Query Board

Query Board

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

RACL Geartech Limited is an automotive gear manufacturing company. Looking at the quarterly trends on a consolidated basis, for Q2FY21 the company reported net sales of Rs48.45 crore, a decrease of 13.42 per cent, as against the net sales of Rs55.96 crore for Q2FY20. For Q2FY21 the company gained an operating profit of Rs13.58 crore, expanding by 24.28 per cent compared to the operating profit of Rs10.92 crore gained in Q2FY20. The company gained net profit of Rs5.59 crore in Q2FY21, which is an expansion by 9.65 per cent compared to the net profit of Rs5.10 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs212.33 crore, an increase of 11.78 per cent over the net sales of Rs189.95 crore reported in FY19. For FY20 the operating profit increased by 31.28 per cent to Rs41.63 crore from Rs31.71 crore reported in FY19. RACL Geartech gained net profit of Rs16.97 crore in FY20, which is an expansion by 73.72 per cent compared to the net profit of Rs9.77 crore gained in FY19. Post-pandemic the demand for two-wheelers and three-wheelers is expected to increase. RACL Geartech will benefit from this because the majority of its product base has a presence in these two segments. Hence, we recommend BUY.

RBL Bank is one of India’s fastest-growing private sector banks with an expanding presence across the country. On the quarterly front, the net interest earned by the bank in the second quarter of FY21 came in at Rs1,018.96 crore as against Rs932.99 crore in the corresponding quarter of the previous fiscal, an increase of 9.21 per cent. The total income in Q2FY21 was Rs2,613.89 crore, a decrease of 0.75 per cent from Rs2,633.65 crore in Q2FY20. The profit after tax rose by 185.34 per cent to reach Rs152.43 crore in Q2FY21 as against Rs53.42 crore in Q2FY20. Net interest earned by the bank in FY20 came in at Rs3,893.91 crore, an increase of 53.22 per cent from Rs2,541.43 crore in FY19.

The total income earned by the bank in FY20 was Rs10,696.69 crore, an increase of 38.15 per cent from Rs7,743.06 crore earned in the previous fiscal. The profit after tax in FY20 decreased by 41.93 per cent to reach Rs500.18 crore as against Rs861.36 in FY19. The bank’s key operating measure like net interest income has shown improvement in the last quarter. It is less vulnerable to corporate portfolios. There is a decrease in the cost of deposit and it will also decrease in the future, which will boost the NIM going forward. Hence, we recommend BUY.

Alufluoride Ltd. is engaged in producing aluminium fluoride and related products. It is the only company in Andhra Pradesh producing high-purity aluminium fluoride (AlF3) with technology developed by Alusuisse, Switzerland. In the production process of aluminium fluoride, the company produces two by-products, namely, silica and calcium fluoride, which are also used in the chemical industry. The company offers aluminium fluoride in 50 and 25 kilogram packing in high-density polythene (HDPE) bags with liner or as required by customers. Its aluminium fluoride is used as a flux in reducing the melting point of alumina during the electrolytic process of producing aluminium and for making flux tablets to purify metal in foundries.

Looking at the quarterly trends on a standalone basis, for Q2FY21 the company reported net sales of Rs12.73 crore, a decrease of 32.58 per cent, as against the net sales of Rs18.88 crore for Q2FY20. For Q2FY21 the company gained an operating profit of Rs2.05 crore, a contraction by 50.1 per cent compared to the operating profit of Rs4.11 crore gained in Q2FY20. Alufluoride gained a net profit of Rs0.96 crore in Q2FY21, which is a contraction by 42.13 per cent compared to the net profit of Rs1.66 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs75.73 crore, an increase of 15.6 per cent over the net sales of Rs65.51 crore reported in FY19.

For FY20 its operating profit increased by 47.29 per cent to Rs17.37 crore from Rs11.79 crore reported in FY19. Alufluoride gained net profit of Rs10.34 crore in FY20, which is an expansion by 25.09 per cent compared to the net profit of Rs8.26 crore gained in FY19. The company attributed a significant drop in profits due to the corona virus pandemic. The global and domestic demand for its products has been impacted. FY21 is expected to remain a challenging year for the company as the demand for its products is expected to be low. Hence, we recommend BOOK PROFIT.

Raunaq EPC International Ltd. is engaged in the turnkey execution of engineering projects. It is a diversified company with two business segments: engineering, procurement and construction (EPC) and automotive components. The company has sufficient in-house resources in terms of engineering manpower, tools and plants and technical know-how to cater to the needs for undertaking turnkey contracts of mechanical, civil and associated electrical and instrumentation works.

The services offered generally cover areas like detailed engineering, procurement, inspection and supply, quality assurance, construction and installation, testing and commissioning and project management and supervision. Looking at the quarterly trends on a consolidated basis, for Q1FY21 the company reported net sales of Rs6.48 crore, a decrease of 60.53 per cent as against the net sales of Rs16.41 crore for Q1FY20. For Q1FY21 the company gained an operating profit of Rs0.41 crore, compared to the operating loss of Rs5.94 crore incurred in Q1FY20. Raunaq EPC International incurred a net loss of Rs0.79 crore in Q1FY21 as against the net loss of Rs5.96 crore incurred in Q1FY20. On the annual front, in FY20 the company reported net sales of Rs61.68 crore, a decrease of 33.55 per cent over the net sales of Rs92.82 crore reported in FY19. For FY20 the company reported operating loss of Rs12.82 as against operating profit of Rs0.73 crore reported in FY19. It incurred net loss of Rs21.78 crore in FY20 against the net loss of Rs4.62 crore incurred in FY19. A downturn in the macroeconomic scenario along with unfavourable regulatory policies will negatively impact the company’s business. The increase in competition within the EPC space may force the company to tender at lower prices, leading to compressed margins. The inability of the company to effectively manage projects may lead to cost and time overruns and reputation loss. Further, its inability to recover payments in time may hamper its working capital, which in turn may impact the funding of other ongoing projects. Hence, we recommend EXIT.

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