Query Board

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

MRS. BECTORS FOOD SPECIALITIES LTD

Mrs. Bectors Food Specialities manufactures and markets a range of biscuits such as cookies, creams, crackers, digestives and glucose under its flagship brand ‘Mrs. Bector’s Cremica’. The company’s quarterly consolidated financials reveal that the operating profit for Q3FY22 was ₹34.89 crore as compared to the operating profit of ₹40.90 crore for Q3FY21, which has decreased by 14.68 per cent. Net sales for Q3FY22 were at ₹263.22 crore, recording an increase of 16.60 per cent as compared to the net sales of ₹225.75 crore in the same quarter last year. The net profit has also been on the lower side and stands at ₹15.50 crore since the same period which was at ₹20.67 crore, a 25.03 per cent decrease from Q3FY21. The annual performance of net sales reported is ₹880.73 crore for FY2021, which has increased by 15.56 per cent from last year’s value of ₹762.12 crore. The operating profit for FY21 stood at ₹151.18 crore as compared to operating profit of ₹95.67 crore for FY20, an increase of 58.03 per cent. The company has delivered net profit of ₹72.18 crore for FY21 as compared to ₹30.27 crore for FY20, which has improved by 138.43 per cent. The exports of the company witnessed doubledigit growth in Q3FY22 along with an increased demand in the domestic market and plans to expand its export and domestic business. Hence, we recommend HOLD.

VIRAT INDUSTRIES LTD

Virat Industries (VIL) is a 100 per cent export oriented unit (EOU) manufacturing excellent quality socks for export, mainly to the European markets. As per the prevalent pattern of production, the production capacity of VIL is estimated at 3.5 million pairs per annum. The company’s quarterly consolidated financials reveal that the operating profit for Q3FY22 was ₹1.02 crore as compared to the operating profit of ₹1.13 crore for Q3FY21, which has decreased by 9.74 per cent. Net sales for Q3FY22 were at ₹7.12 crore, an increase of 7.97 per cent as compared to the net sales of ₹6.60 crore in the same quarter last year. The net profit has also been on the on the higher side and stands at ₹0.40 crore since the same period which was at ₹0.47 crore, a 15.07 per cent decrease from Q3FY21.The annual performance of net sales reported is ₹19.56 crore for FY21, which has decreased by 25.85 per cent from last year’s value of ₹26.38 crore. The operating profit for FY21 stood at ₹2.74 crore as compared to ₹3.97 crore for FY20, decreasing by 30.86 per cent. The company has delivered a net profit of ₹0.79 crore for FY21 as compared to ₹1.48 crore for FY20, down by 46.50 per cent. Owing to low EBITDA and profit margins, the company might not be able to produce consistent results in the coming years. Hence, we recommend EXIT.

BIOCON LTD.

Biocon is an innovation-led global biopharmaceuticals company committed to enhance affordable access to complex therapies for chronic conditions like diabetes, cancer and autoimmune. It has developed and commercialised novel biologics, biosimilars and complex small molecule APIs in India and several key global markets as well as generic formulations in the US and Europe. It also has a pipeline of promising novel assets in immunotherapy under development. The company’s quarterly consolidated financials reveal that the operating profit for Q4FY22 was ₹659.20 crore as compared to the operating profit of ₹641.10 crore for Q4FY21, which has increased by 2.82 per cent.

Net sales for Q4FY22 stands at ₹2,408.80 crore, an increase of 30.76 per cent as compared to the net sales of ₹1,842.10 crore in the same quarter last year. The net profit has also been on the lower side and stands at ₹336.90 crore since the same period which was at ₹366.10 crore, a 7.98 per cent decrease from Q4FY21. The annual performance of net sales reported is ₹8,184.00 crore for FY22, which has increased by 14.57 per cent from last year’s value of ₹7,143.10 crore. The operating profit for FY22 stood at ₹2,182.90 crore as compared to the operating profit of ₹1,907.30 crore for FY21, an increase by 14.45 per cent.

The company has delivered a net profit of ₹978.50 crore for FY21 as compared to net profit of ₹925.60 crore for FY21, up by 5.72 per cent. The improved market share gains in existing biosimilars and expansion of the production portfolio in the generics segment through vertical integration have been of benefit to the company. The successful execution of vaccine in alliance with Serum Institute of Life Sciences has helped the company gain more exposure in the field.

Hence, we recommend BUY but in a staggered manner.

TVS MOTOR COMPANY LTD

TVS Motor Company Ltd. is the largest two-wheeler company in India. It is also the largest exporter in India with exports to several countries. TVS Motor’s strength lies in its extensive research and development, resulting in products that are industry leading in terms of innovation. The company has always stood for innovative, easy-to-handle and environment-friendly products, backed by reliable customer service. It has many manufacturing plants – three located in India (Hosur in Tamil Nadu, Mysore in Karnataka and Nalagarh in Himachal Pradesh) and one in Indonesia at Karawang.

