Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Sanwaria Consumer Ltd., formerly Sanwaria Agro Oils Ltd., is an India-based fast moving consumer goods (FMCG) food processing company. It is engaged in manufacturing and selling rice, edible oil and staple food products such as pulses, sugar, soya chunks, wheat flour, rice flour, salt, semolina, white flour, gram flour, oats and soya meal. On the standalone quarterly front, the company reported total income of Rs46.14 crore in Q4FY20, down significantly by 96.95 per cent from Rs584.29 crore in Q4FY19. The company reported an operating loss of Rs539 crore in Q4FY20 as against an operating profit of Rs49.5 crore in the same quarter for the previous fiscal year. Sanwaria Consumer reported net loss of Rs538.04 crore in Q4FY20 as against net profit of Rs40.09 crore in Q4FY19. In terms of annual trends, the company reported total income of Rs2,980.38 crore in FY20, declining by 43.95 per cent from Rs5,317.79 crore in the previous fiscal year. The company reported an operating loss of Rs1,220.57 crore in FY20 as against an operating profit of Rs197.78 crore in FY19. It posted net loss of Rs1,219.62 crore in FY20 as against net profit of Rs157.8 crore in the previous fiscal year. Given the dismal performance of the company for the quarter and year ended March 2020, our recommendation is to SELL the scrip.
Uni Abex Alloy Products Ltd. is engaged in the manufacture of steel castings and products. It produces static, centrifugal castings and assemblies in heat and corrosion-resistant alloys and alloy steel castings for decanters and reformer tubes. It offers reformer tubes and catalyst tubes, harp assemblies and hot collectors or headers, air injection tubes, feed tubes and heat protection tubes, etc. Its plant is located at Thane. On the standalone financial front, for Q4FY20 the company reported net sales of Rs18.42 crore, decreasing by 32.77 per cent compared to net sales of Rs27.40 crore for Q4FY19. For Q4FY20 its PBDT stood at Rs1.64 crore, thus contracting by 72.2 per cent from Rs5.90 crore for Q4FY19. The company incurred net loss of Rs3.18 crore for Q4FY20 as against net profit of Rs5.44 crore gained in Q4FY19. On the annual front, the company’s net sales for FY20 rose by 13.99 per cent to Rs102.43 crore from Rs89.86 crore posted for FY19. The PBDT for FY20 came in at Rs17.67 crore, expanding by 34.37 per cent when compared to Rs13.15 crore for FY19. The company gained net profit of Rs5.37 crore for FY20, decreasing by 42.93 per cent compared to the net profit of Rs9.41 crore gained in FY19. Based on the company’s financials, our recommendation is to AVOID the scrip.
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 like solar irradiance assessment, land acquisitions and approvals, infrastructure and power evacuation, supply chain installation and commission, lifecycle asset management, etc. to name a few. The S 97 wind turbine produced by it is designed to make low wind sites viable. The company’s manufacturing facilities for wind turbine generator components and rotor blades are located in India, Brazil and the US.
Looking at the quarterly trends of the company, Suzlon Energy reported revenue of Rs643.39 crore for Q4FY20, which is a decrease of 54.73 per cent compared to Rs1,421.19 crore reported for Q4FY19. The company has stated operating loss of Rs362.76 crore for Q4FY20 as against operating profit of Rs113.76 crore for Q4FY19. The net loss for Q4FY20 stood at Rs834.14 crore as against net loss of Rs293.42 crore reported for Q4FY19.
On the annual front, the company reported net sales of Rs2,933.20 crore for FY20, which decreased by 41.08 per cent as compared to net sales of Rs4,978.46 crore reported for FY19. For FY20 Suzlon Energy incurred operating loss of Rs832.16 crore as against operating profit of Rs41.20 crore for the previous fiscal year. The net loss was recorded at Rs2,691.39 crore for FY20 whereas the company incurred net loss of Rs1,531.09 crore for FY19.
The company has recently been reporting widening losses and has defaulted on payments. It continues to struggle with liquidity constraints. Considering its unstable condition, we recommend our investor-readers to EXIT the scrip.
Reliance Communications Ltd. is a telecommunications service provider which operates through two segments, namely, India and global operations. Its Indian operations comprise wireless telecommunications services to retail customers through the global system for mobile (GSM) communication technology-based networks and its global operations comprise carrier, enterprise and consumer business units. The company owns internet protocol (IP)-enabled connectivity infrastructure, comprising over 280,000 kilometres of fibre optic cable systems in India, the United States, Europe, the Middle East and the Asia Pacific region.
On a consolidated quarterly front, the company reported net sales of Rs257 crore in Q4FY20, down by 72.45 per cent from Rs962 crore in Q4FY19. The company incurred an operating loss of Rs104 crore in Q4FY20 as against operating profit of Rs126 crore posted in Q4FY19. It incurred net loss of Rs1,546 crore in Q4FY20 as against net loss of Rs7,779 crore incurred in the same quarter for the previous fiscal year.
