Reviews
In this edition, we have reviewed Ambuja Cement and Caplin Point Tech.
We suggest our reader-investors to HOLD Ambuja Cement and Caplin Point Tech We had recommended Ambuja Cements in Volume 33, Issue No 4, dated Jan 22 – Feb 4, 2018 in our Cover Story, when the stock was trading at Rs 276.45. Our recommendation was based on the fact that the company was then ranked seventh by the internationally renowned Dow Jones Sustainability Index in construction material category and also because the ban on pet coke lifted by the Supreme Court was a boon for the company.
Ambuja Cements Limited is engaged in the manufacture of clinkers and cement. The company operates through cement and cement-related products segment. The company has a wide range of products for business-to-business (B2B) and retail markets. The company’s product, Ambuja Plus Roof Special, is suited for constructing roofs and slabs. It also offers to install rooftop rainwater harvesting technology. Its products also include Ambuja Powercem, which caters the ready-mix (RMX) sector; Ambuja Railcem, which is designed for the railways, and Ambuja Buildcem, which serves the requirements of the mass housing segment.
On the financial front, on a consolidated basis, the net sales of the company has improved by 18.70 per cent in Q2FY19 and stood atRs 155.86 crore as against Rs 131.32 crore in the same quarter of the previous year. The profit before interest depreciation and tax (PBIDT) of the company came in at Rs 55.78 crore in Q2FY19 as against Rs 49.36 crore in Q2FY18, posting a growth of 13 per cent. The profit after tax (PAT) in Q2FY19 was Rs 43.50 crore, posting a jump of 22.40 per cent from 35.54 crore in Q2FY18.
Since our recommendation, the stock price of Ambuja Cement has fallen by 20 per cent, but looking at the company’s robust earnings, we recommend a HOLD.
We had recommended Caplin Point in volume 33, issue no 2 dated December 25, 2017-January 7, 2018, in the ‘Cover Story‘ when the scrip was trading at Rs 636. Our recommendation was based on the robust financial performance of the company and the expansion of the company into more profitable business.
Caplin Point Laboratories Limited is a pharmaceutical company. The company’s product segments include antibiotics, non-steroidal anti-inflammatory drugs (NSAIDS), ophthalmics, pain management and anti-ulcers. The company offers a range of products, including tablets, liquid orals, capsules, softgel capsules, suppositories and ovules, powder for injection, dry syrup, topicals, liquid injections, inhalers, intravenous (IV) infusion, lyophilized products, branded products, dermo cosmetics and other products. It also manufactures a range of ointments, creams, gels and lotions.
On the financial front, the net sales of the company surged 20 per cent on a YoY basis and stood at Rs 155.87 crore in the second quarter of FY19 as against Rs 131.32 crore in the same quarter of the previous fiscal . The profit before interest, depreciation and tax stood at Rs 55.78 crore in Q2FY19, posting a 13 per cent growth from Rs 49.37 crore in Q2FY18.
The profit after tax (PAT) increased by 22 per cent and came in at Rs 42.49 crore in Q2FY19 as against Rs 35.54 crore in the same quarter of the previous year.
Since our recommendation, the stock of the company has fallen by over 43 per cent. However, the company’s growth in financial performance is commendable. Therefore, we would like our investorreaders to HOLD the stock.