Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Hindustan Composites Limited is involved in the development, manufacture and marketing of friction materials comprising brake lining, clutch facing, disc brake pad, roll lining, brake block, etc. On the financial front, on a consolidated quarterly basis, for Q3FY21 the company’s net sales increased by 17.16 per cent to Rs 51.27 crore from Rs 43.76 crore reported in Q3FY20. It reported a PBDT of Rs 7.92 crore which is a rise by 53.19 per cent compared to the PBDT of Rs 5.17 crore posted in Q3FY20. The net profit for Q3FY21 came in at Rs 5.18 crore, thus clocking a growth of 52.8 per cent compared to the net profit of Rs 3.39 crore in Q3FY20. On the annual front, net sales declined by 9.44 per cent to Rs 178.05 crore in FY20 from Rs 196.61 crore reported in FY19. PBDT for FY20 stood at Rs 19.81 crore registering degrowth of 26.58 per cent compared to the PBDT of Rs 26.98 crore posted in FY19. In FY20, the company was reported to have gained a net profit of Rs 12.03 which is a decrease by 36.68 per cent compared to the net profit of Rs 19 crore gained in FY19. The company is committed towards continuous upgradation and development of materials and process through strong collaborations which will benefit its business. Hence, we recommend our investor-readers to HOLD.
Vidhi Speciality Food Ingrediants Ltd. is a company conducting business operations in the food colour manufacturing sector. The company is engaged in the manufacturing and trading of synthetic food colours and chemicals. From the financial point of view, on a consolidated quarterly basis the net sales and operating income rose by 46.82 per cent at Rs 79.28 crore in Q3FY21 from Rs 54 crore in Q3FY20. The operating profit jumped by 33.11 per cent at Rs 15.56 crore in Q3FY21 in comparison with Rs 11.69 crore in Q3FY20. The net profit increased by 36.11 per cent at Rs 10.48 crore in Q3FY21 as compared to net profit of Rs 7.70 crore in Q3FY20. On the annual front, its net sales declined by 1.64 per cent in FY20 at Rs 224.62 crore as against Rs 228.35 crore recorded in FY19. The operating profit rose by 9.51 per cent reflecting at Rs 51.10 crore in FY20 as compared to Rs 46.67 crore in FY19. FY20 recorded a net profit of Rs 34.08 crore as compared to Rs 29.06 crore in FY19. The prospects of the food colour business are underpinned by relatively steady growth trends and increase in demand of consumables and food items. Also, the company records to have well established infrastructure for manufacturing capacities, human resources, technical expertise, etc. which are a leading factor for future growth of its business. Hence we recommend HOLD.
HDFC Bank Limited is an Indian banking and financial company engaged in financing by way of loans for the purchase or construction of residential houses, commercial real estate and certain other purposes in India. Segments of the company include loans, life insurance, general insurance, asset management and others. The company has a spread over 4,520 branches and approximately 12,000 automated teller machines in over 2,590 locations. On the quarterly front, the net interest earned by the bank in the third quarter of FY21 came in at Rs 31,851.60 crore as against Rs 31,200.92 crore in the corresponding quarter of the previous fiscal, an increase of 2.08 per cent.
The total income in Q3FY21 was Rs 39,838.73 crore, an increase of 3.94 per cent from Rs 38,325.70 crore in Q3FY20. The profit after tax rose by 14.36 per cent to reach Rs 8,760.19 crore in Q3FY21 from Rs 7,659.96 crore in Q3FY20. For Q3FY21 the GNPA percentage was 0.81 per cent as compared to 1.42 per cent in Q3FY20. The CRAR ratio in Q3FY21 was 18.9 per cent and in Q3FY20 it was 18.5 per cent. Net interest earned by the bank in FY20 came in at Rs 1,22,189.30 crore, an increase of 16.19 per cent from Rs 1,05,160.75 crore in FY19. The total income earned by the bank in FY20 was Rs 1,47,068.28 crore, an increase of 18.5 per cent from Rs 1,24,107.84 crore earned in the previous fiscal.
The profit after tax in FY20 increased by 21.61 per cent to reach Rs 27,296.27 crore as against Rs 22,445.62 in FY19. The company reported GNPA ratio of 1.26 per cent for FY20 and 1.36 per cent for FY19. In FY20, the CRAR ratio was 18.5 per cent whereas in FY19 it was 17.1 per cent. Gross advances of the company increased 15.4 per cent for the recent quarter. The deposits were also up by 19.1 per cent. The cost to income ratio stood at 36.1 per cent. The company is well-positioned across India’s GDP spectrum and manages to cover diverse needs of the customers. Considering the uniqueness of the company in the banking sector and strong growth prospects, we recommend HOLD.
Torrent Power is a leading brand promoted by the Rs 21,500 crore Torrent Group, which is committed to the mission of transforming life by serving two of the most critical needs – healthcare and power. The company is engaged in the business of power generation, transmission and distribution with operations in the states of Gujarat, Maharashtra and Uttar Pradesh. It is also engaged in the business of cable manufacturing with operations in the state of Gujarat. The company has a portfolio of coal-based, gas-based and renewable power plants with an aggregate generation capacity of 3879 MW.
