Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Exide designs, manufactures, markets and sells lead-acid storage batteries. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs 305.74 crore, an increase of 17.54 per cent, as against the net sales of Rs260.12 crore for Q1FY20. For Q1FY21, the company gained an operating profit of Rs51.75 crore, expanding by 34.12 per cent compared to the operating profit of Rs38.58 crore gained in Q1FY20. The company gained net profit of Rs20.56 crore in Q1FY21, which is an expansion by 25.1 per cent compared to the net profit of Rs16.43 crore gained in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs1,049.15 crore, an increase of 17.6 per cent over the net sales of Rs 892.17 crore reported in FY19. For FY20 its operating profit increased by 62.68 per cent to Rs134.13 crore from Rs82.45 crore reported in FY19. Exide Industries gained net profit of Rs29.83 crore in FY20, which is an expansion by 873.28 per cent compared to the net profit of Rs3.07 crore gained in FY19. The company is focusing on upgrading its products and manufacturing technology as well as acquiring advanced technology to meet the needs of the users. Exports of automotive batteries to the Middle East and South East Asia continued to grow. Hence, we recommend HOLD.
Sun Pharmaceutical Advanced Research Company is a biopharmaceutical company. Looking at the quarterly trends on a standalone basis, for Q1FY21 the company reported net sales of Rs185.45 crore, an increase of 970.73 per cent, as against the net sales of Rs17.32 crore for Q1FY20. For Q1FY21, the company gained operating profit of Rs61.44 crore against the operating loss of Rs91.35 crore incurred in Q1FY20. SPARC gained a net profit of Rs56.69 crore in Q1FY21, compared to the net loss of Rs94.19 crore incurred in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs76.82 crore, a decrease of 57.99 per cent over the net sales of Rs182.87 crore reported in FY19. For FY20 the company reported an operating loss of Rs300.25 against the operating loss of Rs137.78 crore reported in FY19. For FY20 the company reported net loss of Rs312.40 against the net loss of Rs145.43 crore reported in FY19. The company attributed a significant drop in profits due to the pandemic. There has been slow growth in the innovation space because of limitations in government-supported research ecosystems and lack of research scholars with advanced skills. The time-consuming approval process for clinical trials and high investment for research and development is also limiting the growth of SPARC. Hence, we recommend AVOID.
Motherson Sumi Systems Limited (MSSL) is a specialised full-system solutions provider and caters to a diverse range of customers in the automotive and other industries across Asia, Europe, North America, South America, Australia and Africa. The product range of MSSL comprises wiring harnesses, vision systems, cockpits, bumpers, door trims and a broad range of polymer, elastomer and metal-based products. MSSL operates 230 facilities in 41 countries across five continents. It offers services from design and prototyping to production and delivery of solutions across a range of products.
Motherson Sumi Systems Ltd. was incorporated in the year 1986 as a joint venture between Samvardhana Motherson Group and Sumitomo Wiring Systems of Japan. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs8,357.56 crore, a decrease of 49.52 per cent, as against the net sales of Rs16,557.33 crore for Q1FY20. For Q1FY21 the company incurred an operating loss of Rs670.81 crore, compared to the operating profit of Rs1,225.47 crore gained in Q1FY20. The company incurred a net loss of Rs1,191.46 crore in Q1FY21, compared to the net profit of Rs339.91 crore gained in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs62,573.10 crore against net sales of Rs62,571.58 crore reported in FY19.
For FY20, operating profit decreased by 2.85 per cent to Rs5,074.19 crore from Rs5,223.08 crore reported in FY19. MSSL gained a net profit of Rs1,236.98 crore in FY20, which is a contraction by 37.68 per cent compared to the net profit of Rs1,985.04 crore gained in FY19. The last financial year was a challenging year for the company since the automotive industry posted negative growth on account of the transition to BS VI emission norms from March 2020 as well as the disruptions caused by the pandemic. The weak performance of Indian automotive industry during the last year has impacted the growth of MSSL. Hence, we recommend AVOID
Oberoi Realty is a real estate development company operating in Mumbai. The company’s focus is on developing premium projects. The company handles residential, commercial, retail, social infrastructure and hospitality projects. It has developed over 42 projects at strategic locations across Mumbai, aggregating about 11.89 million sq. feet of spaces. The company has established a strong brand and a successful track record in the real estate industry. Looking at the quarterly trends on a consolidated basis, for Q2FY21 the company reported net sales of Rs316.06 crore, a decrease of 35.69 per cent, as against net sales of Rs491.45 crore for Q2FY20.
