Query Board

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



Indian Oil Corporation Limited is engaged in the refining business. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs90,106.48 crore, a decrease of 40.91 per cent, as against net sales of Rs152,497.06 crore for Q1FY20. For Q1FY21, the company gained an operating profit of Rs6,928.60 crore, indicating a contraction of 24.59 per cent compared to the operating profit of Rs9,187.56 crore gained in Q1FY20. IOC gained a net profit of Rs2,129.23 crore in Q1FY21, which is a contraction by 35.44 per cent compared to the net profit of Rs3,298.15 crore gained in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs576,588.93 crore, a decrease of 6.59 per cent over the net sales of Rs617,251.41 crore reported in FY19. For FY20, operating profit decreased by 49.4 per cent to Rs19,195.16 crore from Rs37,936.95 crore reported in FY19.

IOC incurred net loss of Rs3,242.41 crore in FY20 as against net profit of Rs15,889.47 crore incurred in FY19. The company’s business growth faces likely risk of increasing competition from private retailers and alternative fuels. Also, currently the refining and oil industry seems to continue to be struggling. Hence AVOID.

Subex is a pioneer in enabling digital trust for businesses across the globe. It works on themes like digital trust, 5G, artificial intelligence, enterprise, blockchain and IoT. Subex provides business support systems. This system empowers communication service providers to achieve competitive advantage through business optimisation. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs88.70 crore, an increase of 12.35 per cent as against net sales of Rs78.95 crore for Q1FY20. For Q1FY21, the company gained an operating profit of Rs30.56 crore, expanding by 71.2 per cent compared to the operating profit of Rs17.85 crore gained in Q1FY20. Subex gained net profit of Rs15.16 crore in Q1FY21, which is an expansion by 187.12 per cent compared to the net profit of Rs5.28 crore gained in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs364.98 crore, an increase of 4.84 per cent over the net sales of Rs348.12 crore reported in FY19. For FY20, operating profit increased by 86.2 per cent to Rs100.68 crore from Rs54.07 crore reported in FY19. Subex incurred net loss of Rs269.15 crore in FY20 as against net profit of Rs25.22 crore incurred in FY19. Based on the company’s poor annual financial trend we recommend AVOID.

Bharat Petroleum Corporation Limited is engaged in offering motor spirit (MS), high-speed diesel (HSD) and liquefied petroleum gas (LPG). It operates through two segments: downstream petroleum and exploration and production of hydrocarbons. The downstream petroleum segment includes refining and marketing of petroleum products. It is engaged in the production of liquid and gaseous fuels, illuminating oils, lubricating oils or greases or other products from crude petroleum or bituminous minerals. The company also manufactures other petroleum products, including petroleum bitumen and other residues of petroleum oils or of oils obtained from bituminous minerals.

Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs50,909.24 crore, a decrease of 41.09 per cent as against the net sales of Rs86,412.87 crore for Q1FY20. For Q1FY21, the company gained an operating profit of Rs4,796.86 crore, expanding by 36.07 per cent as compared to the operating profit of Rs3,525.26 crore gained in Q1FY20. BPCL gained net profit of Rs2,139.95 crore in Q1FY21, which is an expansion by 52.15 per cent compared to the net profit of Rs1,406.45 crore gained in Q1FY20. On the annual front, in FY20, the company reported net sales of Rs329,797.16 crore, a decrease of 3.25 per cent over the net sales of Rs340,879.15 crore reported in FY19.

For FY20, operating profit decreased by 40.07 per cent to Rs10,278.35 crore from Rs17,149.77 crore reported in FY19. BPCL gained net profit of Rs2,265.11 crore in Q1FY21, which is a contraction by 70.16 per cent compared to the net profit of Rs7,590.53 crore gained in Q1FY20. Demand for the company’s petroleum products stagnated due to the pandemic-triggered disruptions and lockdowns. Also, the sale of aviation turbine fuel was drastically affected. Going forward, there is uncertainty about the timeline of demand growth which may probably be very gradual and slow. Thus, we recommend AVOID .

Datamatics Global Services Limited is a technology company which builds intelligent solutions that enable data-driven businesses to digitally transform themselves through artificial intelligence, cloud, mobility, robotics and advanced analytics.

The company’s annual turnover is USD 170 million. Its offerings include B2B contact database and analytics, B2B demand generation, market research and intelligence, finance and accounting outsourcing, CPA accounting, taxation and payroll outsourcing, customer experience and helpdesk management, and registrar and transfer agent services. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs277.09 crore, a decrease of 4.51 per cent as against the net sales of Rs290.17 crore for Q1FY20.

