Reviews

Reviews

In this edition, we have reviewed KRBL Ltd. and Can Fin Homes . We suggest our reader-investors to HOLD in KRBL Ltd. and Can Fin Homes.

We had previously recommended KRBL Ltd. in Volume 35, Issue No. 03, dated January 06-19, 2020, under the ‘Analysis’ segment. The scrip was then recommended at Rs285.25 on the basis of the company’s strong growth potential.

KRBL is a ‘basmati’ rice processing company engaged in seed development, contact farming, procurement of paddy, storage, processing, packaging, branding and marketing of basmati rice. It uses retail, distributors, B2B and e-commerce as the supply chain. On the quarterly front, net sales have seen an increase of 27.35 per cent to Rs1,133.2 crore in Q2FY21 from Rs889.94 crore posted in Q2FY20. Similarly, operating profits have also expanded to Rs223.43 crore in Q2FY21 from Rs172.31 crore in Q2FY20, indicating 29.67 per cent increase.

Net profit rose by 32.12 per cent from Rs113.39 crore reported in Q2FY20 to Rs149.81 crore reported in Q2FY21. On the annual front, net sales increased by 9.19 per cent to Rs4,499.02 crore in Q2FY21 from Rs4,120.50 crore reported in Q2FY20. Operating profit for Q2FY21 inched up higher by 3.22 per cent to Rs892.87 crore from Rs865.03 crore in Q2FY20. The company gained net profit of Rs558.19 crore in Q2FY21, an increase by 10.97 per cent compared to Rs503.02 crore reported for Q2FY20.

The company focuses on strong margins and reinvesting their accruals in building inventory. It is looking to expand and increase its market reach. KRBL is expected to benefit on account of its strong leadership presence in the industry and product penetration. Hence, we recommend HOLD.

We had previously recommended Can Fin Homes in Volume No. 35, Issue No. 02, dated December 23– January 05, 2020, under the ‘Cover Story’ segment. The stock was then trading at Rs417.3. We had recommended the stock on the basis of high asset quality, transparency and best ethical practices as well as prudent risk management practices adopted by the company. On a standalone quarterly financial front, the income from interest was reported at Rs524.044 crore for Q2FY21 which is an increase by 0.37 per cent as compared to Rs522.10 crore reported for Q2FY20. The total income calculated for Q2FY21 rose by 0.63 per cent to Rs 525.81 crore from Rs522.50 crore in Q2FY20.

For Q2FY21, the company made net profit of Rs128.41 crore with a significant increase of 37 per cent as compared to net profit of Rs93.15 crore in Q2FY20. On the annual front, for FY20 the company posted interest income of Rs2,018.9 crore, an increase by 17.13 per cent compared to Rs1,713.4 crore for FY19. The total income for FY20 increased 17.27 per cent to Rs2,030.45 crore from Rs1,731.34 crore for FY19. For FY20, the company reported net profit of Rs376.12 crore compared to net profit of Rs296.73 crore, gaining 26.5 per cent in FY19.

CanFin homes focuses to promote home ownership across India, with a motto of friendship finance and good service The company’s financial performance saw a positive trend during Q2FFY21. Considering its strong liquidity on the balance-sheet, stable asset quality, positive financial growth and sustainability in the NBFC sector, we recommend HOLD.

(Closing price as of Jan 09, 2021)

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