Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Alembic Limited is primarily engaged in the production of tinctures and alcohol at Baroda. It manufactures around 150 products under this segment in therapeutic areas such as anti-infective, cough and cold to cardiovascular and oral anti-diabetics. It also manufactures products for animal care.The company also engaged in the business of API and real estate. Alembic’s quarterly consolidated financials recorded an operating profit for Q2FY22 of Rs 84.20 crore as compared to operating profit of Rs 5.16 crore for Q2FY21. Net sales for Q2FY22 stood at Rs 19.51 crore as compared to net sales of Rs 16.76 recorded in Q2FY21. The company recorded net profit of Rs 73.58 crore in Q2FY22 as compared to Rs 3.22 crore recorded in Q2FY21. Analysing on an annual basis, in FY21 the net sales declined 0.55 per cent to Rs 73.52 crore as compared to Rs 73.93 crore reported in FY20. The operating profit squeezed 77.93 per cent to Rs 21.34 crore as compared to operating profit of Rs 96.69 crore posted for FY20. Net profit for FY21 was recorded at Rs 13.94 crore – a substantial decline from Rs 93.04 crore recorded in FY20. The company has not delivered good net sales revenue. The stock has fallen 8.36 per cent on YoY basis. It has a slow growing balance-sheet with rather weak projects in the pipeline and growth visibility. Hence, we recommend AVOID.
Shriram Group is an Indian conglomerate established April 5, 1974 by Ramamurthy Thyagarajan, A V S Raja and T Jayaraman. The company has its headquarters in Chennai, Tamil Nadu. The company’s quarterly consolidated financials recorded an operating profit for Q2FY22 of Rs 21.49 crore as compared to the operating profit of Rs 20.92 crore for Q2FY21. Net sales for Q2FY22 stood at Rs 4,697.86 crore as compared to net sales of Rs 4,347.74 recorded in Q2FY21. The company recorded net profit of Rs 771.24 crore in Q2FY22 as compared to Rs 684.56 crore recorded in Q2FY21. Its business continued with the growth momentum and in FY21 the net sales have increased by 5.22 per cent to Rs 17,420.45 crore as compared to Rs 16,555.49 crore reported in FY20. The operating profit also rose by 5.23 per cent to Rs 12,469.63 crore as compared to operating profit of Rs 11,849.98 crore posted for FY20. Net profit for FY21 was recorded at Rs 2,487.26 crore – a slight decline from Rs 2,501.84 crore recorded in FY20. Shriram Group has cleared the merger of Shriram Transport Finance (STFC) with Shriram City Union Finance (SCUF). There are no large synergies from this merger because all the three companies have very widely differentiated verticals and product lines. The company has delivered negative sales growth of 15 per cent over the past six months along with high debtor days and stretched cash conversion cycle. Hence, we recommend AVOID.
Power Finance Corporation Ltd. (PFC) is an Indian financial institution under the ownership of the Ministry of Power, Government of India. Established in 1986, it is the financial backbone of the Indian power sector. PFC’s net worth as on September 30, 2018 was Rs 383 billion. PFC is India’s largest NBFC and also India’s largest infrastructure finance company. The government has raised the status of PFC from ‘Navratna’ to ‘Maharatna’ company on October 12, 2021. On a quarterly consolidated financial front, the income from interest was reported at Rs 9,202.4 crore for Q2FY22 which is an increase by 0.092 per cent as compared to Rs 9,193.91 crore reported for Q2FY21. The total income calculated for Q2FY22 improved by 5.71 per cent to Rs 9,759.22 crore from Rs 9,231.95 crore in Q2FY21.
For Q2FY22 , the company recorded a net profit of Rs 2,758.65 crore as compared to a net profit of Rs 2,085.05 crore gained in Q2FY21. On the annual front, for FY21 the company posted interest income of Rs 36,145.76 crore which is a decrease by compared to Rs 31,950.42 crore for FY20. The total income for FY21 grew by 13.17 per cent to Rs 37,766.57 crore from Rs 33,371.06 crore for FY20. For FY21, the company reported a net profit of Rs 8,444.01 crore as compared to a net profit of Rs 5,655.14 crore gained in FY20. PFC is the eighthhighest profit-making central public sector enterprise (CPSE) as per the Department of Public Enterprises’ survey. The net profit has grown by 66.13 per cent YoY. It is expected to give better net sales results in the next quarter.
The company has the longest domestic ‘AAA’ rating. It is also the key financial partner of government in the power sector. The government of India is the majority owner of the company. The asset quality is been increasing and the company has been lowest net NPA in 3 years. The net NPA has continued its downward trend, i.e. the net NPA has reduced from 3.12 percent to 1.92. The gross NPA stands at 5.17 per cent in FY21 as compared to the 6.21 per cent in FY20. About 85 per cent of the exchange risk is hedged for the FCL with 5-year residual maturity. Hence, we recommend HOLD.
Container Corporation of India Ltd. (CONCOR) is engaged in the business of transportation through containerisation. The company’s core business is characterised by three distinct activities – carrier, terminal operator and warehouse operator. Its quarterly consolidated performance indicates operating profit for Q2FY22 at Rs 494.94 crore as compared to operating profit of Rs 380.63 crore for Q2FY21.
