Query Board

Query Board

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

VASCON ENGINEERS LTD

Vascon Engineers has more than 30 years of experience in conceiving, developing, constructing and managing varied projects. It has a presence across multiple sectors. The latest consolidated quarterly financials of the company show that net sales and other operating income for Q2FY22 stood at Rs152.87 crore, growing by 27.92 per cent from Rs119.50 crore in Q2FY21. Operating profit for Q2FY22 came in at Rs6.77 crore versus an operating loss of Rs0.13 crore in Q2FY21. The company reported net loss of Rs3.13 crore in Q2FY22 relative to net loss of Rs10.23 crore in Q2FY21.

In terms of annual performance on a consolidated basis, the company recorded net sales and other operating income of Rs506.88 crore in FY21, exhibiting marginal growth of 4.52 per cent from Rs484.98 crore in FY20. Operating profit plunged by 99.68 per cent from Rs37.93 crore in FY20 to Rs0.12 crore in FY21. The company recorded net loss of Rs39.17 crore in FY21 in comparison to net profit of Rs3.80 crore in FY20. The company has delivered a poor sales growth of -2.96 per cent over the past five years along with a low return on equity of 0.19 per cent for the last three years. Hence, we recommend EXIT.

IRB INFRASTRUCTURE DEVELOPERS LTD.

IRB Infrastructure Developers Ltd. (IRB) is India’s largest integrated private toll roads and highways infrastructure developer in India with an asset base of over Rs54,000 crore in 10 states across the parent company and two infrastructure investment trusts. The company’s quarterly consolidated financials recorded net sales and other operating income for Q2FY22 of Rs1,465.24 crore, up by 30.44 per cent from Rs1,123.33 crore in Q2FY21. Operating profit also climbed by 26.02 per cent from Rs600.54 crore in Q2FY21 to Rs756.85 crore in Q2FY22. Net profit for Q2FY22 stood at Rs77.93 crore, soaring by 3.5 times relative to Rs22 crore in Q2FY21. In terms of annual performance, the net sales and other operating income were reported to be Rs5,298.63 crore for FY21, which descended by 22.67 per cent in comparison to Rs6,852.22 crore in FY20. Operating profit contracted by Rs14.68 per cent from Rs3,166.36 crore in FY20 to Rs2,701.56 crore in FY21. Consequentially, net profit descended by 61.59 per cent from Rs736.71 crore in FY20 to Rs282.94 crore in FY21. With the onset of the festival season in India and more relaxations announced by the government, traffic movement is expected to significantly improve, further resulting in much stronger earnings in the coming quarters. Hence, we recommend HOLD.

AFFLE (INDIA) LTD


Affle is a global technology company with a proprietary consumer intelligence platform that delivers consumer engagements, acquisitions and transactions through relevant mobile advertising. While Affle’s consumer platform is used by online and offline companies for measurable mobile advertising, its enterprise platform helps offline companies to go online through platform-based app development, enablement of O2O commerce and through its customer data platform.

 The company’s quarterly consolidated financials recorded Q2FY22 net sales and other operating income of Rs274.70 crore, growing two-fold relative to Rs134.95 crore in Q2FY21. On similar lines, operating profit also soared by 86.6 per cent from Rs36.04 crore in Q2FY21 to Rs67.24 crore in Q2FY22. Net profit for Q2FY22 stood at Rs47.82 crore, jumping by 77.26 per cent from Rs26.98 crore in Q2FY21. Their CPCU business continued the growth momentum, delivering 4.9 crore of converted users in Q2FY22, an increase of 73.3 per cent on a YoY basis. In terms of annual performance on a consolidated basis, net sales and operating income for FY21 came in at Rs516.78 crore, growing by just a little over 50 per cent from Rs333.78 crore in FY20.

Operating profit soared by 82.16 per cent from Rs93.98 crore in FY20 to Rs171.19 crore in FY21. Net profit for FY21 stood at Rs135.04 crore, surging two-fold from Rs65.52 crore in FY20. With advertisers consistently accelerating their digital spends, resulting in broad-based and persistent growth across the top industry verticals coming from domestic as well as international markets, the company continues to witness strong optimistic market opportunity. Affle (India) furnishes a differentiated business model, fundamentally inspired to deliver innovation-led profitable growth backed by sustained investments in augmenting their strategic defensibility globally along with a prudent balance-sheet and robust cash flows. Hence, we recommend BUY.

PVR LTD.

PVR is the largest and the most premium film exhibition company in India. Since its inception in 1997, the brand has redefined the way entertainment is perceived in the country. PVR currently operates a cinema circuit comprising 856 screens at 179 properties in 72 cities across India and Sri Lanka, serving over 100 million patrons annually. PVR offers an array of formats in the premium screen category, which stands at eight screens of Director’s Cut, 39 screens of LUXE, four screens of Sapphire, nine screens of IMAX, 18 screens of 4DX, nine screens of P(XL), 13 screens of Playhouse and one screen of PVR Onyx across the country.

