Query Board

This section gives decisive investment rationales to our subscribers on the stock queries they have raised to our research team.

Jubilant Food Works Limited (JFL) is part of the Jubilant Bhartia Group and is one of India’s largest food service companies. The company was incorporated in 1995 and initiated operations in 1996. The company’s quarterly consolidated financials reveal that the operating profit for Q4FY22 was ₹330.19 crore as compared to the operating profit of ₹295.82 crore for Q4FY21, an increase of 11.62 per cent. Net sales for Q4FY22 were at ₹1,210.77 crore, recording an increase of 13.23 per cent as compared to net sales of ₹1,069.28 crore in the same quarter last year. The net profit has also improved and was at ₹135.66 crore since the same period which was at ₹123.92 crore in Q4FY21, a marginal increase by 9.47 per cent. The annual performance of net sales is ₹3,311.87 crore for FY 2021, which has decreased by 15.67 per cent from last year’s value of ₹3,927.27 crore. The operating profit stood at ₹459.69 crore as compared to operating profit of ₹374.83 crore for FY 2020, which has increased by 22.64 per cent. The net profit was at ₹230.52 crore for FY21 as compared to the net profit ₹278.80 crore for FY 2020, a reduction by 17.32 per cent. There is a lot of growth potential since the company has entered into a master franchise agreement with PLK APAC to own and operate the brand Popeye’s quick service restaurants in India, Sri Lanka, Bangladesh and Nepal. Hence, we recommend BUY.

Angel Broking is one of the largest retail broking houses in India in terms of active clients. The company’s quarterly consolidated financials reveal that the operating profit for Q4FY22 was ₹299.06 crore as compared to the operating profit of ₹157.12 crore for Q4FY21, an impressive gain of 90.34 per cent. Net sales for Q4FY22 were at ₹671.28 crore, recording a phenomenal increase of 64.28 per cent as compared to net sales of ₹408.61 crore in the same quarter last year. The net profit has also zoomed upwards and was at ₹204.69 crore since the same period which was at ₹101.91 crore in Q4FY21, a rise of 100.85 per cent. The annual performance of net sales was ₹2,258.61 crore for FY 2021, which has increased by 78.73 per cent from last year’s value of ₹1,263.68 crore. The operating profit stood at ₹927.50 crore as compared to an operating profit of ₹468.46 crore for FY 2020, which has increased by 97.99 per cent. The net profit was at ₹624.81 crore for FY 2021 as compared to the net profit ₹298.86 crore for FY 2020, a phenomenal rise by 110.47 per cent. The company has also released a super app to keep its clients engaged with mutual funds. With high expansion in customer base, average revenue generating orders (ARGO) per customer has started to show signs of stabilisation, indicating an improvement in activation rates. Hence, we recommend BUY.

Galaxy Surfactants is one of the leading manufacturers and marketers of surfactants and specialty chemicals in India for the personal and home care (PHC) industry. The company produces a range of vital cosmetic ingredients including active ingredients, UV protection and functional products. Its products cater to some of the largest global brands in the FMCG sector and find applications in skin care, hair care, oral care, body wash, sun care, household cleaners and fabric care segments. The company’s quarterly consolidated financials reveal that the operating profit for Q3FY22 was ₹78.15 crore as compared to the operating profit of ₹122.51 crore for Q3FY21, a decrease by 36.21 per cent. Net sales for Q3FY22 were at ₹929.09 crore, recording an increase of 37.7 per cent as compared to net sales of ₹674.70 crore in the same quarter last year. The net profit has also been on the lower side at ₹45.62 crore since the same period which was at ₹85.23 crore, lower by 46.47 per cent from Q3FY22. The annual performance of net sales was ₹2,784.06 crore for FY 2021, which has increased by 7.23 per cent from last year’s value of ₹2,596.38 crore. The operating profit for FY 2021 stood at ₹459.69 crore as compared to an operating profit of ₹374.83 crore for FY 2020, an increase of 22.64 per cent. The company has delivered net profit of ₹302.14 crore for FY 2021 as compared to net profit of ₹230.14 crore for FY 2020. Its accelerated volume growth and continuing expansion focus, particularly in the speciality care products category, could support margin expansion. Product expansion is projected to occur across the board, with a particular focus on the speciality care products area. Furthermore, ongoing investment in research and development of around ₹40-50 crore per year and greater wallet share from existing clients are expected to drive volume growth. Hence, we recommend BUY.

