Query Board

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

Smruthi Organics Limited is engaged in the manufacture and sale of bulk drugs and drug intermediates. Looking at the quarterly trends on a standalone basis, for Q2FY21 the company reported net sales of Rs36.84 crore, a decrease of 2.71 per cent as against the net sales of Rs37.87 crore for Q2FY20. For Q2FY21 the company gained operating profit of Rs9.45 crore, expanding by 105.46 per cent compared to the operating profit of Rs4.60 crore gained in Q2FY20. The company gained net profit of Rs5.84 crore in Q2FY21, which is an expansion by 207.8 per cent compared to the net profit of Rs1.90 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs131.07 crore, a decrease of 4.61 per cent over the net sales of Rs137.41 crore reported in FY19. For FY20 the operating profit increased by 12.51 per cent to Rs19.66 crore from Rs17.47 crore reported in FY19. The company gained net profit of Rs8.45 crore in FY20, which is an expansion by 23.1 per cent compared to the net profit of Rs6.86 crore gained in FY19. The company has suffered loss of revenue owing to, a fire accident at one of the finished goods’ warehouse and of course the pandemic. Going forward, there is uncertainty about the timeline of demand growth which may probably be very gradual and slow. Thus, we recommend AVOID .

Cosmo Films Limited is engaged in speciality films. Looking at the quarterly trends on a consolidated basis, for Q2FY21 the company reported net sales of Rs559.78 crore, an increase of 0.7 per cent as against the net sales of Rs555.91 crore for Q2FY20. For Q2FY21 the company gained an operating profit of Rs98.78 crore, expanding by 53.08 per cent compared to the operating profit of Rs64.53 crore gained in Q2FY20. The company gained net profit of Rs52.71 crore in Q2FY21, which is an expansion by 83.66 per cent compared to the net profit of Rs28.70 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs2,203.53 crore, an increase of 2.18 per cent over the net sales of Rs2,156.62 crore reported in FY19. For FY20 the operating profit increased by 54.63 per cent to Rs280.46 crore from Rs181.37 crore reported in FY19. The company gained net profit of Rs113.44 crore in FY20, which is an expansion by 85.63 per cent compared to the net profit of Rs61.11 crore gained in FY19.

The company has introduced a new bi-oriented polypropylene (BOPP)-based coated film. The shares buyback announced in October 2020 reflects the management’s confidence in the company’s business strategy and growth prospects. Hence, we recommend BUY.

Selan Exploration Technology Limited is engaged in oil exploration and production since 1992. The company’s business activities include extraction of crude oil and natural gas. It has been pursuing various reservoir engineering and production engineering technologies across the globe to find appropriate completions for the new drilled wells. The company was amongst the first private sector companies to have obtained rights to develop three discovered oilfields situated in the state of Gujarat, namely, Bakrol, Indrora and Lohar, all with proven oil and gas reserves. It has signed production sharing contracts (PSCs) with Government of India (GoI) for Bakrol, Indrora, Lohar, Ognaj and Karjisan fields.

Looking at the quarterly trends on a standalone basis, for Q2FY21 the company reported net sales of Rs13.09 crore, a decrease of 41.41 per cent as against the net sales of Rs22.34 crore for Q2FY20. For Q2FY21 the company gained operating profit of Rs2.26 crore, a contraction by 81.77 per cent compared to the operating profit of Rs12.40 crore gained in Q2FY20. The company gained net profit of Rs2.99 crore in Q2FY21, which is a contraction by 64.4 per cent compared to the net profit of Rs8.40 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs89.60 crore, a decrease of 4 per cent over the net sales of Rs93.33 crore reported in FY19.

For FY20 its operating profit decreased by 21.55 per cent to Rs44.59 crore from Rs56.84 crore reported in FY19. The company gained net profit of Rs22.43 crore in FY20, which is a contraction by 56.46 per cent compared to the net profit of Rs51.51 crore gained in FY19. The last financial year was a challenging year and 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. Volatility in global oil and gas prices pose a constant threat of revenue loss as the revenue is directly driven by the market price. Hence, we recommend BOOK PROFIT.

Bharat Heavy Electricals Limited (BHEL) is an engineering and manufacturing company engaged in the energy and infrastructure sector with the capability to manufacture the entire range of power plant equipment. BHEL has installed more than 1,000 utility sets in nuclear, thermal, hydro and gas-based power plants, contributing 53 per cent to the total installed conventional power generation capacity in the country.

