Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
L&T FINANCE HOLDINGS LTD.
L and T Financial Services (LTFS) is one of India’s leading non-banking financial companies offering a diverse range of financial products and services across the rural, housing and infrastructure finance sector. It also offers mutual fund products and investment management services. In the fourth quarter of FY21, the company posted interest income of Rs3,223.61 crore as compared to Rs3,280.05 crore recorded in Q4FY20, a dip of 1.72 per cent. In terms of total income, the company recorded Rs3,587.18 crore in Q4FY21, which is 4.71 per cent more than Rs3,425.68 crore posted in Q4FY20. The net profit for Q4FY21 stood at Rs265.97 crore whereas for Q4FY20 it was recorded at Rs384.86 crore, which is a 30.89 per cent decline. On the annual front, in FY21 the interest income was recorded at Rs13,104.85 crore as compared to Rs13,244.74 crore registered in FY20, a 1.05 per cent slip. The total income for FY21 was Rs14,080.10 crore, which squeezed by 2.73 per cent as compared to Rs14,476.75 crore in FY20. The net profit for FY21 was registered at Rs948.88 crore whereas for FY20 it was Rs1,700.26 crore, which is a 44.19 per cent shrink. The shaky quarterly performance of the company in Q4FY21 has made investors cautious regarding prospects of the company. The valuations for L and T Finance Holdings are also analysed to be on the higher side. Hence, we recommend AVOID.
HINDUSTAN COPPER LTD.
Hindustan Copper Ltd. (HCL) is a government-owned corporation in the central public sector enterprise domain under the Ministry of Mines (India), Government of India. In terms of quarterly financial performance, on a consolidated basis the net sales and other operating income for Q3FY21 was reported at Rs538.42 crore which rose significantly as compared to net sales and operating income of Rs93.29 crore for Q3FY20. The company reported an operating profit for Q3FY21 at Rs225.17 crore as against operating loss of Rs27.88 crore reported for the corresponding quarter of the previous fiscal year. It recorded net profit of Rs108.19 crore in Q3FY21 against net loss of Rs95.61 crore in Q3FY20. On an annual basis, the net sales and other operating income were reported to be Rs831.85 crore for FY20 which dipped by 54.2 per cent when compared to Rs1,816.25 crore for FY19. FY20 reported an operating loss of Rs188.54 crore as against operating profit of Rs538.46 crore for FY19. The company incurred net loss of Rs569.49 crore in FY20 as against net profit of Rs145.33 crore in FY20. The above data indicates that the company has reported an unstable performance on an annual basis. Also, the volatility in LME copper price affects the turnover and profitability of the company. Hence, owing to the increasing cost of inputs and the increasing regulatory risks in mining, we recommend AVOID.
DEEPAK NITRITE LTD
Deepak Nitrite Limited (DNL) is involved in manufacturing chemical intermediates to serve the domestic and international markets with high-quality products made in a responsible and sustainable manner. The product categories of the company include fine and specialty chemicals, performance products and basic chemicals. The products are applied in segments like dyes and pigments, agrochemicals, pharmaceuticals, fuel additives, rubber, paper, detergents and personal care.
Analysing the quarterly consolidated financials, the net sales and other operating income for Q4FY21 was reported at Rs1,463.23 crore which rose by 38.62 per cent as compared to net sales and operating income of Rs1,055.54 crore for Q4FY20. The company reported an operating profit for Q4FY21 at Rs460.60 crore which increased attractively as compared to an operating profit of Rs264.28 crore reported for the corresponding quarter of the previous fiscal year. The company recorded net profit of Rs290.11 crore in Q4FY21 in comparison with net profit of Rs172.30 crore in Q4FY20, recording gains of 68.37 per cent.
On an annual basis, the net sales and other operating income were reported to be Rs4,359.75 crore for FY21 which rose by 3.07 per cent when compared to Rs4,229.71 crore for FY20. FY21 reported an increase of 19.56 per cent in operating profit at Rs1,268.55 crore as compared to Rs1,061 crore for FY20. The company reported net profit of Rs775.81 crore in FY21 as compared to net profit of Rs611.03 crore in FY21, recording an increase of 26.97 per cent. DNL has charted an expansion plan of approximately Rs300 crore for development of new agro chemical and pharmaceutical intermediates along with launching new platforms including fluorination and photo chlorination. A The rise in demand for phenol globally is a result of growth in end-user industries owing to increasing urbanisation, changing lifestyles and the rise in disposable incomes globally. Hence, we recommend HOLD.
DEEPAK FERTILISERS & PETROCHEMICALS
Deepak Fertilisers and Petrochemicals Corporation Ltd. (DFPCL) is among India’s leading producers of fertilisers and industrial chemicals. DFPCL today is a multi-product Indian conglomerate having an annual turnover of over USD 1 billion with a product portfolio spanning industrial chemicals, bulk and specialty fertilisers, farming diagnostics and solutions, technical ammonium nitrate and value-added real estate, which includes India’s first and largest revolutionary concept retail destination for home interiors and design.
