Query Board

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

HDFC LIFE INSURANCE COMPANY LTD

HDFC Life is one of India’s leading life insurance companies. It is a joint venture between HDFC Ltd., one of India’s leading housing finance institutions, and Standard Life Aberdeen PLC, a well-known provider of financial savings and investment services in the United Kingdom. On the basis of quarterly consolidated financials, net premium income for Q4FY21 stood at Rs12,869.55 crore, growing by 22.85 per cent from Rs10,475.95 in Q4FY20. Total income was Rs19,192.86 crore for Q4FY21. Net profits were stable and ascended by 2.38 per cent from Rs311.65 crore in Q4FY20 to Rs319.06 crore in Q4FY21. On the basis of annual consolidated financials, net premium income zoomed by 18.31 per cent to Rs32,244.98 crore in FY20 to Rs38,148.81 crore in FY21. Total income for FY21 was Rs71,268.33 crore, clocking significant gains from Rs29,282.81 crore in FY20. The company’s net profit grew by 4.89 per cent from Rs1,297.45 crore in FY20 to Rs1,360.87 crore in FY21. India’s life insurance penetration was pegged at a paltry 2.82 per cent in FY20, which indicates enormous scope for growth in the coming years. HDFC Life has proved its mettle time and again with consistently improving financials and burgeoning market share. Hence, we recommend HOLD.

TATA MOTORS LTD

Tata Motors is a leading global automobile manufacturing company. Its diverse portfolio includes an extensive range of cars, sports utility vehicles, trucks, buses and defence vehicles. In terms of the quarterly consolidated financials, net sales and other operating income for Q4FY21 stood at Rs88,627.9 crore, exhibiting a robust growth of 41.82 per cent from Rs62,492.96 in Q4FY20. Operating profit skyrocketed by a colossal 1,020.40 per cent from Rs1,255.37 crore in Q4FY20 to Rs14,065.17 in Q4FY21. The company reported a 22.34 per cent drop in net loss from Rs9,671.25 crore in Q4FY20 to Rs7,510.85 crore in Q4FY21. In terms of the annual consolidated financials, net sales declined by 9 per cent from Rs2,74,492.12 crore in FY20 to Rs2,49,794.75 crore in FY21. Operating profit jumped by 15.12 per cent to Rs34,930.62 crore in FY21 as against Rs30,343.23 crore in FY20. The company posted net loss of Rs13,016.14 crore in FY21 as against a net profit of Rs6,063.56 crore in FY20. Over the last five years, the company has delivered poor sales growth of -8.51 per cent. It has reported massive losses for the last three years and return on equity has been -27.49 per cent. Debt to equity ratio stands at 2.1, while interest coverage ratio is low at 1.41. Hence, based upon deteriorating financials, we recommend AVOID.

ADANI GREEN ENERGY LTD

Adani Green Energy Limited (AGEL) is one of the largest renewable companies in India, having a current project portfolio of 13,990 MW. The company develops, builds, owns, operates and maintains utility-scale grid-connected solar and wind farm projects. The generated electricity is being supplied to central and state government entities along with government-backed corporations for over 25 years. AGEL has leveraged its capabilities and expanded its presence across 11 Indian states.

Looking at the quarterly consolidated financials, the net sales and other operating income for Q4FY21 stood at Rs986 crore, recording a gain of 41.67 per cent as compared to net sales and operating income of Rs696 crore for Q4FY20. The company recorded an operating profit for Q4FY21 at Rs 722 crore, which increased substantially as compared to an operating profit of Rs247 crore registered for Q4FY20. Net profit for Q4FY21 was reported at Rs104 crore in Q4FY21 in comparison with net profit of Rs64 crore in Q4FY20, documenting gains of 62.5 per cent. In terms of annual performance, the net sales and other operating income were reported to be Rs3,124.00 crore for FY21, improving by 22.56 per cent when compared to Rs2,549 crore for FY20.

FY21 reported an increase of 77.12 per cent in operating profit at Rs2,710 crore as compared to Rs1,530 crore for FY20. The company reported net profit of Rs176 crore in FY21 as against net loss of Rs61 crore reported in FY20. In the initial months of 2021 Adani Green Energy had inked share purchase agreements with Soft Bank Group and Bharati Group for the purpose of acquisition of 100 per cent stake in SB Energy India for USD 3.5 billion. Recently, the Competition Commission of India (CCI) has given a nod for this acquisition, which proved to be the largest acquisition in the renewable energy sector. Hence, considering the robust operations with high plant availability and strong capacity utlilisation factor (CUF) performance over the years portrayed by the company, we recommend HOLD.

ROUTE MOBILE LTD

Route Mobile is a publicly listed company and among the leading cloud communications platform service provider offering communication platform as a service (CPaaS) solution. The company caters to enterprises, over-the-top (OTT) players and mobile network operators (MNO) and its portfolio comprises solutions in messaging, voice, email, SMS filtering, analytics and monetisation. Route Mobile is headquartered in Mumbai and has global footprints in the Asia Pacific, Middle East, Africa, Europe, and the Americas.

The company’s quarterly consolidated financials indicate that net sales and other operating income for Q4FY21 stood at Rs362.44 crore, recording a rise of 36.38 per cent as compared to net sales and operating income of Rs265.76 crore for Q4FY20. The company recorded an operating profit for Q4FY21 at Rs49.30 crore which gave an attractive increase of 95.78 per cent as compared to an operating profit of Rs25.18 crore registered for Q4FY20. Net profit for Q4FY21 was reported at Rs35.47 crore in Q4FY21 in comparison with net profit of Rs14.79 crore in Q4FY20, registering significant gains. In terms of annual performance, the net sales and other operating income were reported to be Rs1,406.18 crore for FY21, improving by 47.05 per cent when compared to Rs956.25 crore for FY20.

FY21 reported an increase of 69.99 per cent in operating profit at Rs190.05 crore as compared to Rs111.80 crore for FY20. The net profit stood at Rs132.75 crore in FY21 in comparison with net profit of Rs58.20 crore reported in FY20, bagging cheering gains. During the last quarter of FY21 the company witnessed growing number of multi-million dollar accounts with advancing client diversification. The company recorded a 140 per cent net revenue retention which was driven by deep customer engagement. Across all the products, 410 and 74 new customers were on-boarded over FY2021 and Q4 FY2021 respectively. Considering the accelerated adoption of next generation messaging channels, including enterprise voice solutions, IP-based messaging and unified communication solutions by enterprises, we recommend HOLD.