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 also provides business solutions for generators, utilities, cross-border solutions, PTC retail, project financing, renewable energy, and energy efficiency and consultancy. On a quarterly consolidated front, the company reported net sales of Rs 4,589.24 crore in Q1FY21, down by 14.64 per cent from Rs 5,376.44 crore in the same quarter for the previous fiscal year. The operating profit of the company came in at Rs 414.19 crore in Q1FY21, down by 11.49 per cent from Rs 467.97 crore in Q1FY20. The company reported net profit of Rs 100.04 crore in Q1FY21, up by 6.91 per cent from Rs 93.57 crore in the corresponding period for the previous fiscal year. In terms of annual trends, the net sales of the company expanded by 20.87 per cent in FY20 to Rs 17,824.51 crore from Rs 14,746.61 crore in the previous fiscal year. Operating profit declined by 11.29 per cent to Rs 1,846.23 crore in FY20 from Rs 2,081.23 crore in FY19. Net profit came in at Rs 406.10 crore in FY20, down by 17.08 per cent from Rs 489.75 crore in the previous fiscal year. The stock is trading at a discount to book value, which is likely to change over the long term. Given the current levels of the stock, we recommend our investor readers to BOOK PROFIT partially on this scrip.
Hisar Spinning Mills is engaged in the manufacture of cotton yarns. On a standalone quarterly front, the company reported net sales of Rs 7.41 crore in Q4FY20, down by 10.46 per cent from Rs 8.28 crore in the same quarter for the previous fiscal year. Operating profit was reported at Rs 0.85 crore in Q4FY20, down by 47.85 per cent as compared to Rs 1.63 crore in Q4FY19. Net profit came in at Rs 0.38 crore in Q4FY20, down by 53.9 per cent from Rs 0.82 crore in the corresponding quarter for the pr evious fiscal year. Looking at the annual trends, net sales increased by 3.07 per cent in FY20 to Rs 31.41 crore from Rs 30.48 crore in FY19. The company reported operating profit of Rs 4.08 crore in FY20, down by 17.53 per cent from Rs 4.95 crore in the previous fiscal year. The net profit of the company was reported at Rs 1.93 crore in FY20, declining by 14.86 per cent from Rs 2.27 crore in FY19. Hisar Spinning Mills has been adversely affected by the onset of the pandemic crisis and resulting lockdowns and has seen headwinds in terms of demand. The company expects a significant impact on profits due to lower sales in the current financial year. This impact is very likely to be seen in the Q1 results which are yet to be released. Given the present conditions, we recommend investors to AVOID this scrip.
ACC Limited is engaged in the manufacturing of cement and ready-mixed concrete. Its segments can be broadly classified into cement and ready-mix concrete. The company manufactures cement, which includes Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC) and Ready-Mixed Concrete (RMX).
On a consolidated quarterly front, net sales were reported at Rs 2,520.30 crore in Q2CY20, down by 37.91 per cent from Rs 4,059.28 crore in Q2CY19. This decline was primarily due to a drop in cement volumes on account of the lockdown. The operating profit of the company came in at Rs 576.64 crore in Q2CY20, down by 31.07 per cent from Rs 836.51 crore in Q2CY19. Net profit of the quarter ended June 2020 was Rs 268.74 crore, declining by 40.65 per cent from Rs 452.81 crore in the quarter ended June 2019.
In terms of annual trends, the company reported net sales of Rs 15,343.11 crore in CY19, up by 5.98 per cent from Rs 14,477.47 crore in the previous calendar year. Operating profit for CY19 came in at Rs 2,731.21 crore, increasing by 24.67 per cent from Rs 2,190.78 crore in CY18. The net profit of the company declined by 9.72 per cent to Rs 1,363.52 crore in CY19 from Rs 1,510.30 crore in the previous calendar year.
Considering the recent initiatives by the government to boost the cement industry amidst the adverse impact of the ongoing pandemic and intermittent lockdowns in major cities, demand is likely to show better recovery in the quarters ahead. Demand recovery will be driven by better rural and IHB segments while urban housing and infrastructure-driven demand are likely to remain limited. Owing to lower pet coke and crude prices, the fuel and packing cost for ACC are likely to remain low which will aid margins in the quarters ahead. Given ACC’s deep penetration in rural markets and a strong focus on premium products, we recommend investors to HOLD the scrip.
Lincoln Pharmaceuticals Ltd. (LPL) is engaged in the business of manufacturing, marketing and distribution of pharmaceutical products. It offers various products such as tablets, capsules, liquid injection, cream in tubes, dry power injection, liquid in bottle, liquid injection and pharmaceutical items.
On a consolidated quarterly front, the total income increased to Rs 105.59 crore in Q1FY21, expanding by 7.63 per cent from Rs 98.10 crore in the same quarter of the previous fiscal year. Operating profit for the quarter ended June 2020 was Rs 23.97 crore, up by 17.82 per cent from Rs 20.34 crore in the quarter ended June 2019. Net profit of the quarter ended June 2020 was reported at Rs 15.26 crore, up by 20.44 per cent from Rs 12.67 crore in the quarter ended June 2019.
