Query Board
This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.
JINDAL STEEL & POWER LTD
JSPL has grown to become an industrial powerhouse with interests in steel, power, mining and infrastructure, working towards realising the vision of a self-reliant India. The company’s quarterly consolidated financials reveal that the operating profit for Q3FY22 is ₹3,320.67 crore as compared to operating profit of ₹4,286.69 crore for Q3FY21, a decrease by 22.54 per cent. Net sales for Q3FY22 stand at ₹12,524.86 crore, recording an increase of 34.96 per cent as compared to net sales of ₹9,280.54 crore in the same quarter last year. The net profit has also been on the lower side and stands at ₹1,866.10 crore since the same period which was at ₹2,566.68 crore, 27.3 per cent less from Q3FY21. The annual performance of net sales reported is ₹38,988.63 crore for FY21, which has increased by 27.98 per cent from last year’s value of ₹30,464.56 crore. The operating profit for FY21 stood at ₹14,983.17 crore as compared to ₹6,840.90 crore for FY20, a phenomenal increase of 119.02 per cent. The company has delivered net profit of ₹4,267.04 crore for FY21 as compared to net loss of ₹399.70 crore for FY20. The company plans to become debt-free by FY23 and has approved capex of ₹24 billion for FY22. With the prices of coking coal increasing in the past month, the company expects a rise in revenues and already has 50 per cent requirement sourced from outside India. Hence, we recommend BUY.
VRL LOGISTICS LTD
VRL Logistics today has grown into a nationally renowned logistics and transport company that is also currently the largest fleet owner of commercial vehicles in India. It has spread its operations to courier service, priority cargo and transport of passengers by air to meet the growing demands of its burgeoning customer base. The company’s quarterly consolidated financials shows that the operating profit for Q3FY22 is at ₹133.95 crore as compared to the operating profit of ₹103.93 crore for Q2FY21, a considerable increase of 28.89 per cent. Net sales for Q3FY22 were at ₹678.39 crore as compared to net sales in the last year same quarter at ₹563.42 crore, up by 20.41 per cent. The net profit has also been on the higher side and stands at ₹60.49 crore since the same period last year which was at ₹39.74 crore, up by 52.21 per cent. The annual performance of net sales is at ₹1,762.92 crore for FY21, which has decreased from last year’s figure of ₹2,118.54 crore by almost 16.79 per cent. The operating profit stood at ₹260.35 crore as compared to ₹308.59 crore for FY20, lesser by 15.63 per cent. The company has delivered net profit of ₹45.07 crore for FY21 as compared to profit after tax of ₹90.12 crore for FY20, down by 49.99 per cent. New branch additions to support volume growth and volume movement in recent times are adding to the company’s overall growth. Hence, we recommend BUY.
ZOMATO
Incorporated in 2010, Zomato Limited is one of the leading online food service platforms in terms of the value of food sold as of December 31, 2020. Its B2C offerings include food delivery and dining out services where customers can search and discover restaurants, order food delivery, book a table and make payments for dining out at restaurants while under the B2B segment it generates revenue from Hyperpure for supply of high-quality ingredients and kitchen products to restaurants and Zomato Pro, a customer loyalty program
The company’s quarterly standalone financials reveal that the operating loss for Q3FY22 is ₹289.60 crore as compared to the operating loss of ₹69.70 crore for Q3FY21. Net sales for Q3FY22 stand at ₹941.20 crore, recording an increase of 78.6 per cent as compared to the net sales of ₹527 crore in the same quarter last year. The net loss has also been on the lower side and stands at ₹(-) 99.30 crore as compared to ₹388.40 from Q3FY21. The annual performance of net sales reported is ₹1,993.7 crore for FY 2021, which is marginally higher by 0.18 per cent from last year’s ₹2,604.73 crore. The operating loss stood at ₹815.12 crore as compared to operating profit of ₹2,385.6 crore for FY 2020, indicating decrease of 8.36 per cent.
The company has delivered a net loss of ₹816.42 crore in FY21, which was considerably lower than the net loss of ₹2,385.6 crore for FY 2020, lesser by 20.91 per cent. The company has strong prospects on growth and profitability and digitisation and thus promises healthy recovery in spending to aid business growth. Even after a smashing debut on its listing, the company is still struggling to recover its losses and improve its operating margins. The scrip fell over 12 per cent after the Q3FY22 results were posted. The company will take some time to streamline its business in order to pacify its investors, which might be disappointing for the short term. Hence, we recommend AVOID.
BAJAJ FINSERV LTD
Bajaj Finserv Limited is a holding company under which there are three key financial sector businesses: lending through Bajaj Finance (BFL) which is itself a listed company, general insurance under Bajaj Allianz General Insurance Company and life insurance under Bajaj Allianz Life Insurance Company. The insurance businesses are unlisted. The company serves millions of customers by providing solutions for asset acquisition through financing, asset protection through general insurance, family and income protection in the form of life and health insurance, and retirement and savings solutions.