For Q1FY21, the company gained operating profit of Rs30.96 crore, indicating contraction by 16.7 per cent as compared to the operating profit of Rs37.16 crore gained in Q1FY20. The company gained net profit of Rs13.88 crore in Q1FY21, which is a contraction by 32.34 per cent compared to the net profit of Rs20.51 crore gained in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs1,203.32 crore, an increase of 6.16 per cent over the net sales of Rs1,133.49 crore reported in FY19. For FY20, operating profit decreased by 11.3 per cent to Rs128.31 crore from Rs144.66 crore reported in FY19.

The company gained net profit of Rs60.62 crore in FY20, which is a contraction by 27.46 per cent compared to the net profit of Rs83.58 crore gained in FY19. The company recently expanded its alliance with Ingram Micro in the META region with a distribution agreement for its intelligent automation products including TruBot, TruCap+, TruBI and TruAI. As the Indian IT sector continues to witness a positive upward trend, the company is well-placed to benefit from business and growth for the next quarters. Based on our analysis, we recommend our investor readers to HOLD.

Associated Alcohols & Breweries is one of the leading and largest liquor manufacturers in the central part of India. The company’s major business is manufacturing and trading of extra-neutral alcohol, country liquor and Indian made foreign liquor (IMFL). It operates through the potable alcohol segment and exports IMFL to countries like Russia, Scotland, etc. The company possesses a variety of products in its portfolio that includes extra-neutral alcohol (ENA), potable alcohol, grain spirit, rectified spirit and IMFL. The company manufactures and markets in-house brands like Red & White, James McGill, Bombay Special and London Bridge.

Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs60.37 crore, a decrease of 53.99 per cent as against the net sales of Rs131.21 crore for Q1FY20. For Q1FY21, the company gained operating profit of Rs9.78 crore, contracting by 55.62 per cent compared to the operating profit of Rs22.04 crore gained in Q1FY20. The company gained net profit of Rs4.77 crore in Q1FY21, which is a contraction by 59.27 per cent compared to the net profit of Rs11.71 crore gained in Q1FY20.

On the annual front, in FY20 the company reported net sales of Rs535.00 crore, an increase of 29.99 per cent over the net sales of Rs411.58 crore, reported in FY19. For FY20, operating profit increased by 29.19 per cent to Rs79.90 crore from Rs61.84 crore reported in FY19. The company gained net profit of Rs49.34 crore in FY20, which is an expansion by 63.02 per cent compared to the net profit of Rs30.26 crore gained in FY19. Net sales for the recent quarters were affected due to the lockdowns. Overcoming these near-term challenges, the company seems to have a healthy profitability growth rate, adequate liquidity and favourable outlook for alcoholic beverages in India. Tapping the under-penetrated market in the Indian alcoholic beverage segment, the company has positive growth potential.

Hence, we recommend HOLD.

PVR Limited is engaged in the business of movie exhibition, distribution and production and in-house advertisement, sale of food and beverages, gaming and restaurant business across India. It currently operates a cinema circuit comprising 845 screens in 176 properties across 71 cities in India and Sri Lanka. The company has diversified revenue segments and generates revenues majorly from box-office and non-box-office which primarily include revenue from sale of food and beverages, advertisements, convenience fees and income from movie production and distribution, among others.

PVR provides diversified cinema viewing experience, which includes PVR Director’s Cut, PVR Gold Class, PVR IMAX, PVR Superplex, PVR P[XL], PVR Playhouse, PVR ECX, PVR Premiere, PVR ICON, PVR LUXE, PVR Cinemas and PVR Utsav. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs12.70 crore, a decrease of 98.56 per cent as against the net sales of Rs880.39 crore for Q1FY20. For Q1FY21, the company incurred an operating loss of Rs73.26 crore compared to the operating profit of Rs285.35 crore gained in Q1FY20. PVR incurred a net loss of Rs225.58 crore in Q1FY21 as against net profit of Rs17.63 crore gained in Q1FY20.

On the annual front, in FY20 the company reported net sales of Rs3,414.44 crore, an increase of 10.66 per cent over the net sales of Rs3,085.56 crore reported in FY19. For FY20, operating profit increased by 79.89 per cent to Rs1,114.38 crore from Rs619.47 crore reported in FY19. PVR gained net profit of Rs27.39 crore in FY20, which is a contraction by 85.63 per cent compared to the net profit of Rs190.55 crore gained in FY19. PVR has undertaken various cost- cutting initiatives to maintain stable and healthier revenue as well as profitability margins. A strong capex will further boost growth. As multiplexes open, film releases that were held back will aid in reviving revenue and as people once again resume recreational activities, the demand for movie screenings will also gradually recover.

Thus, we recommend HOLD.

(Closing price as of October 20, 2020)