In terms of the quarterly consolidated financials, the net sales and other operating income for Q4FY21 stood at Rs1,575.08 crore, recording a rise of 21.82 per cent as compared to net sales and operating income of Rs1,292.95 crore for Q4FY20. The company reported an operating profit for Q4FY21 at Rs278.81 crore, which increased significantly as compared to an operating profit of Rs133.77 crore registered for Q4FY20. Net profit for Q4FY21 was reported at Rs115.80 crore in Q4FY21 in comparison with net profit of Rs22.32 crore in Q4FY20, documenting massive gains. In terms of annual performance, the net sales and other operating income were reported to be Rs5,808.49 crore for FY21, a rise of 23.97 per cent when compared to Rs4,685.38 crore for FY20. FY21 reported an increase of 76.52 per cent in operating profit at Rs987.98 crore as compared to Rs559.71 crore for FY20. The company reported net profit of Rs406.44 crore in FY21 as compared to net profit of Rs89.18 crore in FY21, recording a significant rise.
An improvement in operational effeciency is witnessed by the company in the fourth quarter of FY21. Its business and marketing strategies have been showing optimistic results. Besides, the contributions from latest capacity additions are cheering the company’s prospects. Moving of global specialty chemical value chains from China to India has augmented demand for Nitric Acid in India. Hence, we recommend BUY.
TV18 BROADCAST LTD
TV18 Broadcast Limited, formerly Global Broadcast News and IBN18 Broadcast Limited, is an Indian entity belonging to the Network 18 Group based in Mumbai. The company owns and operates various channels of the NBC Universal Group for Indian viewers such as CNBC TV18, CNBC Awaaz and CNBC-TV18 Prime HD as well as Warner Media-CNN-News18. The company is known as a leading media company in India with the largest bouquet of channels – 56 domestic channels and 16 international beams – and a substantial digital presence.
In terms of the quarterly consolidated financials, the net sales and other operating income for Q4FY21 stood at Rs1,347.94 crore, recording a dip of 5.4 per cent as compared to net sales and operating income of Rs1,424.93 crore for Q4FY20. The company reported an operating profit for Q4FY21 at Rs299.94 crore, which increased by 22.5 per cent as compared to an operating profit of Rs244.85 crore registered for Q4FY20. Net profit for Q4FY21 was reported at Rs236.14 crore in Q4FY21 in comparison with net profit of Rs139.95 crore in Q4FY20, documenting gains of 68.73 per cent. In terms of annual performance, the net sales and other operating income were reported to be Rs4,497.62 crore for FY21, posting a decline by 13.09 per cent when compared to Rs5,174.94 crore for FY20.
FY21 reported an increase of 10.86 per cent in operating profit at Rs870.19 crore as compared to Rs784.98 crore for FY20. The company reported net profit of Rs686.04 crore in FY21 as compared to net profit of Rs377.52 crore in FY20, recording a 81.72 per cent rise. A strong recovery was observed in television advertising growth to high single digits in Q4FY21. The company saw margins expand in the TV news segment all the through the year. Even the TV entertainment section grew viewership share by 2 per cent to 10.9 per cent and saw full year margins at their highest ever. The entertainment OTT reached 1 million D2C subscribers within the first year of launch. Hence, we recommend HOLD.
METROPOLIS HEALTHCARE LTD
Metropolis Healthcare Limited is one of the leading and renowned Indian diagnostics companies. A chain of diagnostic centres is owned by the company across India, South Asia, Africa and the Middle East. Over the years, Metropolis Healthcare has carved a niche for itself. With its widespread operational network, it offers a comprehensive range of clinical laboratory tests and profiles. These tests and profiles are used for prediction, early detection, diagnostic screening, confirmation and monitoring of various diseases.
On a consolidated quarterly front, the net sales and other operating income for Q4FY21 stood at Rs291.73 crore, recording a rise of 40.95 per cent as compared to net sales and operating income of Rs206.98 crore for Q4FY20. The company reported an operating profit for Q4FY21 at Rs98.46 crore, which increased by 80.75 per cent as compared to an operating profit of Rs54.47 crore registered for Q4FY20. Net profit for Q4FY21 was reported at Rs61.32 crore in Q4FY21 in comparison with net profit of Rs15.49 crore in Q4FY20, documenting significant gains. On the annual front, the net sales and other operating income were reported to be Rs997.99 crore for FY21, posting a rise of 16.53 per cent when compared to Rs856.40 crore for FY20. FY21 reported an increase of 23.47 per cent in operating profit at Rs298.05 crore as compared to Rs241.39 crore for FY20.
The company reported net profit of Rs183.35 crore in FY21 as compared to net profit of Rs128.07 crore in FY20, recording 43.16 per cent rise. The revenue share of B2C in focus cities excluding corona virus-related tests grew by 56 per cent. With vaccination drives accelerating up to cover larger population, the nonpandemic business is expected to remain healthy. Meanwhile, the company has taken various cost control initiatives to optimise its cost structure which has led to enhanced EBITDA margins in Q4FY21. Hence, owing to strong recovery in the business and expecting an encouraging future for the company we recommend BUY.
(Closing price as of June 25, 2021)