Query Board

VIKAS PROPPANT

I bought 50000 shares of Vikas Proppant at Rs. 3.56. Now it’s current value is Rs. 11. Kindly suggest me whether to hold the stock now at what prices or should I sell it?
- Ankush Mundra

Vikas Proppant Ltd is engaged in the manufacture of guar gum powder. The company also has a prime seed-processing plant for captive consumption to ensure uninterrupted supply of quality guar gum split to ensure the consistent quality of end-product ‘ADICOL’ food-grade high viscosity guar gum powder. On the financial front, the company posted net sales of Rs. 15.39 crore in Q3FY19, delivering a growth of 28 per cent on a QoQ basis. The PBDT stood at Rs. 15.2 crore in Q3FY19, up by 28 per cent from Rs. 11.87 crore posted in Q2FY19. The net profit reported by the company however remained almost unchanged at Rs. 11.93 crore on a QoQ basis in Q3FY19 as compared to Rs. 11.87 crore in Q2FY19. Recently, Vikas Proppant & Granite has decided to enter into a new niche market of proppants manufacturing, which ONGC and other oil and gas drillers are importing currently. The company has planned to manufacture proppants and mining of granite and fractured debris near Jodhpur. These orders have been finalised with the German fabricators The expected delivery period of the plant and machinery would start end of 2020 and expected to go into production sometime in 2021. Also, recently, the company received mining licence for Kaparada mines and for mining the granite deposits of Khasra No. 10/2 from the Government of Rajasthan. We thus recommend a HOLD.

INDOSTAR CAPITAL FINANCE

I hold some shares of IndoStar Capital Finance Ltd. What are the prospects of the company in FY2020?
 - George D’souza

Indostar Capital Finance offers structured term financing solutions to corporates and loans to SME borrowers in India . The company has recently expanded its portfolio to offer vehicle finance and housing finance products via its 129 branches. The company operates in 4 principal lines of businesses, namely, corporate lending, SME lending, vehicle financing and housing finance. The company recently acquired the commercial vehicle (CV) finance business of India Infoline Finance (IIFL). The acquisition includes IIFL’s entire CV finance assets under management of Rs. 3620 crore along with 1089 employees housed in 161 branches. This acquisition was done to diversify its lending book. In December 2018, Indostar’s AUM stood at Rs. 7748 crore and its net worth stood at Rs. 2928 crore.On the financial front, the company’s net sales stood at Rs. 311.92 crore in December 2018, up 71.81 per cent from Rs. 181.55 crore in December 2017. The company’s net profit for Q3FY19 stood at Rs. 75.49 crore, up 76.83 per cent from Rs. 42.69 crore YoY. The EBITDA for the quarter stood at Rs. 264.47 crore in Q3FY19 as against Rs. 140.21 crore in Q3FY18, registering a growth of 88.62 per cent. In India, SME lending, vehicle financing and housing finance remain extremely underpenetrated markets. Indostar with its diversified business mix appears in a good position to capture this opportunity. By virtue of the above factors, we recommend a HOLD on the stock.

BAJAJ FINANCE 

 I am holding 100 Bajaj Finance shares bought at Rs. 2747. I can hold for the next one year. What price can I expect? What is the long term view if I need to hold for more than a year? - Harshad Shind

Bajaj Finance Ltd is engaged in the business of retail financing. The company is engaged in providing finance for two-wheelers, consumer durables, personal computers, personal loans, insurance services, etc. The company also extended its product line with the launch of IPO financing for high net worth customers. The company plans to introduce new products, thus increasing its product portfolio as well as widen its presence in semi-urban and rural markets.

On the consolidated financial front, the company posted net sales of Rs. 4974.7 crore in the third quarter of FY19 as against Rs. 3371.42 crore in the same quarter of the previous year, thereby registering a substantial rise of 47.56 per cent on a YoY basis. The profit before interest, depreciation and tax (PBIDT) was Rs. 3,442.31 crore in Q3FY19, an expansion of 51.87 per cent from Rs. 2,266.62 crore in the corresponding quarter of the previous year. The profit after tax (PAT) came up to Rs. 1,059.56 crore in Q3FY19, increasing by 53.55 per cent from Rs. 690.03 crore reported in Q3FY18.

On the annual front, the net sales stood at Rs. 13,442.04 crore in FY18 from Rs. 9,966.71 crore in FY17, an increase of 35 per cent. In terms of PBIDT, the company reported a growth of 32 per cent in FY18 to reach Rs. 8,914.86 crore as against Rs. 6,741.55 crore in FY17. The PAT improved by 46 per cent as it stood at Rs. 2,674.11 crore in FY18 as against Rs. 1,836.38 in FY17. In March 2018, Bajaj Finance launched instant and hassle-free personal loans up to Rs. 25 lakh to finance travel expenses. The company has a good consistent profit growth of 34.95 per cent over the last 5 years. On the valuation front, the stock is trading at price to earnings ratio of 49.98 times with EPS of Rs. 60.52 on TTM basis. The return on equity stood at 20.27 per cent and the return on capital employed was at 20.27 per cent.Looking at the above factors, we believe the company would gain some momentum in the near future. Thus, HOLD.

TATA POWER

I have 1000 shares of Tata Power purchased at Rs. 83.5 in 2018. What should I do?
 - Chhuttan Lal Mathur

Tata Power Company Ltd is India’s largest private sector power utility with an installed generation capacity of over 2785 MW. The services offered by the company include design & development, direct marketing, power projects and related services and transmission & distribution. The company operates in the business segment of power.

