Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Max India Limited is engaged in the business of investments and providing consultancy services to group companies. Its Healthcare Business Segment includes its subsidiaries and joint ventures engaged in delivery of healthcare services in North India through primary and tertiary healthcare centres, as well as revenue from leasing of medical and other equipment. The Business Investments Segment is represented by treasury investments. The Senior Living Segment is engaged in the business of senior living. On a consolidated quarterly front, net sales dropped by 1.97 per cent to Rs 33.92 crore in Q3FY20 from Rs 34.60 crore in Q3FY19. The company incurred an operating loss of Rs 11.34 crore in Q3FY20 as compared to an operating loss of Rs 11.42 crore incurred in Q3FY19. A net profit of Rs 347.08 crore was incurred in Q3FY20 as compared to a net loss of Rs 31.17 crore incurred in Q3FY19. On an annual basis, net sales reported for FY19 was Rs 155.76 crore, decreasing 35.11 per cent as compared to Rs 240.02 crore in FY18. The company incurred an operating loss of Rs 18.38 crore in FY19 as compared to operating loss of Rs 23.19 crore incurred in FY18. A net loss of Rs 130.03 crore was incurred in FY19 as compared to net loss of Rs 27.41 crore incurred in FY18. Divestment of 51 per cent stake in Max Bupa to True North concluded in the month of December 2019. Hence the company has a treasury corpus of Rs 516 crore for future growth. Thus, HOLD.
Standard Chartered PLC is an international banking company. Its segments include corporate and institutional banking, allowing companies and financial institutions to operate and trade globally while the private banking segment supports high net worth individuals with their banking needs across borders and offers access to global investment opportunities. Its retail banking segment offers clients as well as small businesses a range of banking support solutions and the bank’s commercial banking segment provides mid-sized companies with financial solutions and services. IDR is generally considered as an experiment that has failed in India. Standard Chartered (SC) was the first global entity to get listed in India on the BSE back in 2010. Complexities associated with IDRs and their lack of liquidity has led to institutional buyers and private companies to convert the IDRs into Standard Chartered shares listed abroad, in the past. Hence, it is advisable for Indian investors to hunt for private sector banks rather than go for IDR of SC. Also there is a possibility that the said IDRs may be terminated and as per our understanding the last date is June 15, 2020. Thus, we believe that at this juncture it may not be good idea to buy IDR of SC. In case you are keen to buy SC stock, directly buying it from the overseas market can be considered as an option though there is exposure to forex risks. Hence, we recommend AVOID.
Solara Active Pharmaceutical Sciences Limited is an Indiabased pharmaceutical company. The company offers a range of products and services, such as NSAID, anaesthetics, analgesics, anti-viral, retinod, anti-emetic, anti-malarial, diuretics, muscle relaxant, anti-allergic, anti-hypertensive, calcimimetic agent, anti-seizure, anti-gout, cardiovascular, anti-infective, cough suppressant, skin disorder and cardiovascular agent.
Looking at the quarterly trends on a consolidated basis, for Q4FY20 the company reported net sales of Rs 296.77 crore, a decrease of 22.98 per cent as against net sales of Rs 385.31 crore for the same quarter of the previous fiscal. PBDT also decreased by 15.6 per cent for Q4FY20 and was Rs 41.83 crore as compared to Rs 49.56 crore for Q4FY19. For the fourth quarter of FY20 the net profit also decreased by 32.02 per cent to Rs 17.81 crore when compared to Rs 26.20 crore in the fourth quarter of the previous fiscal. In terms of annual results, net sales saw a decrease of 4.68 per cent to Rs 1,321.75 crore in FY20 from Rs 1,386.68 crore in FY19. The company reported PBDT of Rs 209.07 crore in FY20, which is an increase of 38.67 per cent compared to Rs 150.77 crore in FY19. On the other hand, the company gained net profit of Rs 114.52 crore in FY20, which is a growth of 92.76 per cent compared to Rs 59.41 crore gained in FY19.
The company like others was impacted by the ongoing lockdown restrictions and supply chain disruptions as well. It reported successful completion of USFDA inspection at its Cuddalore facility during July 2019 and also at its Puducherry and Mangalore facilities during February 2020 with zero 483s. During FY20 it also filed four new DMFs in the US market and market extensions were done for six of its existing products to include nine new markets. Going forward, the company continues to expand into new markets through the introduction of new products in its already diversified product portfolio. Since the pharmaceutical has been able to benefit from the pandemic crisis, it expected to have a positive growth in the future as well. Hence, we recommend our investor readers to HOLD.
Kabra Extrusion Technik Limited is engaged in the sale of plastic extrusion machinery. The company manufactures allied equipment and specialises in providing plastic extrusion machinery for manufacturing pipes and films. It offers a spectrum of plastic extrusion solutions for pipes, drip tubes, monolayer-multilayer blown films, pelletizing, mixers and profiles.