Torrent Power claims to be amongst the best run power utilities in the country with highly efficient generation assets. From the financial point of view, on a consolidated quarterly basis the net sales and operating income declined by 4.1 per cent at Rs 2,952.75 crore in Q3FY21 from Rs 3,079.00 crore in Q3FY20. The operating profit increased by 3.51 per cent at Rs 907.64 crore in Q3FY21 in comparison with Rs 876.86 crore in Q3FY20. The net profit took a dip by 23.58 per cent at Rs 321.73 crore in Q3FY21 as compared to net profit of Rs 420.62 crore in Q3FY20. On a consolidated annual front, the net sales increased by 3.72 per cent in FY20 at Rs 13,640.63 crore as against Rs 13,150.97 crore recorded in FY19.
The operating profit rose by 10.17 per cent reflecting at Rs 3,733.66 crore in FY20 as compared to Rs 3,389.07 crore in FY19. FY20 recorded a net profit of Rs 1,178.88 crore as compared to Rs 903.83 crore in FY19, rising by 30.43 per cent. Due to capacity addition, the company saw an increase in contribution from renewable generation. The interest cost also decreased both due to lower debt and reduction in interest rates. The economic revival in the post-lockdown period resulted in an increase in demand for electricity in Torrent Power’s distribution areas. Therefore, based on analysis and positive indications shown by the operations of company, we recommend ACCUMULATE.
Parag Milk Foods Limited is engaged in manufacturing and processing of milk and milk products. The company offers a range of products which includes cheese, ghee, whey proteins, paneer, curd, yoghurt, milk products, liquid milk, milk-based beverages and milk powders. Its feature brands include ‘Gowardhan’ under which traditional dairy products such as ghee are marketed by the company; ‘Go’ under which Parag Milk Foods’ markets western lifestyle dairy products such as cheese; ‘Pride of Cows’ which is the company’s premium milk brand and ‘Topp Up’ which is flavoured milk.
The manufacturing facilities are located at Manchar in Maharashtra and Palamaner in Andhra Pradesh. On the consolidated financial front, its net sales for Q3FY21 were Rs 473.59 crore which is a decrease of 25.17 per cent as compared to net sales of Rs 632.93 crore for Q3FY20. The PBDT for Q3FY21 was reported to be Rs 26.57 crore which is a decrease of 44.95 per cent as against Rs 48.27 crore reported for the same quarter of the previous fiscal year. There was a decrease in net profit by 59.33 per cent for the Q3FY21 to Rs 11.22 crore when compared to Rs 27.58 crore for the third quarter of the previous fiscal year.
Looking at the annual trend, the net sales were reported to be Rs 2,437.92 crore for FY20, thus increasing by 1.76 per cent when compared to Rs 2,395.66 crore for FY19. In FY20, PBDT also decreased by 8.78 per cent to Rs 180.60 crore as against Rs 197.97 crore for FY19. At Rs 93.69 crore for FY20, a 22.39 per cent decrease in the net profit for FY20 was reported when compared to the net profit of Rs 120.72 crore in FY19. Post an initial period of disruption due to the pandemic the company is witnessing gradual recovery in demand for its products. Parag Milk Foods continues to expand its product portfolio to cater to consumers’ changing needs company expects rising income and disposable income to drive consumption of milk and dairy products. Therefore, we recommend HOLD for this stock.
SBI Cards and Payment Services Limited is engaged in the marketing and distribution of credit cards. The company offers a wide range of credit card portfolio to individual cardholders and corporate clients, which includes lifestyle, rewards, travel and fuel, shopping, banking partnership cards and corporate cards. It is focused on offering customised benefits for its cardholders, such as reward programs and discount programs – tailored for each target demographic. It also offers a co-brand credit card that is specifically targeted at medical doctors, which offers specialised medical professional liability insurance to its cardholders.
On the quarterly front, the company reported net interest income of Rs 1,168 crore for Q3FY21 which is a decrease by 9 per cent compared to the net interest income of Rs 1,282 crore reported for Q3FY20. The total income for Q3FY21 fell by a mere 1 per cent to Rs 2,540 crore from Rs 2,563 crore posted in Q3FY20. Profit after tax was reported at Rs 210 crore for Q3FY21 which is a 52 per cent decrease compared to the profit after tax of Rs 435 crore posted for Q3FY20. For Q3FY21 the GNPA percentage was 1.61 per cent as compared to 4.3 per cent in Q3FY20. The CRAR ratio in Q3FY21 was 23.7 per cent and in Q3FY20 it was 25.3 per cent. Net interest earned by the bank in FY20 came in at Rs 4,841.3013 crore, an increase of 35.41 per cent from Rs 3,575.12 crore in FY19. The total income earned by the bank in FY20 was Rs 9,752.28 crore, an increase of 33.83 per cent from Rs 7,286.85 crore earned in the previous fiscal.
The profit after tax in FY20 increased by 43.91 per cent to reach Rs 1,244.81 crore as against Rs 864.96 in FY19. The company reported GNPA ratio of 2.44 per cent for FY20 and 2.01 per cent for FY19. In FY20, the CRAR ratio was 22.4 per cent whereas in FY19 it was 20.1 per cent. The company saw 15 per cent growth in cards, 8 per cent growth in spends and 4 per cent growth in receivables. The total management overlay provision at Rs 1,113 crore as of December 2020 as against Rs 758 crore as of September 2020. Hence, we recommend BUY.
(Closing price as of Mar 30, 2021)