Cyient, founded in 1991, is a global engineering and technology solutions company. It engages with customers across their value chain helping to design, build, operate and maintain products and services that make them leaders and respected brands in their industries and markets. The company’s quarterly consolidated financials reveal that the operating profit for Q4FY22 was ₹261.80 crore as compared to the operating profit of ₹194.90 for Q4FY21, which has increased by 34.33 per cent. Net sales for Q4FY22 were at ₹1,181.20 crore, recording an increase of 8.06 per cent as compared to net sales of ₹1,093.10 crore in the same quarter last year. The net profit has also been on the on the higher side and stands at ₹154.20 crore since the same period which was at ₹103.10 crore, a 49.56 per cent increase from Q4FY21. The annual performance of net sales was ₹4,534.40 crore for FY 2021, which has increased by 9.73 per cent from last year’s value of ₹4,132.40 crore. The operating profit for FY21 stood at ₹929.90 crore as compared to operating profit of ₹714.90 crore for FY 2020, an increase of 30.07 per cent. The company has delivered net profit of ₹522.30 crore for FY 2021 as compared to net profit of ₹363.80 crore for FY 2020. With an OCF and EBITDA ratio of 80 per cent, the company is debt-free and has a good cash flow. Over the last five years, Cyient’s stock has increased by around 2.3 times from April 2017 to April 2022. It has a brighter future in the aerospace and utility sectors with the recent acquisition of Citec, an international plant and product engineering services’ company serving customers across the energy, mining, process, oil and gas, and manufacturing industries. Improved demand from significant deals, a solid order book and organisational reorganisation have contributed to the company’s rapid expansion. Margins are expected to expand as well owing to increased revenue. Hence, we recommend BUY.

Hindalco Industries Limited is the metals’ flagship company of the Aditya Birla Group. A USD 18 billion metals powerhouse, Hindalco Industries is an industry leader in aluminium and copper. Hindalco’s acquisition of Aleris Corporation in April 2020 through its subsidiary Novelis Inc. has cemented the company’s position as the world’s largest flat-rolled products player and recycler of aluminium. Its state-of-art copper facility comprises a world-class copper smelter and a fertiliser plant along with a captive jetty. The copper smelter is among Asia’s largest custom smelters at a single location. The company’s quarterly consolidated financials reveal that the operating profit for Q3FY22 is ₹7,493 crore as compared to operating profit of ₹5,521 crore for Q3FY21, which has increased by 3.72 per cent. Net sales for Q3FY22 were at ₹50,272 crore, recording an increase of 43.81 per cent as compared to net sales of ₹34,958 crore in the same quarter last year. The net profit has also been on the higher side and stands at ₹3,672.00 since the same period which was at ₹1,875 crore, a 95.84 per cent increase from Q3FY21. The annual performance of net sales reported is ₹1,31,985.00 crore for FY21, which has increased by 11.72 per cent from last year’s value of ₹1,18,144.00 crore. The operating profit for FY21 stood at ₹18,758 crore as compared to an operating profit of ₹15,492 crore for FY20, an increase of 21.08 per cent. The company has delivered net profit of ₹3,478 crore for FY21 as compared to net profit of ₹3,763 crore for FY20. Novelis has chalked out a capex plan of USD 4.8 billion for carrying out operations worldwide. For aluminium, healthy demand outlook due to increased focus on recyclable products and supply constraints from China are key growth factors, whereas factors affecting the business growth include higher energy cost, semi-conductor shortage impacting the overall automotive segment, etc. Hence, we recommend HOLD.

Bharat Petroleum Corporation (BPCL) was established in 1952. It is one of the leading companies in the petroleum sector in India and its journey has been from being an oil and gas entity in India to a Fortune 500 oil refining, exploration and marketing conglomerate. The company’s quarterly consolidated financials reveal that the operating profit for Q3FY22 is ₹5,711.93 crore as compared to the operating profit of ₹6,187.14 crore for Q3FY21, a decrease of 7.68 per cent. Net sales for Q3FY22 were at ₹1,17,702.59 crore, recording a phenomenal increase of 34.84 per cent as compared to the net sales of ₹87,292.62 crore in the same quarter last year. The net profit has also reduced and stands at ₹2,354.28 crore since the same period which was at ₹2,627.45 crore in Q3FY21. The annual performance of net sales reported is ₹3,04,266.2 crore for FY21, which has decreased by 7.74 per cent from last year’s value of ₹3,29,797.16 crore. The operating profit stood at ₹23,549.41 crore as compared to operating profit of ₹10,860.45 crore for FY20, which has increased by 116.84 per cent. The net profit was at ₹17,645.36 crore for FY21 from the net profit ₹2,265.11 crore for FY20, a phenomenal rise by 679.01 per cent. One of the factors that may impact the company’s performance is the government’s announcement of an LPG subsidy of ₹40 billion in the recent Union Budget, which can be increased further. The divestment of Government’s stake and the positive response from bidders seems to be a positive factor for the its valuation. Furthermore, the stability in global refining product cracks (mainly diesel) will work in favour of the company. The resumption of daily automotive fuel price changes, improvements in refining margins and elevation in crude oil price will improve the company’s growth prospects. Hence, we recommend BUY.

(Closing price as of May 02, 2022)