On a consolidated quarterly front, net sales improved by 20.19 per cent to Rs 66.34 crore in Q3FY20 from Rs 55.20 crore in the same quarter for the previous fiscal year.The company reported an operating profit of Rs 7.41 crore in Q3FY20, up by 104.41 per cent from Rs 3.63 crore in Q3FY19. Net profit reported by the company saw growth of 329.04 per cent to Rs 5.84 crore in Q3FY20 from Rs 1.36 crore in the corresponding period of the previous fiscal year.
Looking at the annual trends, the company reported net sales of Rs 245.14 crore in FY19, falling by 9.78 per cent from Rs 271.72 crore in FY18. It reported an operating profit of Rs 40.59 crore in FY19, expanding by 31.99 per cent from Rs 30.76 crore reported in FY18. Similarly, net profit increased by Rs 24.47 crore in FY19 from Rs 20.12 crore in FY18, showcasing growth of 21.65 per cent. The company’s operating margin has seen improvement from 8.40 per cent in FY18 to 13.61 per cent in FY19. Similarly, the company’s net profit margin has improved to 9.98 per cent in FY19 from 7.40 per cent in FY18.
Although the virus crisis had resulted in the operations of the company being temporarily suspended, it has resumed partial operations at its manufacturing facilities at Daman and Maharashtra in the month of May 2020 after securing permissions from the local government authorities. The performance of the company will be impacted in Q4, but there is likely to be an improvement in the quarters ahead as operations normalise. Thus, we recommend HOLD.
REC Limited, formerly Rural Electrification Corporation Limited, is engaged in financial services and activities such as credit granting. It provides financial assistance to state electricity boards, state government departments and rural electric cooperatives for rural electrification projects. It also provides loan assistance to state electricity boards and state power utilities for investments in rural electrification schemes through its corporate office located at New Delhi.
On a consolidated quarterly front, net sales grew by 13.69 per cent to Rs 7,533.80 crore in Q3FY20 from Rs 6,626.74 crore in the same quarter for the previous fiscal year. The company reported an operating profit of Rs 7,152.41 crore in Q3FY20, up by 20.85 per cent from Rs 5,918.31 crore in Q3FY19. Net profit reported by the company stood at Rs 1,663.76 crore in Q3FY20 as compared to Rs 1,276.16 crore in Q3FY19.
Looking at the annual trends, the company reported net sales of Rs 24,983.62 crore in FY19, up by 13.06 per cent as compared to Rs 22,098.31 crore in the previous fiscal year. In FY19, operating profit came in at Rs 23,727.98 crore, growing by 23.03 per cent from Rs 19,286.72 crore in FY18. Similarly, net profit saw growth of 29.09 per cent to Rs 5,731.43 crore in FY19 as compared to Rs 4,439.85 crore in the previous fiscal year. The company’s return on equity (ROE) improved from 13.40 per cent in FY18 to 17.07 per cent on YoY basis. The return on capital employed (ROCE) of the company was 9.21 per cent, expanding by 42 bps on YoY basis during this period.
In terms of the company’s outstanding loans, it has a welldiversified asset portfolio with the top 10 borrowers accounting for approximately 38 per cent of the current loans. No single borrower group accounts for more than 8 per cent of the total loan book and there is no slippage in the top 10 accounts. Moreover, since REC Limited this is a government-backed entity, it is likely to recover post the virus crisis. We thus recommend HOLD.
Astral Poly Technik Limited is engaged in the production of plastic products along with its subsidiaries. It is also engaged in trading of pipes, fittings and adhesive solutions. Its product range includes the pipe category for plumbing, industrial, drainage, fire protection, agriculture, electrical conduit and ancillary and the adhesive category for construction, maintenance, wood care and automotive. The company has its manufacturing facilities in India and abroad as well. Its pipe manufacturing facilities offer products such as chlorinated polyvinyl chloride (CPVC) piping system for plumbing, industrial and fire protection and unplasticized PVC (UPVC) piping system for plumbing and manholes or chambers.
Looking at the quarterly trends on a consolidated basis, in Q4FY20 the company reported net sales of Rs 628.90 crore, which is a decrease of around 18.82 per cent compared to the net sales of Rs 774.70 crore in Q4FY19. PBDT decreased by 19.08 per cent to Rs 94.60 crore in Q4FY20 as against Rs 116.90 crore in Q4FY19. The company recorded a net profit of Rs 52.20 crore for Q4FY20, a decrease by 20.18 per cent compared to net profit of Rs 65.40 crore for Q4FY19. Looking at the annual trends, the company’s net sales in FY20 were Rs 2,577.90 crore, which is a 2.82 per cent increase from net sales of Rs 2,507.30 in FY19. PBDT for FY20 increased by 12.81 per cent to Rs 415.60 crore compared to Rs 368.40 crore of FY19. In FY20 the company’s net profit increased by 25.04 per cent to Rs 251.20 crore from Rs 200.90 crore in FY19.
De-growth in quarterly results was on account of both the plastics and adhesives segments of the company that got hit hard during the lockdown in the crucial month of March. The company has completed its restructuring of distributorship network which will yield higher margins and superior growth going ahead. It has recently launched hand sanitizers and has received positive response for it. Going ahead the company looks to have a positive growth trend and hence we recommend HOLD.
(Closing price as of May 20, 2020)