On the financial front on a consolidated basis, the net sales grew 21.17 per cent to reach Rs. 7,706.71 crore in Q3FY19 as against Rs. 6,360.22 crore in the same quarter of the previous year. The profit before interest depreciation and tax (PBIDT) witnessed a minor jump of 9 per cent to Rs. 1,465.69 in Q3FY19 as compared to Rs. 1,333.64 crore posted in the corresponding period of the previous year. The company posted a net loss of Rs. 14.02 crore in the latest quarter ending December, 2018 as against a net profit of Rs. 155.2 crore reported in Q3FY18.

On the annual front, the net sales in FY18 came in at Rs. 29,617.97 crore, a growth of 5 per cent as compared to Rs. 28,135.71 reported in FY17. The PBIDT in FY18 stood at Rs. 6333.96 crore, remaining flat as compared to Rs. 6,248.31 crore in FY17. The company posted a turnaround in FY18 by posting net profit at Rs. 1,125.2 crore in FY18 as against net loss of Rs. 126.16 crore in FY17.

In April, Tata Power Company’s subsidiary Tata Power Strategic Engineering Division (SED) handed over the combat management system for the indigenous aircraft carrier developed by Tata Power SED, in collaboration with Weapon and Electronics System Engineering Establishment (WESEE) and MARS, Russia to the Indian Navy. This is a major contribution towards the Government of India’s policy of ‘Make in India’. Also, Tata Power Company and Indraprastha Gas (IGL) have signed memorandum of understanding (MoU) towards setting up integrated customer services and value optimisation. We therefore recommend a HOLD to our reader-investors.

MARUTI SUZUKI

I have 150 share of Maruti Suzuki bought at Rs. 6,725. Please advise me from a 6-month investment horizon.
- Ankit Choudhary

Maruti Suzuki India Limited (MSIL) is engaged in the business of manufacture, purchase and sale of motor vehicles, automobile components and spare parts (automobiles). The other activities of the company consist of facilitation of pre-owned car sales, fleet management and car financing.

On the financial front, the company posted net sales at Rs. 18,926.4 crore in Q3FY19, remaining almost unchanged from Rs. 18,940 crore posted in Q3FY18. The profit before interest, depreciation and tax came in at Rs. 1,931.1 crore in Q3FY19, posting a contraction of 36 per cent from Rs. 3,037.8 crore reported in the same quarter of the previous year. The profit after tax (PAT) came in at Rs. 1,489.3 crore in Q3FY19 as against Rs. 1,799 crore in Q3FY18, posting a 17.22 per cent drop on a YoY basis.

On the annual front the company reported the net sales for FY18 at Rs. 79,762.70 crore, posting an increase of 17 per cent from Rs. 68,034.8 crore posted inn FY17. The PBIDT came in at Rs. 14,107 crore in FY18 as compared to Rs. 12,651 crore in FY17, representing a 12 per cent growth. The PAT was Rs. 7,721 crore in FY18, signifying a growth of 5 per cent as compared to Rs. 7,350.2 crore in FY17.

The company in March has introduced new 1.5- litre DDiS 225 diesel engine. This marks the company’s full-fledged entry into the market with bigger engines of 1.5 litre capacity. The 1.5 litre engine offers improved performance, best-in-class fuel efficiency, enhanced torque and power with refined NVH performance to thrill customers seeking higher performance cars from Maruti Suzuki.The company has recently received an approval for manufacturing Vitara Brezza, starting from the year 2022 at existing Toyota Kirloskar Motor (TKM) plant which will save investment in new plant for the company. The variants of this model will be sold through sales network of the company and TKM respectively. Keeping in mind the latest developments, we would recommend a HOLD.

EDELWEISS FINANCIAL SERVICES

I hold 1,000 shares of Edelweiss Financial Services Ltd. Could you please advise whether I should hold or sell?
- Jasmit

Edelweiss Financial Services Ltd is a diversified financial services company in India providing services such as investment banking, institutional equities, private client broking, asset management and investment advisory services, wealth management, insurance broking and wholesale financing services to corporate, institutional and high net worth individual clients. The company’s business line can be broadly classified as investment banking, wherein the company provides full range of services and transaction expertise, including private placements of equity, capital raising services in public markets, etc.

Edelweiss aims to raise up to a $1billioncorpus for its latest AIF (alternative investment fund), Edelweiss Special Opportunites Fund (ESOF) III. This is a nearly threefold increase from $350 million it raised in April 2017 for ESOF II.

On the financial front on a consolidated basis, the net sales of the company jumped 27.35 per cent YoY and stood at Rs. 2,751.72 crore in Q3FY19 as against Rs. 2,160 crore in the same quarter of the previous year. The profit before interest, depreciation and tax (PBIDT) of the company has also risen by 25 per cent and stood at Rs. 1688.44 crore in Q3FY19 as against Rs. 1,344.93 crore in the same quarter of the previous year. In terms of profit after tax (PAT), the company witnessed a rise of 18 per cent, posting PAT of Rs. 258.16 crore in Q3FY19 while in Q2FY18 it was Rs. 218.64 crore.

On the annual front, the company posted net sales of Rs. 10,586 crore in FY18, a decline of 22 per cent from Rs. 3879.80 crore in FY17. The PBIDT of the company grew 30 per cent to Rs. 5059.43 crore in FY18 as against Rs. 3859.34 crore in the previous fiscal. The PAT stood at Rs. 858.38 crore in FY18, while in FY17 it was Rs. 548.48 crore, posting a jump of 57 per cent. We would advise our reader-investors to HOLD the stock.

(Closing price as of Apr 09, 2019)