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Kiran Dhavale

QueryBoard 

SPECIALITY RESTAURANTS 

I have some shares of Speciality Restaurants. Is it right to HOLD or should I exit now? 

- Manthan 


Speciality Restaurants Ltd is engaged in restaurants and mobile food service activity. The company has restaurants across India, Bangladesh and Tanzania. On the financial front, on a standalone basis, the net sales of the company has gone up 24 per cent on a YoY basis in Q3FY19 to reach Rs 98.45 crore from Rs 79.30 crore in the same quarter of the previous year. The profit before depreciation and tax stood at Rs 14.46 crore in Q3FY19 while in Q3FY18 it was Rs 6.75 crore, thereby posting a substantial jump of 114 per cent. The profit after tax (PAT) has surged significantly, posting growth of over 1000 per cent and coming in at Rs 8.44 crore in Q3FY19 versus Rs 0.67 crore in the same quarter of the previous year. On the annual basis, the net sales in FY18 stood at Rs 296.79 crore, dropping by 5 per cent from Rs 312.42 crore in FY17. The PBDT of the company in FY17 stood at Rs 36.74 crore but it has come down to a loss of Rs 1.49 crore in FY18. 

Similarly, the company posted a net loss of Rs 53.41 crore in FY18 as against a net profit of Rs 9.45 crore in FY17. We recommend a HOLD on the back of the company’s quarterly performance. The company is likely to witness a recovery in its financials in the upcoming quarters too. 

ROYAL ORCHID HOTELS 

I have bought Royal Orchid Hotel at Rs 191. Should I hold or sell? 

- Aman Sharma 


Royal Orchid Hotels Ltd is engaged in the hospitality and food service activities, such as hotels, resorts and restaurants, and food and beverage service activities, such as restaurants and mobile food services. On the financial front, on a standalone basis, the company’s net sales went up 9 per cent to Rs 26.96 crore in Q2FY19 versus Rs 24.72 crore in Q2FY18. The PBDT of the company witnessed a jump of 11 per cent in Q2FY19 to Rs 5.58 from Rs 5.03 crore in Q2FY18. However, the profit after tax (PAT) went down by 4 per cent and stood at Rs 3.03 crore in the second quarter of FY19, while in the same quarter of the previous year, it was Rs 3.15 crore. On the annual front, the net sales of the company has increased by 12 per cent in FY18 and stood at Rs 102.14 crore versus Rs 91.31 crore in the previous fiscal. The PBDT of the company on an annual basis has witnessed a jump of 40 per cent in FY18 at Rs 19.87 crore while in FY17 it was Rs 14.19 crore. The profit after tax (PAT) climbed 11 per cent and stood at Rs 10.98 crore in FY18 as against Rs 9.91 crore in FY17. On the valuation front, the company is currently available at a PE multiple of 131.08x. The return on equity (RoE) stood at 1.40 per cent and the return on capital employed (RoCE) stood at 8.92 per cent. The company has been maintaining a healthy dividend payout of 36.73 per cent.Looking at the financials and the company’s growth, we recommend a HOLD and wait for the right time to make profit. 

UGAR SUGAR 

I have some shares of Ugar Sugar Works bought at Rs 18.60 per share. The share is now around Rs 12, what should I do? Kindly suggest. 

- Rishikesh Mishra 


The Ugar Sugar Works Limited is engaged in the manufacture and sale of sugar, industrial and potable alcohol and generation and distribution of electricity. The company’s segments include sugar, electricity, industrial alcohol and potable alcohol. It has two distilleries and Indian Made Liquor (IML) units. The company manufactures various IML brands, including Old Castle Premium Whisky, US Whisky, US Brandy, US Gin, Ugar XXX Rum, Gokak Falls Whisky, Milan Whisky, Hawk Gin and Gagarin Vodka. Its other distillery products include ethanol, rectified spirit, malt spirit and extra neutral alcohol. It manufactures white crystal sugar in various grades, such as M-30, S-30 and SS-30. Its sugar byproducts include bagasse, filter cake and final molasses. The company generates power and steam by way of its 44-megawatt plant. Its plants are located at Ugarkhurd in Belgaum district and at Malli-Nagarhalli village in Gulbarga district in Karnataka. 

On the financial front, on a standalone basis, the net sales of the company has plunged 19 per cent in Q2FY19 and stood at Rs 191.50 crore as against Rs 237.44 crore in the same quarter of the previous year. The net loss of the company has narrowed to Rs 29.08 crore in the second quarter of FY19 as against Rs 44.89 crore in Q2FY18. 

On the annual front, the net sales have risen by 35 per cent to Rs 789.5 crore in FY18 from Rs 585.37 crore in FY17. The company however has posted a net loss of Rs 68.19 crore in FY18 as against net profit of 23.43 crore in FY17. 

On the valuation front, the company is available at a PE multiple of 16.30 per cent on its TTM earnings. The return on equity (RoE) stood at 23.67 per cent and the return on capital employed (RoCE) stood at 28.74 per cent. The company has posted good results in its December quarter, so we would advise our investor-readers to wait for the results and then make an informed decision depending upon the Q3FY19 results. Until then we recommend a HOLD 

AMINES AND PLASTICIZERS 

I am holding 100 shares of Amines & Plasticizers bought at Rs 75. Kindly advise on this stock 

- Mangesh Kulkarni 


Amines and Plasticizers Limited is engaged in the manufacture of basic chemicals, fertilisers and nitrogen compounds, plastic and synthetic rubber in primary forms. The company is engaged in the production of alkyl alkonalamines, morpholine, alkyl morpholine and gas treating solvents, which finds application in various industries such as oil refineries, natural gas plants, ammonia plants, petrochemical plants, pharmaceuticals and agro-chemicals. Its products and services include information technology, engineering and fabrication services, oil field chemicals, textile auxiliary chemicals, pharmaceutical intermediates and industrial gases. 