The latest consolidated quarterly financials of the company show that the company recorded three-fold growth in net sales and other operating income from Rs4.45 crore in Q2FY21 to Rs120.32 crore in Q2FY22. Operating profit for Q2FY22 stood at Rs86.76 crore, relative to an operating loss of Rs14 crore in Q2FY20. The company reported net loss of Rs153.27 crore in Q2FY22 as compared to net loss of Rs183.62 crore in Q2FY21. During the quarter, PVR continued with its strategy for keeping operating costs low and maintaining adequate liquidity. In terms of annual consolidated financials, the company recorded net sales and other operating income of Rs280.01 crore in FY21, down by 91.8 per cent from Rs3,414.44 crore in FY20 due to countrywide pandemic-related restrictions on theatres, malls and multiplexes.

The operating profit shrunk by 87.94 per cent from Rs1,114.38 crore in FY20 to Rs134.14 crore in FY21. The company reported net loss of Rs747.20 crore in FY21 versus net profit of Rs27.84 crore in FY20. PVR was able to successfully conclude discussions with landlord partners for rental waivers or discounts in respect of 80 per cent of its properties and achieved savings of 75 per cent. The total available liquidity on the balance-sheet is over Rs700 crore as of September 30, 2021. A healthy recovery is forecasted from Diwali onwards and business is expected to bounce back strongly. Hence, we recommend HOLD.

INDIAN RAILWAY CATERING & TOURISM CORP. LTD

IRCTC as a public sector undertaking provides a single-window solution to all travel, tourism, internet ticketing and hospitality-related services. It has completely redefined travel and tourism in India. With a host of services ranging from online ticket bookings to hotel and flight bookings, the online portal meets varied travel needs with just a few clicks. The company operates through four major divisions – catering and hospitality, internet ticketing, travel and tourism, and packaged drinking water under the brand name ‘Rail Neer’ – offering a comprehensive range of products and services that meet the needs and expectations of millions.

As regards the standalone quarterly performance of the company, net sales and other operating income for Q2FY22 stood at Rs404.94 crore, recording a hefty rise as compared to net sales and operating income of Rs88.56 crore for Q2FY21. The company posted an operating profit for Q2FY22 at Rs227.63 crore which grew significantly as compared to an operating profit of Rs14.58 crore registered for Q1FY21. The company achieved net profit of Rs158.57 crore in Q1FY22 as compared to net profit of Rs32.64 crore achieved in Q1FY21, clocking attractive gains. In terms of annual performance, the net sales and other operating income were reported to be Rs783.05 crore for FY21, which squeezed by 65.42 per cent when compared to Rs2,264.31 crore for FY20.

FY21 reported a decline of 64.55 per cent in operating profit at Rs275.92 crore as compared to Rs778.44 crore for FY20. The net profit stood at Rs189.90 crore in FY21 in comparison with net profit of Rs513.11 crore reported in FY20, 62.99 per cent lower. The company bears a resilient business portfolio that can be scaled and based on core competencies. The expansion plans of the firm indicate signs of potential upside in the stock in the long run. Besides, the company has been expanding its business to bus, air tickets as well as tour and travel planners. This is likely to build up new potential opportunity for the firm to strengthen its position. Hence, we recommend HOLD.

GOODYEAR INDIA LTD

Goodyear India is one of the world’s largest tyre companies. It employs about 72,000 people and manufactures its products in 54 facilities across 23 countries around the world. In the farm segment, the company is a market leader in the original equipment segment and supplies to all major tractor companies in India. The company also trades in passenger car tyres and has been offering technologically advanced products that offer better driving experience to its consumers.

The company’s quarterly standalone financials reveal that net sales and other operating income for Q1FY22 was at Rs534.15 crore, recording a rise of 135.38 per cent as compared to net sales and operating income of Rs226.93 crore for Q1FY21. The company recorded an operating profit for Q1FY22 at Rs50.33 crore which zoomed upward significantly as compared to an operating profit of Rs7.9 crore registered for Q1FY21. Net profit for Q1FY22 was Rs26.89 crore as against net loss of Rs4.49 crore in Q1FY21. In terms of annual performance, the net sales and other operating income were reported to be Rs1,791.71 crore for FY21, which improved by 2.64 per cent when compared to Rs1,745.57 crore for FY20. FY21 reported an increase of 40.04 per cent in operating profit at Rs239.34 crore as compared to Rs170.91 crore for FY20.

The net profit stood at Rs136.26 crore in FY21 in comparison with net profit of Rs88.84 crore reported in FY20. The company is expecting the farm economy to further grow in financial year 2021-22 based on favourable monsoon outlook and high focus from the government. The company will continue to concentrate on sustaining leadership delivered by a best-in-class team. After the opening of the lockdown, the company has seen gradual recovery in the passenger tyre industry and this is expected to continue to improve. Good Year India is optimistic about the long-term industry outlook and would focus on various strategic initiatives to strengthen its position in the market. Hence, we recommend BUY.

(Closing price as of Nov 30, 2021)

 

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