Query Board

Query Board

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


VINATI ORGANICS



Vinati Organics Limited is into the business of manufacturing organic and inorganic chemical compounds and nitrogenous energetic compounds. The company has its spread over 22 countries and exports products to customers across the US, Europe and Asia. In terms of its financial performance over the previous quarters on a standalone quarterly basis, its net sales declined to Rs223.47 crore in Q3FY21 as compared to Rs238.47 crore in Q2FY20, a dip of 6.29 per cent. The operating profit decreased by 17.29 per cent from Rs98.39 crore in Q3FY20 to Rs81.38 crore in Q3FY21. Its net profit was Rs64.14 crore in Q3FY21 as compared to Rs66.83 crore in Q3FY20. On an annual basis its net sales declined by 8.78 per cent from Rs1,127.92 crore in FY19 to Rs1,028.87 crore in FY20. Operating operating profit increased by 1.18 per cent in FY19 as compared to FY20. The net profit on an annual basis rose by 18.17 per cent in FY20 at Rs333.83 crore as compared to Rs282.49 crore in FY19. With its core strengths of cost efficiency, captive research, local leadership, customer assurance, synergic integration, strong collaboration and an environmentally friendly approach, Vinati Organics is poised to constantly outgrow the market. Considering the above parameters, we recommend investors to ACCUMULATE this stock. 

DHFL


For over three decades, DHFL has been providing easy access for affordable housing finance to millions of lowerand middle-income families in semi-urban and rural India. It also leases commercial and residential premises. In terms of its financial performance on a quarterly consolidated financial front, the income from interest was reported at Rs2,315.93 crore for Q2FY21, a decrease by 0.66 per cent as compared to Rs2,331.45 crore reported for Q2FY20. The total income calculated for Q2FY21 fell by 2.65 per cent to Rs2,328.56 crore from Rs2,392.17 crore in Q2FY20. For Q2FY21 the company recorded net profit of Rs92.81 crore as against net loss of Rs206.43 crore gained in Q2FY20. On the annual front, for FY20 the company posted interest income of Rs9,232.25 crore, a decrease by 24.09 per cent as compared to Rs12,307.84 crore for FY19. The total income for FY20 fell by 27.98 per cent to Rs9,343.12 crore from Rs12,902.52 crore for FY19. For FY20 the company reported net loss of Rs18,247.99 crore as against net loss of Rs1,164.98 crore incurred in FY19. The company has also reported negative return of 72.83 per cent on equity over the past three years. Besides, the promoters have pledged 100 per cent of their holdings and the company has also been downgraded by credit rating agencies. Hence, we recommend investors to EXIT from the stock.

STEEL AUTHORITY OF INDIA



Steel Authority of India Limited (SAIL), a holding company, has been successful in climbing to the position of being the largest steel-making company in India. It produces iron and steel at five integrated plants and three special plants located principally in the eastern and central regions of India and situated close to domestic raw materials. The company is engaged in the business of manufacturing flat products such as hot rolled (HR) coils, HR plates, cold rolled (CR) coils, pipes and electric sheets, and long products such as thermo-mechanically treated (TMT) bars and wire rods.

In terms of its performance in the previous quarters on a consolidated quarterly basis, its net sales increased to Rs19,835.71 crore in Q3FY21 as compared to Rs16,542.48 crore in Q3FY20, a rise of 19.91 per cent. The operating profit increased by a whopping 300 per cent from Rs1,178.00 crore in Q3FY20 to Rs5,242.03 crore in Q3FY21. The net profit was the highlight of the quarter, turning positive as compared to the same quarter the previous year. It was Rs1,246.50 crore in Q3FY21 as compared to net loss of Rs442.49 crore in Q3FY20. On an annual basis the net sales were seen declining by 7.93 per cent from Rs66,973.58 crore in FY19 to Rs61,664.16 crore in FY20.

The operating profit increased by 8.44 per cent in FY19 as compared to FY20. On an annual basis the net profit declined by 9.38 per cent in FY20 at Rs1,926.39 crore as compared to Rs2,125.84 crore in FY19. In response to pandemic SAIL proactively started to take actions and activated response towards its Plants, Units, Mines and townships. In the fight to defeat COVID-19,SAIL contributed Rs 30 crore to PM CARES FUND. India offers huge scope of growth because of its comparatively low per capita steel consumption which is expected to increase considering the pace of infrastructure construction and the thriving automobile and railways sectors. Backed by the government’s major support, SAIL is predicted to have a profitable road ahead. Hence, we recommend investors to ACCUMULATE the stock.

CUPID



Cupid Limited is a pioneering manufacturer and supplier of quality male condoms, female condoms and waterbased lubricant jelly. It has an active research and development centre in addition to its main production facility. It works with healthcare professionals, central and state governments and organisations in order to support them in promoting good sexual health and the importance of consistent condom use to prevent HIV and other sexually transmitted diseases. The manufacturing facility is located at Sinnar near Nashik, about 200 km east of Mumbai.