On the financial front, on a standalone basis, the company posted net sales of Rs 113.43 crore for the second quarter of the fiscal 2019 as against Rs 79.89 crore, posting a 42 per cent growth over the same quarter of FY18. The profit before depreciation and tax (PBDT) for Q2FY19 fell by 24 per cent to Rs 5.95 crore as against Rs 7.88 crore in the corresponding quarter of the previous year. The profit after tax (PAT) fell by 24 per cent in Q2FY19 as it stood at Rs 3.51 crore versus Rs 4.61 crore in Q2FY18. 

On the annual front, the company posted net sales at Rs 333.2 crore in FY18 as against Rs 295.16 crore in FY17, thereby posting 13 per cent growth. The PBDT of the company increased 10 per cent and stood at Rs 26.25 crore in FY18, while in FY17 it was Rs 24.08 crore. The profit after tax showed no change and remained at the same level of Rs 15.48 crore in both FY17 and FY18. On the valuation front, the company is available at a P/E multiple of 13.59x. The company’s return on equity (RoE) stood at 23.34 per cent and the return on capital employed (RoCE) was 26.96 per cent. The dividend yield stood at 0.83 per cent. 

Looking at the above financials and the quite attractive valuations, we would also want to add that the company has a good consistent profit growth of 38.12 per cent over the 5-year period. Therefore, we recommend a HOLD on the stock as we expect the company to put up a better performance on the bourses. 

CYIENT 

I am holding 30 shares of Cyient bought at Rs 640. Kindly advise on this stock. 

- Siva 


Cyient Limited, formerly known as Infotech Enterprises Limited, is engaged in providing software-enabled engineering and geographic information system (GIS) services. The company’s segments consist of data and network operations (DNO), engineering, manufacturing, industrial products (EMI), and product realisation (PR). DNO vertical services industries such as power, gas, telecom, transportation and local government and offers data conversion, data maintenance, photogrammetry and information technology (IT) services. EMI vertical services customers in industries such as aerospace, automotive, off-highway transportation and industrial and commercial products, engineering design, embedded software, IT solutions, manufacturing support, technical publications and other strategic customers. PR vertical services is engaged in providing electronic manufacturing solutions in the fields of medical, industrial, automotive, telecommunications, defence and aerospace applications. 

On the consolidated financial front, the company has posted topline of Rs 1,188 crore in Q3FY19, showcasing a jump of 21 per cent YoY. In Q3FY18 the sales stood at Rs 983 crore. The PBDT of the company came in at Rs 101.40 crore in Q3FY19, posting a significant drop of almost 50 per cent from Rs 197.50 crore in the Q3FY18 period. The net profit stood at Rs 73.70 crore in Q3FY19, falling by 50 per cent from Rs 143.90 crore posted in the third quarter of fiscal 2018. On the annual front, in FY18 the net sales stood at Rs 1439.70 crore, up by 11 per cent from Rs 1292 crore in FY17. The PBDT stood at Rs 576.80 crore, surging by 60 per cent in FY18 from Rs 341 crore in FY17. The net profit expanded by 70 per cent in FY18 and reached Rs 401.80 crore, while in FY17 the net profit came in at Rs 236.90 crore. On the valuation front, the company is currently trading at a P/E of 16.13x. The return on equity (ROE) stood at 18.34 per cent and the return on capital employed (ROCE) stood at Rs 22.87 per cent. The company has been delivering sales growth of 12.68 per cent in three years. The dividend yield for the company was Rs 2.16 per cent. We recommend a HOLD. 

SOUTH INDIAN BANK 

I have bought 2000 shares of South Indian Bank at Rs 18. Please enlighten me about your long-term view on the same. Shall I hold it or exit? 

- Shantanu Deshpande 


The South Indian Bank Limited (SIB) provides retail and corporate banking, para-banking activities such as debit card, third-party product distribution, in addition to treasury and foreign exchange business. SIB’s segments include treasury, corporate or wholesale banking, retail banking and other banking operations. The treasury services segment consists of interest earnings on investments portfolio of the bank, gains or losses on investment operations and earnings from foreign exchange business. On the other hand, the corporate banking segment provides loans to corporates. The retail banking segment provides loans to non-corporate customers. The other banking operations segment includes income from para-banking activities such as debit cards, third-party product distribution and associated costs. 

On the financial front, the total income of the bank stood at Rs 1,921.93 crore in Q3FY19 as against Rs 1,735.77 crore in the same quarter of the previous fiscal. The bank has witnessed a jump of 11 per cent in its total income on a YoY basis. The PBDT for the December ending quarter of 2018 went up by a marginal 1 per cent to Rs 332.01 crore as against Rs 330.15 crore. The net profit, however, fell by 27 per cent YoY. In Q3FY19, it stood at Rs 83.85 crore, while in the same period of the previous year, it stood at Rs 115 crore. 

On the annual front, the total income of the bank in FY18 came in at Rs 7030.06 crore, which was 7 per cent higher than Rs 6562.64 crore posted in FY17. The PBDT of the bank climbed 16 per cent annually to Rs 1,480.79 crore in FY18 versus Rs 1,214.59 crore in FY17. The net profit has come down by 15 per cent in FY18 to Rs 334.89 as against Rs 392.50 crore in FY17. On the valuation front, the bank is trading at a P/E of 8.36x. The return on equity (ROE) was 6.97 per cent and the return on capital employed (ROCE) was 6.15 per cent. We recommend a HOLD, looking at the financials of the bank and counting on the financial industry to perform better in the coming quarters.

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