TVS Motor has a global footprint, including geographies like the Middle East, Africa, Southeast Asia, Indian subcontinent, and Latin and Central America. The company’s quarterly consolidated financials reveal that the operating profit for Q4FY22 was ₹843.71 crore as compared to the operating profit of ₹786.34 crore for Q4FY21, which has increased by 7.3 per cent. Net sales for Q4FY22 were at ₹6,585.20 crore, recording an increase of 7.39 per cent as compared to net sales of ₹6,131.90 crore in the same quarter last year. The net profit has also been on the lower side and stands at ₹279.29 crore since the same period which was at ₹317.06 crore, a 11.91 per cent decrease from Q3FY21.

The annual performance of net sales reported is ₹24,355.31 crore for FY22, which has increased by 25.41 per cent from last year’s value of ₹19,420.82 crore. The operating profit for FY22 stood at ₹22,365.82 crore as compared to ₹28,026.25 crore for FY21, a decrease by 20.2 per cent. The company has delivered net profit of ₹728.39 crore for FY22 as compared to net profit of ₹615.25 crore for FY21, which has reduced by 18.39 per cent. The company offers an improved product mix with premium products rising across segments and has outperformed the industry in most of the segments. It has implemented effective cost-cutting initiatives and has experienced higher exports, thus leading to better profit margin. Hence, we recommend HOLD. 

BHARTI AIRTEL LTD

The company is a leading global telecommunications company with operations in countries across Asia and Africa. It ranks amongst the top three mobile service providers globally in terms of subscribers. In India, the company’s product offerings include 2G, 3G and 4G wireless services, mobile commerce, fixed line services, high-speed home broadband, DTH, and enterprise services including national and international long distance services to carriers. In the rest of the geographies, it offers 2G, 3G, 4G wireless services and mobile commerce. The company’s quarterly consolidated financials reveal that the operating profit for Q4FY22 was ₹16,058.90 crore as compared to the operating profit of ₹12,415.80 crore for Q4FY21, which has increased by 29.34 per cent.

Net sales for Q4FY22 were at ₹31,500.30 crore, recording an increase of 22.34 per cent as compared to the net sales of ₹25,747.30 crore in the same quarter last year. The net profit has also been on the higher side and stands at ₹3,001.40 crore since the same period which was at ₹983.60 crore, a 205.14 per cent increase from Q4FY21. The annual performance of net sales reported is ₹116,546.90 crore for FY2022, which has increased by 15.83 per cent from last year’s value of ₹100,615.80 crore. The operating profit for FY22 stood at ₹58,068.20 crore as compared to an operating profit of ₹46,014.50 crore for FY21, an increase by 26.2 per cent.

The company has delivered net profit of ₹5,882 crore for FY22 as compared to net loss of ₹12,271.20 for FY21. It has managed to create stickiness with its customer base and has acquired relative market share from Vodafone Idea which will prove to be beneficial for the future as an opportunity for 5G network expansion. Bharti Airtel offers a formidable digital ecosystem which helps maintain the company its relative strength among its competitive peers. The relief offered by the government and the tariff hike are going to be an added benefit. Hence, we recommend HOLD.

AMBER ENTERPRISES INDIA LTD

Amber Enterprises India is a market leader in the room air-conditioner (RAC) original equipment manufacturer and original design manufacturer industry in India with a market share of 55.4 per cent in terms of volume in FY 2017. It has expertise in components like heat exchangers, sheet metal components, injection moulding components, and system tubing and motors, Amber Enterprises offers higher energy efficiency and expertise in indoor, outdoor, split and window AC units. The company deals in AC components as well as non-AC components. The company’s quarterly consolidated financials reveal that the operating profit for Q4FY22 was ₹134.66 crore as compared to the operating profit of ₹149.65 for Q4FY21, which has decreased by 10.01 per cent.

Net sales for Q4FY22 were at ₹1,936.70 crore, recording an increase of 21.16 per cent as compared to the net sales of ₹1,598.43 crore in the same quarter last year. The net profit has also been on the on the lower side and stands at ₹59.30 crore since the same period which was at ₹76.48 crore, a 22.46 per cent decrease from Q4FY21. The annual performance of net sales reported is ₹4,206.40 crore for FY22, which has increased by 38.8 per cent from last year’s value of ₹3,030.52 crore. The operating profit for FY22 stood at ₹308.62 crore as compared to operating profit of ₹253.39 crore for FY21, an increase by 21.8 per cent.

The company has delivered net profit of ₹111.32 crore for FY22 as compared to ₹83.28 crore for FY2021, up by 33.68 per cent. The company’s revenues have seen strong growth across categories but supply chain issues have affected the RAC segment, without which the volume growth would have been higher. However, increasing product offerings and customer additions along with foray into the commercial AC space and entry into exports will drive revenue growth and margin recovery over the medium to long term.

Hence, we recommend HOLD.

(Closing price as of June 14, 2022)