The net sales for Q2FY22 stood at Rs 1,837.20 crore as compared to net sales of Rs 1,509.30 crore recorded in Q2FY21. The company recorded net profit of Rs 248.29 crore in Q2FY22 as compared to net loss of Rs 175.77 crore recorded in Q2FY21. The company’s annual consolidated financials disclose that the performance of net sales has slightly declined to Rs 6,427.08 crore for FY21 from FY20’s net sales reported at Rs 6,539.42 crore. The operating profit stood at Rs 1,317.21 crore as compared to an operating profit of Rs 1,947.24 crore for FY21. The company has acquired net profit of Rs 469.30 crore for FY21 as compared to net profit of Rs 366.87 crore for FY20. It has a PE ratio of 49.19 which shows that investors are ready to pay a higher price for the shares as the future looks bright. Closing of shares in 2021 has shown 20.21 per cent returns over the last six months and 73.49 per cent over the last 12 months.
For Power conservation Implementation of MPLS connectivity in place of VSAT also reduced the power consumption by hardware equipment. Most of the CRT monitors have been replaced by LCD/LED monitors, which have reduced the power requirement drastically. In the field of information technology, the company has made progress, the VSAT based hybrid network has been upgraded with MPLS cloud and now it covers to more than 61 locations. Also, a web enabled Customer interface through a dedicated Web Server is running successfully providing facilities to the customers. The stock price has reached its peak level. Hence, we recommend EXIT.
Natco Pharma is an Indian multinational pharmaceutical company based in Hyderabad, which makes finished dosage formulations and active pharmaceutical ingredients. It is a market leader in branded oncology medicines in India and among the country’s top three producers of Hepatitis C drugs.
Natco Pharma launched Veenat, a generic version of Novartis AG’s anti-cancer drug Glivec. It won the subsequent patent protection legal battle against Novartis in 2013. In 2012, Natco Pharma obtained a compulsory license to produce a cheaper and generic version of Bayer’s anti-cancer medication Nexavar.
In the United States, it launched influenza medication Tamiflu with marketing partner Alvogen, multiple sclerosis treatment drug Glatiramer Acetate in partnership with Mylan, and Hepatitis C drugs under a licensing agreement with Gilead Sciences. The company’s quarterly consolidated financials indicate that the company reported an operating profit for Q2FY22 of Rs 108.5 crore as compared to operating profit of Rs 302.10 crore recorded for Q2FY21. The net sales for Q2FY22 stood at Rs 377.20 crore as compared to net sales for Q2FY21 which were Rs 802.20 crore. The net profit recorded for Q2FY22 was Rs 65.10 crore, 68.07 per cent lower than Rs 203.9 crore recorded for Q2 FY21.
The annual performance of net sales has improved 7.16 per cent to reach Rs 2,052.10 crore for FY21 as compared to Rs 1,915 crore recorded in FY20. The operating profit reported at Rs 709.8 crore as compared to an operating profit of Rs 690 crore for FY20, 2.87 per cent higher. The net profit recorded by the company in FY21 dipped 3.43 per cent to Rs 442.4 crore as compared to Rs 458.10 crore reported in FY20. The financial performance shows the sluggish growth of the company. The stock has declined 13.78 per cent in 2021 so far. The stock is also trading at a higher PE ratio as compared to the industry PE ratio. Hence, we recommend AVOID.
Tata Chemicals Limited is an Indian global company with interests in chemicals, crop protection and specialty chemistry products headquartered in Mumbai. The company is one of the largest chemical companies in India with operations in India, Europe, North America and Africa. Tata Chemicals is a subsidiary of Tata Group. Innovations in specialty chemistry have led to establishing Tata NQ, India’s first and only nutritional science business. The company has a strong position in the crop protection business through its subsidiary company, Rallis India Ltd.
The company’s quarterly consolidated financials recorded an operating profit for Q2FY22 of Rs 557.26 crore as compared to operating profit of Rs 454.8 crore for Q2FY21. Net sales for the Q2FY22 stood at Rs 3,022.63 crore as compared to net sales of Rs 2,609.35 recorded in Q2FY21. The company recorded a net profit of Rs 210.62 crore in Q2FY22 in comparison with Rs 70.47 crore recorded in Q2FY21. Analysing on an annual basis, in FY21 the net sales have declined 1.52 per cent to Rs 10,199.80 crore as compared to Rs 10,356.75 crore reported in FY20. The operating profit squeezed 23.24 per cent to Rs 1,735.06 crore as compared to an operating profit of Rs 2,260.29 crore posted for FY21.
Net profit for FY21 was recorded at Rs 410.60 crore, a substantial decline from Rs 7,232 crore recorded in FY20. Tata Chemicals is a leading player in the global soda ash market. In the basic chemicals category, Tata Group’ chemical subsidiary offers soda ash, soda bicarbonate, cement, salt, marine chemicals and crushed refined soda. The demand has been growing for the company’s products lately. For the first time, it has started to book customer orders and shipments to China. Worldwide, there have been sharp price increases in spot prices, especially in soda ash, and they are predicted continue in that direction. Also, the company has charted investment plans of Rs 2,600 crore in its core business. The stock has almost doubled in a year’s time. Hence, we recommend HOLD.