Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
Sudarshan Chemical Industries Limited is a globally prominent pigment player, largest in India. It has a dominant market share of 35+ per cent in India. The company has two production facilities plants in Mahad and Roha and two dedicated research and development centres globally. The quarterly results show net sales have grown by 18.95 per cent in Q2FY22 to ₹ 596.65 crore from Q2FY21 which was ₹ 501.58 crore. The net profit also has gone down by 7.09 per cent i.e. to ₹ 36.38 crore for Q2FY22 while in Q2FY21 it was ₹ 39.16 crore. On the annual front the results show net sales with growth of 9.72 per cent. The FY21 numbers show a profit of ₹ 1,844.34 crore as compared to FY20 which was ₹ 1,680.91 crore. The operating profit has jumped by 17.44 per cent to ₹ 294.77 crore in FY21 as opposed to ₹ 250.99 crore in FY20. The net profit on the contrary has fallen by a small margin of 2.73 per cent and stands at 141.11 crore in FY21. SCIL dominates the Indian pigment industry with around 30-35 per cent market share. Additionally, it is also the third-largest player globally with a market share of 3-3.5 per cent in organic pigments. With a vision of building world-class operations with integrated transformation, the company continuously works on new products and customised solutions. This has enabled it to spread its wings to 85+ countries. Hence, we recommend BUY.
Reliance Industries Ltd. (RIL) is one of the largest private sector companies in India with businesses in telecommunication, petrochemicals, synthetic fibres, textiles, retail and energy. The company’s quarterly standalone financials shows that the operating profit for Q3FY2022 is at ₹ 25,227 crore as compared to the operating profit of ₹ 14,982 crore for Q3FY2021. Net sales for Q3FY2022 stand at ₹ 2,09,823 crore as compared to net sales in the last year same quarter which was ₹ 1,37,829 crore, up by 52.2 per cent. The net profit also has been on the higher side and stands at ₹ 20,539 crore as compared to the same period last year which was at ₹ 14,894 crore. The annual performance of the company has delivered an exceptional net profit of ₹ 53,739 crore for FY21 as compared to the profit after tax of ₹ 39,880 crore for FY20. These projects will create 10 lakh direct and indirect employment opportunities in the state and will make Gujarat net zero and carbon-free over the span of 10-15 years with the setting up a 100 GW renewable energy power plant and green hydrogen eco-system development. These strategic investments and partnerships across all business segments, leading position in digital services platform and omnichannel retail strategy will drive future growth. Recovery in global oil and energy markets will aid stronger fuel margins. Hence, we recommend HOLD.
G R Infraprojects Ltd. is an integrated engineering, procurement and construction company with leading positions across core activities. It has public private partnerships with experience in design and construction of various road and highway projects across 14 states in India. Also, it is registered as construction agency empanelled by the Public Works Department, Government of Rajasthan, Military Engineering Services, Ministry of Defence and the Government of India.
Analysing the quarterly performance, the net sales for Q2FY22 were reported at ₹ 1,882.38 crore as compared to ₹ 1,270.08 crore in Q2FY21.
The operating profit increased by 6 per cent to ₹ 408.18 crore in Q2FY22. The net profit stood at ₹ 188.61 crore in Q2FY22 as compared to ₹ 172.03 crore in Q2FY21. On the annual front, the net sales for FY21 were reported at ₹ 7,844 crore. The operating profit improved by 24 per cent to ₹ 1,854 crore in FY21 as compared to ₹ 1,587 crore in FY20. The net profit jumped to ₹ 953 crore in FY21 as compared to FY20, which was ₹ 801 crore. The company has set itself on a journey to grow from being just a road player to a diversified EPC player over the next decade.
GRIL has already forayed into the adjacent civil vertical of railways and metros and is now looking to bid for power transmission and distribution projects. More importantly, it plans to scale up in new verticals while maintaining its focus on cash flow generation, rather than just top-line growth – a continuation of its past business strategy. While the company expects to continue to focus on the development and construction of road projects as a part of its growth strategy, it intends to diversify into railways projects, including earthworks, construction of bridges, supply of materials, track linking, and laying of optical fibre cables. Hence, we recommend HOLD.
Godrej Agrovet is a specialised, research and development- focused agri-business company. They also work closely with farmers to provide on-farm technical support and engage them in skill-building activities. Also the crop protection business has a wide range of products that cater to the entire crop lifecycle.
Its product range, including crude palm oil, crude palm kernel oil and palm kernel cake, is produced at five oil palm mills across the country. The quarterly performance shows a jump in net sales of ₹ 2,151.70 crore in Q2FY22 which is a 25 per cent increase. The operating profit also soared by 8 per cent in Q2FY22 to ₹ 196.05 crore. The quarterly net profit rose by 2.31 per cent to ₹ 100.53 crore in Q2FY22 as compared to ₹ 98.26 crore reported in Q2FY21. The annual performance of net sales decreased to ₹ 6,239.60 crore in FY21. The operating profit climbed by 12.71 per cent to ₹ 603.33 crore in FY21 as compared to ₹ 535.31 crore in FY20.