The facility has the capacity to manufacture over 480 million pieces of male condoms, 52 million pieces of female condoms and 210 million sachets of lubricant jelly per annum. In terms of financial performance on a standalone quarterly basis, its net sales de-grew by 30.04 per cent from Rs42.11 crore in Q2FY20 to Rs29.46 crore in Q2FY21. The operating profit declined by 32.45 per cent from Rs15 crore in Q2FY20 to Rs10.13 crore in Q2FY21. Net profit also followed a decline trend and slipped down by 35.82 per cent in the second quarter of FY21 as compared to the same quarter in the previous financial year. On an annual basis the net sales showed a substantial increase of 87.23 per cent at Rs164.65 crore in FY20 as compared to Rs87.94 in FY 19.

The company’s operating profit showed a massive increase of more than 100 per cent recorded at Rs55.73 crore in FY20 as compared to Rs23.04 crore in FY19. Net profit also jumped by more than 100 per cent in FY20 as compared to FY19. Though the pandemic has hit the market and impacted trading and manufacturing activities, the demand for condoms continues to remain strong, backed by an increase in both international and government funding for prevention of sexually transmitted diseases and HIV as also the prevention of unwanted pregnancies. Better affordability of condoms has also led to an increase in demand from the low- and middle-income groups. Hence, we recommend investors to BUY the scrip.

MOIL



Manganese Ore (India) Limited (MOIL) is a government enterprise engaged in the business of producing and selling different grades of manganese ore. MOIL operate 11 mines out of which seven are located in Nagpur and Bhandara districts of Maharashtra and four in the Balaghat district of Madhya Pradesh. It has also set up a plant based on indigenous technology to manufacture 1,500 MT per annum capacity of electrolytic manganese dioxide (EMD). MOIL promotes non-conventional energy resources and has set up a 4.8 MW wind energy farm at Nagda Hills and a 15.2 MW wind farm at Ratedi Hills in district Dewas of Madhya Pradesh.

In terms of its financial performance on a consolidated quarterly basis, its net sales and operating income increased by 21.37 per cent at Rs307.20 crore in Q2FY21 from Rs253.11 crore in Q2FY20. The operating profit declined by 76.08 per cent at Rs32.61 crore in Q2FY21 in comparison with Rs136.31 crore in Q2FY20. This can be traced to a substantial increase of 57.12 per cent in the cost of raw materials in Q2 of FY21 as compared to Q2 of FY20. Due to this, net profit also saw a decline of 91.73 per cent in Q2FY21 as compared to Q2FY20.

On an annual basis its net sales were down by 21.75 per cent in FY20 as compared to FY19 while operating profit was down by 44.81 per cent at Rs436.65 crore in FY20 as compared to Rs791.15 crore in FY19. Net profit also showed a dip of 48.12 per cent in FY20 as compared to FY19. The financials may show a declining trend due to the impact of the pandemic on operational and manufacturing activities. MOIL accounts for about 48 per cent of the country’s production. It possesses about 93.06 million tons of reserves and resources of manganese ore and has strongly positioned itself to capitalize on India’s steel demand growth. MOIL is ready to enhance production of manganese ore up to 2.5 million tonnes by 2020-21. Given its dominant position, centrally located mines and strong and expanding customer base, we recommend investors to HOLD this stock.

ABB INDIA

ABB India is a dominant global technology company that aims to energize the transformation of society and industry to achieve a more productive and sustainable future. It boosts the boundaries of technology by connecting software to its electrification robotics, automation and motion portfolio. ABB India has a history of excellence which can be traced back to 130 years and records to be successfully driven by 1,10,000 talented employees in over 100 countries. India has experienced a substantial level of economic expansion and ABB India has been steadily expanding its footprint to support this growth.

As for the financial performance of ABB India that has its financial year from January to December, on a standalone quarterly basis its net sales and operating income declined by 7.64 per cent at Rs1,612.17 crore in Q3FY20 from Rs1,745.62 crore in Q3FY19. The operating profit showed a rise of 1.24 per cent at Rs141.50 crore in Q3FY20 as compared to Rs139.77 crore in Q3FY19. The net profit increased by 8.48 per cent in Q3FY20 as compared to Q3FY19. On an annual basis its net sales were up by 9.34 per cent in FY19 as compared to FY18. The operating profit rose by 15.44 per cent at Rs625.46 crore in FY19 as compared to Rs541.80 crore in FY18. Net profit showed a dip of 40.61 per cent in FY19 as compared to FY18.

ABB India focuses on the growth segment while conventional sectors continue to face headwinds. The government’s investments also remain the key to fuel growth of the company. The demand recovery for ABB India’s products is backed by piled up opportunities with green shoots in emerging sectors. The company has reported a PE ratio of 146.82 which is the highest among its peer companies. It has also recorded an EV and EBITDA ratio of 41.56. The fundamentals of the company indicate that the stock is currently expensive as per its valuation. It is trading at 8.21 times its book value with the price being close to its 52-week high price. Considering these factors we recommend investors to BOOK PROFIT for this stock.
(Closing price as of Feb 09, 2021)

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