Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
APEX FROZEN FOODS LTD.
Apex Frozen Foods is an integrated producer and exporter of shelf-stable quality aquaculture products.The company’s operations comprise hatchery, farming, pre-processing, processing and exporting of shelf-stable quality aquaculture products. An analysis of the financial performance on a quarterly basis reveals that net sales grew by a mere 2.09 per cent from Rs218.26 crore in Q1FY21 to Rs222.82 in Q1FY22. Operating profit for Q1FY22 stood at Rs13.75 crore, down by 35.19 per cent from Rs21.22 in Q1FY21. Net profit plummeted by 61.13 per cent from Rs8.47 crore in Q1FY21 to Rs3.29 crore in Q1FY22. On the annual front, net sales for FY21 came in at Rs818.48 crore, dipping by 1.04 per cent from Rs827.11 crore in FY20. Operating profit contracted by 7.1 per cent from Rs105.99 crore in FY20 to Rs98.46 crore in FY21. Net profits plunged by 26.97 per cent from Rs60.64 crore in FY20 to Rs44.29 crore in FY21. During FY21 a whopping 82 per cent of the company’s revenues were contributed from sales in the US. While the domestic ecosystem was better prepared during the second wave of the pandemic which allowed the company’s operations to remain largely unaffected, global disruption in sea transport continued to limit the growth in sales volumes. This trend is likely to continue in the coming quarters. Hence, we recommend AVOID.
ARVIND FASHIONS LTD.
Arvind Fashions Ltd. is India’s leading casual and denim wear player, a lifestyle powerhouse with a strong portfolio of fashion brands catering to consumers across the sub-categories and price points. Analysis of the company’s consolidated financial performance on a quarterly basis reveals that net sales jumped by 3.5 times on account of a low base effect from Rs71.93 crore in Q1FY21 to Rs319.24 crore in Q1FY22. Operating loss for Q1FY22 stood at Rs24.72 crore, improving from a loss of Rs33.27 crore in Q1FY21. Net loss was Rs182.49 crore in Q1FY22, reducing from Rs213.13 crore in Q1FY21. On the annual front, net sales shrunk by 39.09 per cent from Rs3,613.57 crore in FY20 to Rs2,201.18 crore in FY21. On similar lines, operating profit dropped by 61.79 per cent from Rs317.57 crore in FY20 to Rs121.33 crore in FY21. Net loss for FY21 stood at Rs595.99 crore as compared to Rs399.19 crore in FY20. The company’s online channel sales increased by 4.2 times on a YoY basis in Q1FY22 and direct-to-consumer (D2C) business contributed to more than 30 per cent of online sales. The company has also signed a definitive agreement in July 2021 for strategic sale of assets of ‘unlimited’ retail business to V-Mart Retail in an all-cash deal. Transaction closure is expected within Q2FY22. Hence, we recommend HOLD.
KPIT TECHNOLOGIES LTD.
KPIT Technologies is a leading independent software development and integration partner helping mobility leapfrog towards a clean, smart and safe future. With 7,000 automobelievers across the globe specialising in embedded software, artificial intelligence (AI) and digital solutions, KPIT Technologies accelerates clients’ implementation of next-generation technologies for the future mobility roadmap.
To analyse the company’s quarterly consolidated performance, net sales and other operating income for Q1FY22 stood at Rs567.38 crore – recording a rise of 15.16 per cent as compared to net sales and operating income of Rs492.71 crore for Q1FY21. The company recorded an operating profit for Q1FY22 at Rs110.25 crore which gave a robust increase of 63.99 per cent as compared to an operating profit of Rs67.23 crore registered for Q1FY21. Net profit for Q1FY22 jumped significantly and was reported at Rs60.25 crore in Q1FY22 as compared to net profit of Rs24.23 crore in Q1FY21. On the annual front, net sales and other operating income were reported at Rs2,035.74 crore for FY21, declining by 5.59 per cent when compared to Rs2,156.17 crore for FY20. FY21 reported an increase of 1.55 per cent in operating profit at Rs322.90 crore as compared to Rs317.99 crore for FY20.
The net profit stood at Rs141.40 crore in FY21 as compared to net profit of Rs146.78 crore reported in FY20, shrinking by 3.66 per cent. The company witnessed a sequential constant currency growth of 4.3 per cent across passenger cars and commercial vehicle verticals. Autonomous and connected practices led growth during the quarter. Also, an improvement in utilisation, reduction in sub-contractor costs and revenue growth assisted the expansion of EBITDA margins. The company predicts the revenue growth momentum to be the same in FY22. This growth is expected to be broad-based across practices and clients. Owing to a healthy order book and decent medium-term visibility, the company gives us confidence of growth in FY22. Hence, we recommend HOLD
VA TECH WABAG LTD.
With presence in four continents, VA Tech Wabag is a pure-play water technology multinational offering a wide range of solutions focused on conservation, optimisation, recycling and reuse of resources, directed at addressing water challenges across the world. With strong research and development and a passion for innovation, the company has skills in handling EPC projects of any scale across any sector or region. VA Tech Wabag has three dedicated research and development centres in Switzerland, Austria and India, and holds over 100 patents. It has a successful track record of executing over 6,000 municipal and industrial projects globally with quality and commitment to timely delivery.