The company’s quarterly consolidated financials depict that the interest income for Q3FY22 was recorded at ₹18.52 crore as compared to the interest income of ₹15.15 crore for Q3FY21, an increase of 8.52 per cent. The total income for Q3FY22 was seen at ₹271.63 crore, recording an increase of 23.6 per cent as compared to a total income of ₹46.67 crore in the same quarter last year. The net profit stands at ₹168.50 crore as compared to ₹8.40 crore, 84 per cent up from Q3FY21. The annual performance of net interest income reported is ₹14,314.08 crore for FY21, which has improved by a narrow margin from last year’s ₹13,590.4 crore. Total income stood at ₹16,271.93 crore as compared to a net profit of ₹15,472.2 crore for FY20.
The company has delivered a net profit that improved and stood at ₹1,647.2 crore for FY21 as compared to ₹1,552.7 crore for FY20. Bajaj Finserv, like its subsidiaries, is on the cusp of accelerated growth owing to future earnings’ momentum. The company has shown remarkable ability to switch from an online to an offline model, especially during the lockdown restrictions, which aided its valuations. Innovative product launches, selective product mix and healthy traction in all its businesses have driven the revenue and earnings on the higher side for the company.
Hence, we recommend BUY.
BHARTI AIRTEL LTD.
Bharti Airtel Limited is domiciled and incorporated in India as a public limited company with its shares being listed on the NSE and the BSE. Bharti Airtel is India’s second-largest telecom operator with a revenue market share of ~37 per cent. The company is principally engaged in the provision of telecommunication services in India under wireless and fixed-line technology, national and international long-distance connectivity and digital TV along with complete integrated telecom solutions to enterprise customers. All these services are rendered under the unified brand ‘Airtel’.
The company also owns tower infrastructure pertaining to telecom operations through its subsidiary and joint venture entity. The company’s quarterly consolidated financials reveal that the operating profit for Q3FY22 is ₹14,899.90 crore as compared to the operating profit of ₹12,102.20 crore for Q3FY21, an increase of 23.12 per cent. Net sales for Q3FY22 stand at ₹29,866.60 crore, recording an increase of 12.63 per cent as compared to net sales of ₹26,517.80 crore in the same quarter last year. The net profit has also been on the steeper side and stands at ₹1,034.60 crore since the same period which was at ₹1,570.70 crore, 34.13 per cent less from Q3FY21.
The annual performance of net sales reported is ₹1,00,615.80 for FY21, which has increased by 18.82 per cent from last year’s value of ₹84,676.50 crore. The operating profit for FY21 stood at ₹46,014.50 crore as compared to an operating profit of ₹35,789.10 crore for FY20, an increase of 28.57 per cent. The company has delivered net loss of ₹12,271.20 crore for FY21 as compared to ₹30,001.50 crore for FY20. Airtel India’s tariff hike flow is going to boost its ARPU and increase the EBITDA by 20-30 per cent from the pre-hike levels. It also has relative market share gain from Vodafone India Limited. Given its stressed balance-sheet and long-term potential that is driven by growth opportunity from 5G and enterprise.
Hence, we recommend BUY.
PVR LTD.
PVR Ltd. is a market leader in terms of screen count in India. Since 1997 the brand has redefined the cinema industry and the way people watch movies in the country. The company offers a diversified cinema viewing experience through various formats, including PVR Director’s Cut, PVR Gold Class, PVR IMAX, PVR Superplex, PVR P(XL), PVR Playhouse, PVR ECX, PVR Premiere, PVR ICON, PVR LUXE, PVR Cinemas and PVR Utsav.
The company exhibits diversified content to serve different regional customer segments across India. Its quarterly consolidated financials reveal that the operating profit for Q3FY22 is ₹260.47 crore as compared to the operating profit of ₹196.61 crore for Q3FY21, an increase of 32.48 per cent. Net sales for Q3FY22 were at ₹614.15 crore, recording a phenomenal increase of 1,252.75 per cent as compared to net sales of ₹45.40 crore in the same quarter last year. The net loss has also been reduced and stands at ₹-10.20 crore since the same period which was at ₹49.21 crore in Q3FY21. The annual performance of net sales reported is ₹280.01 crore for FY21, which has decreased by 91.80 per cent from last year’s value of ₹3,414.44 crore. The operating profit stood at ₹134.41 crore as compared to operating profit of ₹1,114.38 crore for FY20, which has fallen by 87.94 per cent.
The net loss was at a staggering ₹747.20 crore for FY21 from a commendable net profit of ₹27.84 crore for FY20. Recovery in footfalls and revenues is expected to help the company engage in a turnaround with the release of big-budget Hindi and foreign movies lined up in the post-pandemic phase. The company is likely to have ~8-10 per cent permanent savings in costs (ex-rental) on account of rationalisation measures. Consolidation due to the permanent closure of about 10-15 per cent single screens will drive increased market share of multiplexes.
Hence, we recommend BUY.
(Closing price as of Apr 01, 2022)