Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
SHILP GRAVURES LTD.
Shilp Gravures began operations in 1989 with a chemical etching facility.It had an inherent cutting-edge having been established by a team of technocrats. The company’s quarterly consolidated financials reveal that net sales and other operating income for Q1FY22 were at Rs18.11 crore, recording a rise of 61.29 per cent as compared to net sales and operating income of Rs11.23 crore for Q1FY21. The company recorded an operating profit for Q1FY22 at Rs4.34 crore which grew substan-tially as compared to an operating profit of Rs1.87 crore registered for Q1FY21. Net profit for Q1FY22 was Rs2.81crore as against net profit of Rs0.17 crore in Q1FY21. In terms of annual performance, the net sales and other operating income were reported to be Rs69.81 crore for FY21, which shrunk by 1.18 per cent when compared to Rs70.65 crore for FY20. FY21 reported an increase of 92.51 per cent in operating profit at Rs18.75 crore as compared to Rs9.74 crore for FY20. The net profit stood at Rs10.27 crore in FY21 in comparison with net profit of Rs0.87 crore reported in FY20. For nearly a decade, the company has posted unfavourable sales growth of just 2.07 per cent. Also, being a small-cap company, the returns on investment posted are not attractive. Currently, the stock is trading near its 52-week high price, and it might be the best time to book profits. Hence, we recommend EXIT.
PUNJAB NATIONAL BANK
Punjab National Bank, abbreviated as PNB, is an Indian nationalised bank having headquarters in New Delhi. On the quarterly front, the net interest earned by the bank in the first quarter of FY22 came in at Rs19,229.31 crore as against Rs20,865.35 crore in the corresponding quarter of the previous fiscal, a dip of 7.84 per cent. The total income in Q1FY22 was Rs22,815.41 crore, a squeeze of 7.73 per cent from Rs24,727.72 crore in Q1FY21. Meanwhile, the profit after tax rose signifi-cantly to reach Rs1,080.30 crore in Q1FY22 from Rs475.19 crore in Q1FY21. The net interest earned by the bank in FY21 came in at Rs81,866.40 crore, an increase of around 49 per cent from Rs54,918.47 crore in FY20. The total income earned by the bank in FY21 was Rs94,990.85 crore, an increase of 47.7 per cent from Rs64,306.13 crore earned in the previous fiscal. The profit after tax in FY21 reached Rs2,152.43 crore as against Rs363.34 crore in FY20. Due to high slippages in MSME for two consecutive quarters, the company’s management predicts that the sector will continue to remain under stress till Q4FY22. As MSME loans contribute a significant portion of the total advances and loan book, PNB’s near-term profitability would be critically dependent on the MSME segment’s recovery. Therefore, having a cautious outlook, we recommend EXIT for this stock.
PTC INDIA LTD.
PTC is a pioneer in starting a power market in India and undertakes trading activities which include long-term trading of power generated from large power projects as well as short-term trading arising as a result of supply and demand mismatches, which inevitably arise in various regions of the country. Since July 2001, when it started trading of power on a sustainable basis, it has provided the best value to both the buyers and sellers while ensuring optimum utilisation of resources.
On a consolidated quarterly front, the net sales and other operating income for the Q1FY22 were recorded at Rs4,958.50 crore, growing by 7.08 per cent as compared to net sales and operating income of Rs4,630.78 crore for Q1FY21. The company recorded an operating profit of Rs410.70 crore for Q1FY22 which declined by a mere 0.84 per cent as compared to operating profit of Rs414.19 crore registered for Q1FY21. Net profit of Rs136.12 crore was registered in Q1FY22 whereas it was Rs100.04 crore in Q1FY21. On the annual front, net sales and other operating income were reported to be Rs18,345.50 crore for FY21, ascending by 1.35 per cent when compared to Rs18,100.81 crore for FY20. FY21 reported a decrease of 6.74 per cent in operating profit at Rs1,720.65 crore as compared to Rs1,845.09 crore for FY20.
The net profit improved by 12.71 per cent, standing at Rs457.70 crore in FY21 in comparison with net profit of Rs406.10 crore reported in FY20. In the midst of the pandemic’s impact, PTC India ended the quarter with a stellar performance. In this quarter’s business performance, PTC clocked a 21 per cent rise in volume which can be attributed to short-term trades and the exchange traded segment. The consulting business continues to make deeper inroads to strengthen its presence in B2B solutions for customer entities like SEZs, port trusts and other areas.
Hence, we recommend HOLD.
QUICK HEAL TECHNOLOGIES LTD.
Quick Heal Technologies Ltd. is one of the leading IT security solutions companies and is India’s first listed cyber security products’ entity. Each Quick Heal product is designed to simplify IT security management across the length and depth of devices and on multiple platforms. They are customised to suit consumers, small businesses, government establishments and corporate houses. Over a span of 25 years the company’s research and development centre has focused on computer and network security solutions. The current portfolio of cloud-based security and advanced machine learning-en-abled solutions stop threats, attacks and malicious traffic before they strike.
