Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team .
BIRLA SOFT LTD
Birla Soft Technologies combines the power of domain, enterprise and digital technologies to re-imagine business processes for customers and their ecosystem. The company’s consultative and design thinking approach makes societies more productive by helping customers run businesses efficiently and profitably. On a consolidated quarterly basis, the revenue from operations for Q3FY21 were Rs880.78 crore, an increase of 5.69 per cent as compared to net sales of Rs833.29 crore for Q3FY20. The EBITDA for Q3FY21 was reported to be Rs144.44 crore, increasing by 34.4 per cent as against Rs107.45 crore reported for the same quarter of the previous fiscal year. Q3FY21 reported net profit of Rs96.39 crore as compared to net profit of Rs72.69 crore for the third quarter of the previous fiscal year. In terms of the annual trend, revenue from operations was reported to be Rs3,290.96 crore for FY20, surging up substantially from Rs2550.66 crore for FY19. In FY20, total income increased by 29.38 per cent to Rs3,333.96 crore as against Rs2,576.72 crore for FY19. The company reported net profit of Rs224.34 crore in FY20 as against net profit of Rs235.38 crore in FY19. Strategic investments in the digital transformation and cloud space are starting to pay off with new deals, including deals of TCV worth USD 109 million during the quarter. Hence, we recommend HOLD.
TATA STEEL LONG PRODUCTS LTD.
Tata Steel Long Products Ltd., formerly Tata Sponge Iron Ltd., is an India-based holding company engaged in the production of sponge iron by direct reduction method of iron ore and generation of power from waste heat. Its quarterly consolidated financials state that net sales and other operating income for Q3FY21 were Rs1,364.17 crore, an increase of 36.51 per cent as compared to net sales of Rs999.31 crore for Q3FY20. The operating profit for Q3FY21 was reported to be Rs445.40 crore, a substantial increase as against Rs44.12 crore reported for the same quarter of the previous fiscal year. Q3FY21 reported net profit of Rs304.40 crore as compared to net loss of Rs112.19 crore for the third quarter of the previous fiscal year. Taking into account the annual trend, its net sales and other operating income were reported to be Rs3,489.99 crore for FY20, surging up from Rs992.05 crore for FY19. In FY20, operating profit increased by 15.89 per cent to Rs234.58 crore as against Rs202.42 crore for FY19. The company reported net loss of Rs516.23 crore in FY20 as against net profit of Rs124.39 crore in FY19. Despite maintenance shutdowns, company has achieved the highest-ever quarterly crude steel production on the back of debottlenecking and arcing. The company has been enhancing and diversifying its presence in the automotive sector with strong recovery in the market. Hence, we recommend HOLD.
GUJARAT GAS LTD.
Gujarat Gas Ltd. (GGL) is known as India’s largest city gas distributor having a presence across 23 districts in the state of Gujarat, Union Territory of Dadra and Nagar Haveli and Thane Geographical Area, excluding already authorised areas, which includes Palghar district of Maharash-tra. The company poses to have the largest customer base in residential, commercial and industrial segments. It has more than 25,000 km of gas pipeline network along with 480+ CNG stations and distributes close to 11.50 mmscmd of natural gas to over 15,00,000 households and to more than 3,900 industrial customers.
The quarterly consolidated financials state that the net sales and other operating income for the Q3FY21 were Rs2,885.70 crore, an increase of 12.54 per cent as compared to net sales of Rs2,564.25 crore for Q3FY20. The operating profit for Q3FY21 was reported to be Rs634.43 crore, rising by 63.02 per cent as against Rs389.17 crore reported for the same quarter of the previous fiscal year. The net profit for Q3FY21 was at Rs392.18 crore as compared to Rs196.40 crore for the third quarter of the previous fiscal year, increasing by 99.68 per cent. Taking into account the annual trend, net sales and other operating income were reported to be Rs10,526.49 crore for FY20, surging up by 32.2 per cent as compared to Rs7,962.48 crore for FY19.
In FY20, operating profit increased by 56.74 per cent to Rs1,718.16 crore as against Rs1,096.20 crore for FY19. The company reported net profit of Rs1,198.85 crore in FY20 as against net profit of Rs416.96 crore in FY19. The company depicts a balanced portfolio of mature, semi-mature and new geographical areas which will well-equip it in sustaining volume growth in the long term. These geographical areas are dominated by chemical, FMCG suppliers and small-scale industrial estates. The volume growth is expected to be positive owing to robust demand among industrial customers and bounce-back in CNG volume off-take. Hence, we recommend ACCUMULATE.
CENTRAL DEPOSITORY SERVICES (I) LTD.
Central Depository Services (India) Ltd. operates as a securities’ depository in India. The company serves a wide range of clients such as depositary participants and other capital market intermediaries, corporates, capital market intermediaries, insurance companies, and others. Dematerialisa-tion for a range of securities, including equity shares, preference shares, mutual fund units, debt instruments and government securities are offered by the company. Services for capital market intermediaries including mutual funds are provided by offering ‘know your customer’ (KYC) services. On the quarterly consolidated financial front, the income from interest was reported at Rs86.13 crore for Q3FY21, an increase of 59.12 per cent as compared to Rs54.13 crore reported for Q3FY20.
The total income calculated for Q3FY21 increased by 50.7 per cent to Rs103.20 crore from Rs68.48 crore in Q3FY20. For Q3FY21, the company reported net profit of Rs54.02 crore as against net profit of Rs48.86 crore gained in Q3FY20. On the annual front, for FY20 the company posted interest income of Rs168.15 crore, an increase of 10.37 per cent compared to Rs152.34 crore for FY19. The total income for FY20 rose by 12.15 per cent to Rs211.38 crore from Rs188.47 crore for FY19. For FY20, the company registered net profit of Rs77.31 crore as against net profit of Rs84.37 crore gained in FY19, which is a dip of 8.36 per cent.
The pandemic has depicted a rising demand for digital services such as virtual AGMs, e-voting, Aadhaar-based e-KYC, etc. and CDSL happens to be a prime beneficiary. It is reported that CDSL continued to gain beneficiary owner (BO) account market share from NSDL which stood at 56.1 per cent in September 2020 as against 51.8 per cent in FY20. Due to exclusive agreements with discount brokers, the company’s incremental market share stood at 87 per cent. BO accounts appear to be building blocks for a depository which have high correlation to revenue growth. Hence, we recommend HOLD.
(Closing price as of Apr 19, 2021)