It operates in two segments: power and industry. Looking at the quarterly trends on a consolidated basis, for Q2FY21 the company reported net sales of Rs3,444.31 crore, a decrease of 42.88 per cent as against the net sales of Rs6,030.16 crore for Q2FY20. For Q2FY21 the company incurred an operating loss of Rs536.14 crore compared to the operating profit of Rs398.03 crore gained in Q2FY20. The company incurred net loss of Rs564.46 crore in Q2FY21 as against the net profit of Rs113.61 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs20,494.59 crore, a decrease of 30.39 per cent over the net sales of Rs29,441.58 crore reported in FY19. For FY20 the company reported operating profit of Rs326.93, a decrease of 88.28 per cent as against operating profit of Rs2,789.45 crore reported in FY19.

BHEL incurred net loss of Rs1,494.07 crore in FY20 against net profit of Rs1,188.02 crore incurred in FY19. BHEL has recently successfully manufactured and tested India’s highest rating automatic transformer at National High Power Test Laboratory (NHPTL). This is a new benchmark in the global transformer industry. Successfully passing the short circuit test indicates the company’s strength in the sector. The company has set up a ‘Make in India Business Development Group’ which will identify various imports and manufacture those here. Capacity utilisation levels in various industries like oil and gas as also steel is catching up. The company is also pursuing new opportunities in downstream oil and gas, transportation, defence and aerospace. Hence, we recommend HOLD.

MOIL is a Miniratna Category-I company. It operates through three segments: mining, manufacturing and power generation. MOIL produces and sells different grades of manganese ore. Looking at the quarterly trends on a consolidated basis, for Q2FY21 the company reported net sales of Rs307.20 crore, an increase of 21.37 per cent as against the net sales of Rs253.11 crore for Q2FY20. For Q2FY21 the company gained an operating profit of Rs32.61 crore, a decrease of 76.08 per cent as against the operating profit of Rs136.31 crore gained in Q2FY20. MOIL gained net profit of Rs7.33 crore in Q2FY21, a contraction by 91.73 per cent compared to the net profit of Rs88.59 crore gained in Q2FY20.

On the annual front, in FY20 the company reported net sales of Rs1,038.07 crore, a decrease of 27.95 per cent over the net sales of Rs1,440.67 crore reported in FY19. For FY20 its operating profit decreased by 44.81 per cent to Rs436.65 crore from Rs791.15 crore reported in FY19. MOIL gained net profit of Rs248.22 crore in FY20, which is a contraction by 48.12 per cent compared to the net profit of Rs478.46 crore gained in FY19. The government is committed towards infrastructure development in the country and therefore the demand for steel is expected to increase in the medium to long run, which in turn will provide a great opportunity for the manganese ore industry.

MOIL is focusing on development and mechanisation of its existing mines and also adding new leases so that the target can be achieved. Steel use per capita during in the country is much below the average per capita steel use of the world. This provides enough room for the growth of the steel industry in the country and a resultant increase in the demand of manganese ore. MOIL is very well-positioned to contribute to India’s steel demand growth given its dominant position, medium to high-grade ore reserves, centrally located mines and strong customer relations.

Hence, we recommend HOLD.

Titan Biotech Limited is a manufacturer and exporter of biological products used in the field of pharmaceuticals, nutraceuticals, food and beverages, biotechnology and fermentation, cosmetics, veterinary and animal feed, agriculture, microbiology culture media and plant tissue culture media, etc. The company has experience of more than 25 years and a market presence in 75+ countries. Titan Biotech has been consistently making efforts in research and development to deliver the best quality of biological products.

It has a variety of products, reaching approximately 2,500 in numbers. Looking at the quarterly trends on a consolidated basis, for Q2FY21 the company reported net sales of Rs32.66 crore, an increase of 76.46 per cent, as against the net sales of Rs18.51 crore for Q2FY20. For Q2FY21 the company gained an operating profit of Rs11.07 crore, an increase of 316.36 per cent against the operating profit of Rs2.66 crore gained in Q2FY20. Titan Biotech gained net profit of Rs7.58 crore in Q2FY21, an expansion by 413.97 per cent compared to the net profit of Rs1.48 crore gained in Q2FY20. On the annual front, in FY20 the company reported net sales of Rs79.44 crore, expanding by 22.39 per cent against the net sales of Rs64.91 crore reported in FY19.

For FY20 its operating profit increased by 45.9 per cent to Rs13.93 crore from Rs9.54 crore reported in FY19. The company gained net profit of Rs7.84 crore in FY20, which is an expansion by 100.36 per cent compared to the net profit of Rs3.91 crore gained in FY19. The company plans to promote its products domestically as well as internationally by participating in important exhibitions, conferences and seminars in and outside India and doing aggressive marketing and advertisement to tap the market. It is focusing on technology development and new product development. The company offers great comparative advantages in terms of skills, knowledge, expertise and costeffectiveness. The outlook of the company looks very positive. Hence, we recommend BUY.