The company’s quarterly consolidated financials recorded net sales and other operating income for Q1FY22 at Rs658 crore, posting a strong rise of 52.71 per cent as compared to net sales and operating income of Rs430.87 crore for Q1FY21. The company recorded operating profit for Q1FY22 at Rs46.97 crore which zoomed robustly by 55.53 per cent as compared to an operating profit of Rs30.20 crore registered for Q1FY21. The net profit of Q1FY22 cheered the company at Rs18.87 crore as against net profit of Rs3.54 crore in Q1FY21. In terms of annual performance, net sales and other operating income were reported to be Rs2,834.49 crore for FY21, which ascended by 10.85 per cent as compared to Rs2,557.15 crore for FY20. FY21 reported a decrease of 9.99 per cent in operating profit at Rs226.97 crore as compared to Rs252.15 crore for FY20.
Net profit stood at Rs95.07 crore in FY21 as compared to net profit of Rs79.18 crore reported in FY20, growing by 20.07 per cent. The company continues its profitable growth with an order book of over Rs104 billion and an order intake of over Rs14 billion. In the latest quarter the company has received a key order from AGCC, Russia for integrated treatment facilities worth Rs1,221.3 crore. Hence, having a positive bias regarding the timely completion of existing orders and inflow of new orders contributing to the overall growth of the company, we recommend BUY.
POLY MEDICURE LTD.
Poly Medicure is one of the leading medical devices companies and exporters in India. It bears the tag of being the largest exporter of medical devices from India for six years in a row. The company has a strong track record of manufacturing high-quality medical devices in eight state-of-the-art manufacturing facilities across the world. It owns five manufacturing facilities in India – three in Faridabad and one each in Jaipur and Haridwar. It has three facilities overseas – one in Italy as a wholly-owned subsidiary, one in China as a wholly-owned subsidiary and one venture in Egypt.
An analysis of the company’s quarterly consolidated perfor-mance reveals that net sales and other operating income for Q1FY22 stood at Rs211.94 crore, recording a rise of 24.4 per cent as compared to net sales and operating income of Rs170.38 crore for Q1FY21. The company recorded operating profit for Q1FY22 at Rs65.61 crore which gave an increase of 33.04 per cent as compared to operating profit of Rs49.82 crore registered for Q1FY21. Net profit for Q1FY22 jumped up by 42.02 per cent and was reported at Rs36.94 crore in Q1FY22 in comparison with net profit of Rs26.01 crore in Q1FY21. On the annual front, net sales and other operating income were reported to be Rs786.47 crore for FY21, improving by 14.44 per cent when compared to Rs687.24 crore for FY20.
FY21 reported an increase of 27.6 per cent in operating profit, registering at Rs232.78 crore as compared to Rs182.43 crore for FY20. Net profit stood at Rs132.56 crore in FY21 as compared to net profit of Rs93.74 crore reported in FY20, bagging gains of 41.42 per cent. The company has increased its distributor strength from 150 to 223 along with the addition of top corporate hospitals, dialysis and laboratory chains. The government has earmarked a budget of Rs 3,420 crore for the PLI scheme. Under this ambit, Poly Medicure has also got approval for some key products while new greenfield projects are in the pipeline. Hence, the optimistic expansion plans of the company have majorly contributed to us recommending HOLD.
BANCO PRODUCTS (INDIA) LTD
Banco Products (India) has carved a niche for itself as a leader in the business of engine cooling and engine sealing systems. The company is a preferred choice of OEMs in the automotive and industrial sectors. Its leading OEM customers include Tata Motors, Ashok Leyland, Cummins, Maruti Suzuki, Mahindra and Mahindra, Hero Honda, TVS, etc. With a broad product basket, Banco Products (India) is a leader in the aftermarket for engine cooling and engine sealing products.
The company’s quarterly consolidated financials recorded net sales and other operating income for Q1FY22 at Rs500.84 crore, posting a rise of 82.6 per cent as compared to net sales and operating income of Rs274.28 crore for Q1FY21. The company recorded operating profit for Q1FY22 at Rs79.67 crore, which grew sturdily as compared to operating profit of Rs28.68 crore registered for Q1FY21. Net profit for Q1FY22 stood at Rs45.9 crore as against net profit of Rs17.56 crore in Q1FY21. In terms of annual performance, net sales and other operating income were reported at Rs1,532.58 crore for FY21, which zoomed by 7.77 per cent when compared to Rs1,422.07 crore for FY20. FY21 reported growth of 27.01 per cent in operating profit standing at Rs187.14 crore as compared to Rs147.34 crore for FY20. Net profit stood at Rs113.73 crore in FY21 in comparison with net profit of Rs86.57 crore reported in FY20, rising by 48.53 per cent.
In April 2021, a new subsidiary named Banco New Energy Cooling Systems Ltd. was incorporated in India to carry on all types of business of manufacturing, assembling, importing, exporting and the distribution of all types of heat exchangers for electrical vehicles (EVs) and for automotive, non-automotive and industrial applications. The rapidly globalising world is posing newer opportunities for the transportation industry, especially during the transition towards electric, electronic and hybrid cars which qualify to be a more efficient, safe, and reliable mode of transportation. This poses new verticals and opportunities for automotive component manufacturers. Hence, we recommend HOLD.
(Closing price as of Aug 20, 2021)