crore for FY18. The PBDT for FY19 stood at Rs764.10 crore as against Rs569.06 crore for FY18. For FY19 there is an increase of 34.27 per cent in PBDT as compared to FY18. In FY19, net profit was recorded atRs606.62 crore, which is a positive increase of 29.15 per cent compared to net profit of Rs469.71 crore for FY18. With Indian Railways initiating a process to invite private players in passenger train operations, this will lead to benefits and drive growth in the industry. Hence, we recommend investor-readers to HOLD this scrip.

GFL Limited, formerly Gujarat Fluorochemicals Limited, is an India-based holding company operating through three segments, namely, wind energy, power and theatrical exhibition. The wind energy business segment manufactures and supplies wind turbine generators (WTGs), provides erection procurement and commissioning (EPC) services and common infrastructure facility services, and engages in operation and maintenance along with site development services. Its power segment focuses on power generation. The theatrical exhibition segment is engaged in operating and managing multiplex cinema theatres.

On a consolidated quarterly front, net sales declined by 17.59 per cent in Q3FY20 to Rs681.35 crore from Rs826.78 in the same period for the previous fiscal year. On the other hand, the operating profit of the company increased to Rs195.88 crore in Q3FY20 from Rs151.63 crore in Q3FY19, showcasing a growth rate of 29.18 per cent. Net profit was reported at Rs8.02 crore in the quarter ended December 2019 as compared to Rs155.92 crore in the corresponding quarter for the previous fiscal year.

Looking at the annual trends, the company reported net sales of Rs 5,698.11 crore in FY19, expanding by 45.31 per cent from Rs3,921.29 crore in the previous fiscal year. The operating profit reported in FY19 wasRs1,377.05, up by 58.74 per cent from Rs867.51 crore in FY18. Its net profit saw significant growth in FY19, coming in at Rs1,349.45 crore from Rs240.15 crore in FY18.

GFL Limited has a strong market position in the wind turbine manufacturing and cinema exhibition businesses and particularly healthy operating efficiency in its cinema exhibition business. It is the parent company of INOX Leisure, having a holding in the company which is almost equal to its own market capitalisation. INOX Leisure is trading at a discount to its peers and has significant growth potential. Thus, we recommend investor-readers to BUY this scrip.

Future Retail Limited is engaged in the business of retailing a range of household and consumer products through departmental store facilities under various formats. The company offers consumer durable goods, fashion, food, electronics and other products.

On a consolidated quarterly front, the company reported net sales of Rs5,193.19 crore in Q3FY20, down by 3.26 per cent from Rs5,368.46 crore in the same quarter for the previous fiscal year. This decline of revenues was attributed to the closure of small-format stores and exit from select product categories. In terms of operating profit, the company saw a massive 158.05 per cent growth to Rs729.08 crore in Q3FY20 from Rs282.53 crore in Q3FY19. The net profit of the company was reported at Rs165.18 crore in Q3FY20, down by 16.36 per cent from Rs197.48 crore in the corresponding period for the previous fiscal year.

Looking at the annual trends, the company reported net sales of Rs20,164.90 crore in FY19, up by 9.13 per cent as compared to Rs18,477.97 crore in the previous fiscal year. The operating profit of the company stood at Rs1,057.38 crore in FY19 as compared to Rs843.99 crore in FY18, showcasing a growth rate of 25.28 per cent. The net profit of the firm was reported at Rs732.81 crore in FY19, increasing significantly from Rs11.31 crore in the previous fiscal year. The company has shown improving EBIT margins from 1.30 per cent in FY18 to 4.70 per cent in FY19. Its ROCE saw significant improvement on a YoY basis, increasing from 6.52 per cent in FY18 to 19.02 per cent in FY19. I

t is to be noted that there are multiple reports suggesting that Reliance Industries are in talks with Kishore Biyani-led Future Retail, in which Amazon is an investor, for a strategic acquisition. Should a deal unfold, the stock is likely to see significant upside in the future. We thus, recommend investorreaders to HOLD this scrip.

(Closing price as of July 27, 2020)