Reviews
In this edition, we have reviewed SJVN Ltd. and Voltas Ltd. We suggest our reader-investors to HOLD in SJVN Ltd. and Voltas Ltd.
We had recommended SJVN Ltd. in Volume 36, Issue No. 6, dated February 16, 2021 to March 1, 2021, under the ‘Low Price’ segment. The recommended price for the stock was Rs25.40. We had recommended the stock on the basis of optimistic growth prospects of the company. Satluj Jal Vidyut Nigam, better known as SJVN, is an Indian public sector undertaking involved in hydroelectric power generation and transmission. It was incorporated in 1988 as a joint venture between Government of India and Government of Himachal Pradesh.
The financial performance of the company reveals that on a consolidated quarterly basis the net sales and other operating income was recorded at Rs662.46 crore in Q1FY22 as compared to Rs673.72 crore in Q1FY21, posting a decline of 1.67 per cent.
The operating profited ascended by 3.74 per cent from Rs549.45 crore in Q1FY21 to Rs570.02 crore in Q1FY22. The net profit for the quarter registered at Rs341.03 crore in Q1FY22 as compared to net profit of Rs302.72 crore in Q1FY21, posting a rise of 12.66 per cent. On the annual front the net sales and operating income squeezed by 8.04 per cent from Rs2,702.80 crore in FY20 to Rs2,485.39 crore in FY21. The operating profit of Rs2,624.17 crore of FY20 grew by 9.18 per cent to reach operating profit of Rs2,865.16 crore in FY21. FY21 reported a net profit of Rs1,641.78 crore in comparison to net profit of Rs1,561.18 crore reported in FY20. Bearing a robust portfolio of 31 projects of about 10,000 MW in the pipeline, the company has set an ambitious target of achieving 5,000 MW installed capacity by 2023, 12,000 MW by 2030 and 25,000 MW by 2040. Also, the company has charted plans for additional hydropower projects from Nepal as part of India’s playbook of helping build South Asia-focused energy security architecture. Hence, we recommend HOLD.
We had recommended Voltas Ltd. in Volume 36, Issue No. 6, dated February 16, 2021 to March 1, 2021 under the ‘Choice Scrip’ segment. The recommended price for the stock was Rs1,013.75. We had recommended the stock on account of the positive outlook regarding the company’s growth and expansion along with its position in the power generation sector. Voltas is an Indian multinational home appliances’ company specialising in air-conditioning and cooling technology. As India’s largest air-conditioning company, Voltas is also one of the most reputed engineering solution providers, specialising in project management.
The financial performance of the company states that on a consolidated quarterly basis the net sales and other operating income was recorded at Rs1,461.81 crore in Q1FY22 as compared to Rs1,195 crore in Q1FY21, giving a rise of 22.33 per cent. The operating profited ascended by 21.86 per cent from Rs150.98 crore in Q1FY21 to Rs183.99 crore in Q1FY22. The net profit for the quarter registered at Rs135.33 crore in Q1FY22 as compared to net profit of Rs113.84 crore in Q1FY21, giving a rise of 18.88 per cent. On the annual front the net sales and operating income dipped by 1.34 per cent from Rs7,658.08 crore in FY20 to Rs7,555.78 crore in FY21.
The operating profit of Rs917.26 crore of FY20 dipped 9.49 per cent to reach operating profit of Rs830.22 crore in FY21. FY21 reported a net profit of Rs589.76 crore in comparison to net profit of Rs589.75 crore reported in FY20 with no gains on a YoY basis. Although the second quarter of FY22 is a lean period for cooling products, the start of the festival period is likely to witness a spurt in demand. The company continues to sharpen its focus on working capital management and conservation of cash while remaining cautiously optimistic. Hence, considering the decent performance delivered by the company across segments in the gone by quarter and bearing an optimistic expectation of its performance in the coming quarters, we recommend HOLD.
(Closing price as of Sept 17, 2021)