On an annual basis, net sales fell by 58.03 per cent to Rs1,685 crore in FY20 as compared to Rs4,015 crore in the previous fiscal year. The company reported an operating loss of Rs167 crore in FY20 as against operating loss of Rs560 crore in FY19. It incurred net loss of Rs42,681 crore in FY20 as compared to net loss of Rs7,220 crore incurred in the previous fiscal year. Reliance Communications is non-operational and has lost most of its customers. The company had an overall debt of Rs46,000 crore, heading into insolvency with a total of 53 financial creditors across local and foreign banks, NBFCs and funds. According to the plan approved by lenders, Reliance Communications and its subsidiary, Reliance Telecom Infrastructure Ltd. (RTIL), will go to UVARC whereas the tower company, Reliance Infratel, will go to Reliance Jio for a total consideration of between Rs20,000 crore to Rs23,000 crore to be paid over a period of seven years. Considering the extreme volatility, our recommendation is to SELL the scrip.
Black Rose Industries is a speciality chemicals distribution and manufacturing company. The company’s chemicals distribution division is engaged in the import, distribution and export of a range of speciality and performance chemicals. Its manufacturing division operates an acrylamide manufacturing plant as well as a polyacrylamide manufacturing plant. In addition, it also manufactures fabrics and made-ups for industrial applications.
On a consolidated quarterly front, net sales expanded by 13.03 per cent to Rs98.05 crore in Q4FY20 from Rs86.75 crore in the same period for the previous fiscal year. The operating profit reported by the company for Q4FY20 came in at Rs7.36 crore, down by 4.12 per cent from Rs7.68 crore in Q4FY19. Its net profit came in at Rs4.39 crore in Q4FY20, declining by 9.47 per cent from Rs4.85 crore in the corresponding quarter for the previous fiscal year.
Looking at the annual trends, the company reported net sales of Rs372.63 crore in FY20, increasing by 20.7 per cent from Rs308.71 crore in the previous fiscal year. The operating profit of the company increased by 35.93 per cent to Rs33.43 crore in FY20 from Rs24.59 crore in FY19. The net profit of the company expanded by 48.88 per cent to Rs20.67 crore from Rs13.89 crore in the previous fiscal year.
The company’s sales performance in for Q4 was marred by the pandemic-induced lockdown towards the end of March 2020. About 25 per cent of the projected sales during March were affected due to loss of sale during the crucial last 10 working days of the month. In addition, the crash of the Indian rupee which depreciated to the level of Rs76 from Rs71 had an adverse impact on the company’s bottom-line. After the initial fall due to the pandemic crisis, the company has indicated that off-take from customers has gradually started to reach the pre-pandemic levels. However, given the current levels of heightened uncertainty and the present elevated levels of the stock price, our ecommendation is to BOOK PROFIT in this scrip.
Shalby Limited provides healthcare services by operating a multi-speciality chain of hospitals. Its hospitals are tertiary care hospitals which offer quaternary healthcare services. It provides services for a range of specialisation, including orthopaedics, complex joint replacements, cardiology, neurology, oncology and renal transplantations. The company primarily focuses on Tier I and II cities.
On a consolidated quarterly front, net sales of the company declined by 4.06 per cent to Rs108.88 crore in Q4FY20 from Rs113.49 crore in the same quarter for the previous fiscal year. The operating profit of the company was reported at Rs12.63 crore in Q4FY20, down by 26.67 per cent from Rs17.22 crore in Q4FY19. The company reported net loss of Rs17.11 crore in Q4FY20 as against net profit of Rs3.27 crore in the corresponding quarter for the previous fiscal year.
Looking at the annual trends, net sales reported in FY20 grew by 5.32 per cent to Rs486.85 crore from Rs462.26 crore in the previous fiscal year. Operating profit of the company came in at Rs99.11 crore in FY20, up by 8.15 per cent from Rs91.64 crore in FY19. The company reported net profit of Rs27.59 crore in FY20, down by 12.86 per cent from Rs31.66 crore in the previous fiscal year.
Owing to the pandemic crisis and ensuing lockdown, the company has indicated that revenue for the month of April 2020 registered a 50-80 per cent dip from its pre-pandemic revenue. However, May 2020 witnessed 20 per cent growth from April and the following June numbers saw 100 per cent rise to that of May. Shalby remains a net cash surplus company and with mounting recovery the business has been able to maintain its operations without a hitch. With restrictions on movement on people lifted in many parts of the country and pent-up demand, the company is likely to see an increase in patient footfall for OPD and elective surgeries which should aid revenue prospects in the quarters ahead. Therefore, our recommendation is to HOLD the scrip.
(Closing price as of August 11, 2020)