Looking at the annual trends, total income was reported at Rs 397.53 crore in FY20, up by 6.93 per cent from Rs 371.78 crore in the previous fiscal year. Operating profit expanded by 5.08 per cent in FY20 to Rs 76.58 crore from Rs 72.87 crore in FY19. Net profit was reported at Rs 51.44 crore in FY20 and Rs 48.71 crore in FY19, showcasing a growth rate of 5.6 per cent.
LPL recently launched chewable Vitamin C + Zinc tablet for the Indian market. The tablet is an evidence-based bio-active for natural immunity in a combination of zinc that boosts antiviral activity and protection against corona virus. The market size for Vitamin C and Zinc tablets is estimated at around Rs 150 crore in India and growing at 15 per cent per annum. This should aid revenue growth in the quarters ahead. LPL has moreover become debt-free and has reported a robust set of numbers for the latest quarter despite a challenging business environment. The company’s strategic growth initiatives, strong performance in the domestic and international markets, new product approvals, and better margin products along with operational efficiency are likely to contribute towards a healthy growth in the quarters ahead as well. We recommend investors to BUY the scrip.
Alok Industries Limited is a textile company with a presence in the cotton and polyester segments. The company is engaged in the manufacturing of textiles, including mending and packing activities of leather and other apparel products. Its products include accessories, corrugated pallets, cotton and blended yarn.
On a consolidated quarterly front, net sales declined by 7.66 per cent to Rs 748.10 crore in Q4FY20 from Rs 810.15 crore in the same quarter for the previous fiscal year. The company reported an operating profit loss of Rs 84.28 crore in the quarter ended March 2020 as against an operating profile of Rs 4.74 crore in the quarter ended March 2019. The net profit reported by the company saw a significant decline of 70.18 per cent to Rs 1,791.08 crore in Q4FY20 from Rs 6,005.44 crore in the corresponding quarter for the previous fiscal year.
Looking at the annual trends, net sales came in at Rs 3,328.78 crore in FY20, a decline of 0.7 per cent from Rs 3,352.24 crore in the previous fiscal year. The company reported an operating loss of Rs 88.17 crore in FY20 and an operating loss of Rs 110.64 crore in FY19. Net profit came in at Rs 1,311.22 crore in FY20, down by 36.87 per cent from Rs 2,077.18 crore in the previous fiscal year.
The stock of Alok Industries has zoomed multi-fold since its low of Rs 5.29 on March 23, 2020. The rally in stock price comes on the back of the company’s change in focus from being a textile player to manufacturing protective gear in battling the pandemic and more significantly, a joint bid by Reliance Industries Ltd. and JM Financial Asset Reconstruction Co. Ltd. for the company. Moreover, retail investors in the country have been dabbling in penny stocks over the past few months, which could also have fuelled the rally. Taking into consideration the current levels of the stock and current performance of the company, we recommend investors to BOOK PROFIT on this scrip.
Ambuja Cements Limited is a manufacture of cement. The company owns specially designed ships and terminals for bulk transportation of its products. It sells most of its products domestically but also has a subsidiary that markets the group’s items in Sri Lanka.
On a consolidated quarterly front, net sales were reported at Rs 4,644.17 crore in Q2CY20, declining by 34.35 per cent from Rs 7,074.08 crore in Q2CY19. The operating profit of the company was reported at Rs 1,233.01 crore in Q2CY20, down by 22.66 per cent from Rs 1,594.29 crore in Q2CY19. Similarly, net profit saw a decline of 28.64 per cent and was reported at Rs 590.44 crore in Q2CY20 from Rs 827.45 crore in Q2CY19.
Looking at the annual trends, net sales were reported at Rs 27,103.55 crore in CY19, increasing by 4.08 per cent from Rs 26,040.94 crore in CY18. The operating profit of the company was reported at Rs 5,177.73 crore in CY19, expanding by 18.15 per cent from Rs 4,382.23 crore in the previous calendar year. The company reported net profit of Rs 2,763.19 crore in CY19, down by 6.65 per cent from Rs 2,960.16 crore in CY18.
The cement industry was adversely affected owing to the disruptions caused by a national lockdown, delay in the normalisation of economic activities due to the virus outbreak and subsequent safety measures required. This was made worse given that January to June is considered peak business periods of cement industry. However, demand is expected to rebound, led by normal monsoons and various policy support measures taken to enhance rural and agricultural incomes. Moreover, continued government spending on infrastructure development and affordable housing should boost demand growth in the mid-term. A strong bounce-back in profitability can only be expected in the next calendar year. Given the company’s balance-sheet strength and current valuation levels, we recommend investors to HOLD the scrip.
(Closing price as of September 08, 2020)