For Q2FY21, the company gained an operating profit of Rs195.71 crore, contracting by 13.59 per cent compared to the operating profit of Rs226.49 crore gained in Q2FY20. Oberoi Reality gained net profit of Rs136.14 crore in Q2FY21, which is a contraction of 0.35 per cent compared to the net profit of Rs136.62 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs2,237.63 crore, a decrease of 13.35 per cent over the net sales of Rs2,582.50 crore reported in FY19. For FY20, operating profit decreased by 11.17 per cent to Rs1,096.32 crore from Rs1,234.12 crore reported in FY19. The company gained a net profit of Rs683.42 crore in FY20, which is a contraction by 15.63 per cent compared to the net profit of Rs810.03 crore gained in FY19.
The demand for real estate in India is expected to remain strong in the medium to long term. Oberoi Realty is a well-accepted brand and it has contemporary and well-designed projects in strategic locations, a strong balance-sheet and stable financial performance. The company is expected to acquire new lands in the near future. Recovery in demand is visible with the arrival of the festive season. At the same time the company is also facing challenges like unanticipated delays in project approvals and the rising cost of construction. Hence, we recommend not accumulating further shares. As for the existing shares, we recommend HOLD.
The compny is involved in home retail in India. It is a one-stop-shop destination for home solutions. Praxis Home Retail offers a wide assortment in furniture, home ware, customised solutions in kitchen and wardrobes, and home improvement products. The company has a presence across 28 cities with 49 stores. Praxis Home Retail operates through two segments: brick and mortar home retail segment and online home retail segment. Its brick and mortar home retail segment operates through stores in the brand name of Home Town. The online home retail segment operates through websites like www.fabfurnish.com and www.hometown.in.
Looking at the quarterly trends on a standalone basis, for Q1FY21 the company reported net sales of Rs23.14 crore, a decrease of 85.73 per cent, as against the net sales of Rs162.19 crore for Q1FY20. For Q1FY21, the company incurred an operating loss of Rs14.92 crore compared to the operating loss of Rs3.04 crore incurred in Q1FY20. Praxis Home Retail incurred a net loss of Rs38.85 crore in Q1FY21, compared to the net loss of Rs25.53 crore incurred in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs702.77 crore, an increase of 2.92 per cent against the net sales of Rs682.81 crore reported in FY19. For FY20, the company reported an operating profit of Rs16.25 crore against operating loss of Rs22.48 crore reported in FY19.
The company has incurred a net loss of Rs80.74 crore in FY20 compared to the net loss of Rs26.94 crore incurred in FY19. Footfalls and customer gatherings are essential ingredients of revenue and profit growth for those sectors where this company operates. The company has shown poor performance both on the annual and quarterly front. The demand for its products was impacted due to the pandemic-related disruptions and lockdowns. Going forward, there is uncertainty about the timeline of demand growth which may probably be very gradual and slow. Less disposable income compared to before the crisis and cost-consciousness in shopping has also led to fall of demand. Thus, we recommend AVOID.
The company manufactures adhesives and glues, including rubber-based glues and adhesives. Its brand name Fevicol has become synonymous with adhesives. Pidilite Industries has an extensive distribution network of 6,000 distributors and 6,00,000 dealers and retailers across India. Its turnover is USD 800 million. The company has a product reach of around 70 countries globally. Pidilite Industries is India’s one of the most trusted brands in adhesives and sealants across all three business segments – branded consumer products, industrial products and trade products. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs877.84 crore, a decrease of 56.47 per cent, as against the net sales of Rs2,016.62 crore for Q1FY20.
For Q1FY21, the company gained an operating profit of Rs86.37 crore, contracting by 82.14 per cent compared to the operating profit of Rs483.59 crore gained in Q1FY20. Pidilite Industries gained a net profit of Rs15.35 crore in Q1FY21, which is a contraction by 94.78 per cent compared to the net profit of Rs294.10 crore gained in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs7,294.47 crore, an increase of 3.06 per cent over the net sales of Rs7,077.96 crore reported in FY19. For FY20, operating profit increased by 13.9 per cent to Rs1,725.45 crore from Rs1,514.85 crore reported in FY19.
The company gained a net profit of Rs1,119.02 crore in FY20, which is an expansion by 21 per cent compared to the net profit of Rs924.79 crore gained in FY19. Recovery in economic activity is helping the demand to increase. Pidilite Industries’ major subsidiaries in India and globally are taking initiatives to improve margins and achieve consistent sales growth in their respective businesses. Technology implementation in distribution in recent years is boosting efficiency, enabling the company to retain channel loyalty in the current uncertain times. Consumer and bazaar businesses have seen a demand recovery, especially in rural areas and semi-urban towns. Hence, we recommend HOLD.
(Closing price as of November 04, 2020)