The net profit also jumped to ₹ 297.33 crore in FY21 as opposed to ₹ 287.64 crore reported in FY20. The animal feed and palm oil segments have reported positive numbers in the quarter. The company expects decent improvement in volumes and profitability for its animal feed, palm oil and crop protection segments driven by cost reduction initiatives and better pricing that will lead growth in bottom-line. With the Kharif harvest coming in, prices are expected to correct, thereby providing some cushion to the company’s margins. Countries like China are buying huge quantities of palm oil, pumping up prices of the hard oil that India imports from Indonesia and Malaysia to meet its domestic demand. In FY21, China’s palm oil imports increased 6 per cent YoY to 7.2 MMT. The shortage in global oilseed production has been a main reason for the prices of vegetable oils shooting up, coupled with strong price support on increased demand from China.
Hence, we recommend HOLD.
Axis Bank Limited, formerly known as the UTI Bank, is an Indian banking and financial services company. The bank has nine international offices with branches at Singapore, Hong Kong, Dubai, Shanghai, Colombo and representative offices at Dhaka, Dubai, Sharjah and Abu Dhabi, which focus on corporate lending, trade finance, loan syndication, investment banking and liability businesses.
In the quarterly results declared for Q2FY22, net interest income for Q2FY22 increased by 16.32 per cent on a YoY basis. The operating profit increased by 26.33 per cent to ₹ 6,631.12 crores in Q2FY22 from ₹ 5,248.94 crore in Q2FY21.
The bank has registered one of the highest quarterly net profits of ₹ 3,973.07 crores in Q2FY22. This represents a staggering jump of 1,334.84 per cent YoY. Net NPA ratio at 0.91 per cent is down 1.08 per cent. On an annual basis, the interest income increased by 1.54 per cent on a YoY basis from ₹ 63,715.68 crore to ₹ 64,696.42 crore in FY21. The operating profit grew by 11.46 per cent in FY21 as compared to FY20. Meanwhile, the profit after tax ascended 84.66 per cent from ₹ 5,280.04 crore to ₹ 9,750.08 crore. The GNPA ratio decreased to 3.17 per cent in FY21 from 3.53 per cent FY20 as well as the capital adequacy ratio improved during FY21 and stood at 18.72 per cent as compared to FY20 which was 15.33 per cent.
The bank’s asset quality carries on remaining stable even as its NPA levels continue with a downward trend. Also, further reduction in cost of funds, steady growth in advances and deposits and adequate provisions, Axis Bank is well placed among its private banking peers. It is closer to closing the deal as it looks to take over Citi’s domestic consumer business soon as per new reports. The deal is valued at approximately USD 1.5 billion and will provide Axis Bank access to Citi’s 35 branches and 4,000+ manpower in addition to its portfolio of retail loans worth around ₹ 28,000 crore and credit card book of approximately ₹ 9,000 crore. Hence, we recommend BUY.
A home-grown manufacturing company, Dixon Technologies (India) Limited is a leading electronic manufacturing services (EMS) provider with a diversified portfolio across consumer electronics, home appliances, mobile phones, lighting solutions, security devices, set top boxes, medical equipment, wearables and reverse logistics.
The company’s quarterly standalone financials reveal that the operating profit for Q3FY2022 is ₹ 103 crore as compared to the operating profit of ₹ 100.5 crore for Q3FY2021. Net sales for the Q3FY2022 stands at ₹ 3,073.25 crore, recording an increase of 41 per cent as compared to the net sales in the same quarter last year. The net profit has also been on the steeper side and stands at ₹ 46.38 crore since the same period which was at ₹ 61.59 crore, 25 per cent down from Q3FY21. The annual performance of net sales reported is ₹ 54.60 crore for FY21, which has improved from last year’s ₹ 40.55 crore.
The operating profit stood at ₹ 2,170.07 crore as compared to a net profit of ₹ 1,567.68 crore for the last financial year i.e. FY20. The company has delivered an exceptional net profit of ₹ 1,597.9 crore for FY21 as compared to ₹ 1,250 crore for FY20. Dixon Technologies has also entered into a joint venture with Japan-based Rexxam Co. Ltd. for manufacturing printed circuit boards (PCBs) for air-conditioners for domestic and international markets. Dixon Devices, the joint venture company, will be 40 per cent owned by Dixon and the rest 60 per cent by Rexxam.
Domestic mobile production is set to grow five times to ₹ 10.5 lakh crore by FY26 under the PLI scheme and Dixon is one of the main beneficiaries. New segments such as electronics/IT products, telecom products and LED lights and AC componentc will drive future revenue growth for Dixon. Hence, we recommend AVOID.
(Closing price as of Feb 20, 2022)