In terms of quarterly consolidated financials, net sales and other operating income for Q1FY22 was recorded at Rs54.78 crore, descending by 25.43 per cent from Rs73.46 crore reported in Q1FY21. Operating profit declined by 70.22 per cent from Rs38.45 crore in Q1FY21 to Rs11.45 crore in Q1FY22. The company reported a 75.23 per cent plunge in net profit at Rs6.18 crore in Q1FY22 as against net profit of Rs24.96 crore recorded in Q1FY21. On an annual basis, net sales ascended by 16.39 per cent from Rs286.14 crore in FY20 to Rs333.04 crore in FY21. The operating profits increased by 34.67 per cent to Rs165.62 crore in FY21 versus Rs122.99 crore in FY20. The company earned net profit of Rs106.98 crore in FY21 as compared to net profit of Rs74.41 crore in FY20, giving a rise of 43.77 per cent.
The company is well-positioned to leverage its strengths to capture future opportunities with its strong threat detection and prevention capabilities. The extensive experience has helped the company in understanding the security market and issues faced by millions of users in-depth which has led to consistent introduction of innovative products and solutions for its customers. The pandemic-led lockdown has made available a huge growth opportunity for Quick Heal with the demand increasing for cyber security products. Hence, we recommend HOLD.
SOMANY HOME INNOVATION LTD.
Somany Home Innovation Ltd (SHIL) is the fastest growing player in consumer appliances and a leader in the building product segment with three distinct distribution channels to market. SHIL is focused on servicing end-consumers and involved in branding, marketing, sales and distribution and service of various product categories. SHIL, via its wholly owned subsidiary Brilloca Limited, has a versatile range of best-in-class sanitary ware and faucet products with five brands – Queo, Alchymi, Hindware Italian Collection, Hindware and Benelave – catering to a wide pricing spectrum from luxury and super-premium to mass.
The company’s quarterly consolidated financials recorded net sales and other operating income for Q1FY22 at Rs342.30 crore, recording a strong rise of 84.66 per cent as compared to net sales and operating income of Rs185.37 crore for Q1FY21. The company recorded an operating profit for Q1FY22 at Rs16.99 crore which flipped the operating loss of Rs14.04 crore registered for Q1FY21. The net profit of Q1FY22 stood at Rs103.51 crore as against net loss of Rs24.54 crore in Q1FY21. In terms of annual performance, the net sales and other operating income were reported to be Rs1,775.21 crore for FY21, which ascended by 10.05 per cent when compared to Rs1,613.13 crore for FY20. FY21 reported an increase of 43.31 per cent in operating profit at Rs161.18 crore as compared to Rs112.47 crore for FY20. The net profit stood at Rs54.84 crore in FY21 in comparison with net profit of Rs23.11 crore reported in FY20, growing robustly.
The company has added three new patents in the June quarter. Additionally, the company bears strong distribution network with 10,000+ retail outlets and 1,000+ distributor partners. The company has posted attractive ROE and ROCE in FY21 of 18.64 per cent and 22.31 per cent, respectively, as compared to ROE and ROCE of 11.05 per cent and 7.30 per cent posted in FY20. Besides, a reduction in debt likely to indicate the company’s potential to yield good returns in the long term. Hence, we recommend BUY.
LARSEN & TOUBRO INFOTECH LTD.
LTI is a global technology consulting and digital solutions company helping more than 435 clients succeed in a converging world. With operations in 31 countries, the company goes an extra mile for clients to accelerate their digital transformation with LTI’s ‘Mosaic’ platform enabling their mobile, social, analytics, IoT and cloud journeys. Each day, a team of more than 36,000 LTItes enable its clients to improve the effectiveness of their business and technology operations and deliver value to their customers, employees and shareholders.
The company’s quarterly consolidated financials reveal that net sales and other operating income for Q1FY22 were at Rs3,462.50 crore, recording a rise of 17.4 per cent as compared to net sales and operating income of Rs2,949.20 crore for Q1FY21. The company recorded an operating profit for Q1FY22 at Rs769.30 crore which grew by 16.95 per cent as compared to an operating profit of Rs657.80 crore registered for the Q1FY21. Net profit for Q1FY22 was Rs496.80 crore as against net profit of Rs416.40 crore in Q1FY21, dipping by 19.31 per cent. In terms of annual performance, the net sales and other operating income were reported to be Rs12,369.80 crore for FY21, which rose by 13.71 per cent when compared to Rs10,878.60 crore for FY20. FY21 reported an increase of 27.81 per cent in operating profit at Rs2,999.50 crore as compared to Rs2,358.50 crore for FY20.
Net profit stood at Rs1,938.20 crore in FY21 in comparison with net profit of Rs1,520.50 crore reported in FY20, growing by 57.47 per cent. LTI’s growth has been consistent and is expected to continue going forward. Healthy growth in the BFSI vertical coupled with improved credentials in Temenos, planned addition of 4,500 freshers in FY22 which would overcome supply-side constraints, expected recovery in the E and U vertical led by healthy deal wins, acquisition of Cuelogic and its consolidation from Q2FY22, and scaling up of products and partnerships can be identified as major triggers for further growth of the company. Hence, we recommend HOLD.
(Closing price as of Sept 17, 2021)