Query Board

Readers are requested to send only one query at a time so that more readers get a chance. For complaints regarding non-receipt of dividend, bonus, rights and other matters, investors may write to www.investor.sebi.gov.in 

SONATA SOFTWARE LTD.

I have shares of Sonata Software at ₹860. Please let me know, your suggestion to go ahead with averaging to hold or exit. I can hold up to 6 to 12 months, thank you. - Sharan Shankrikoppa 

Sonata is a global technology company that enables successful platform-based digital transformation initiatives for enterprises, to create businesses that are connected, open, intelligent and scalable. For the first quarter that ended on June 31, 2022, Sonata Software reported a net sale of ₹1778.86 crore. This is a rise of 40.23 per cent over the net sales of ₹1268.54 crore reported at the same time last year. Likewise, the company witnessed an increase in the operating income as it climbed to ₹159.83 crore from an operating loss of ₹129.13 crore in Q1FY22. Sonata Software also reported a positive quarterly net profit of ₹107.76 crore compared to a net profit of ₹86.73 crore in the previous year's same quarter. Furthermore, the company’s full-year financials reveal that its net sales climbed to ₹5553.37 crore in FY22 from ₹4228.08 crore in FY21, giving an increase of 31.34 per cent. The operating profit improved by 38.97 per cent to ₹565.73 crore in FY22 from ₹407.10 crore in FY21. Similarly, the net profit for the year FY22 stood at ₹376.43 crores delivering an exceptional return of 54.3 per cent from ₹243.96 crore reported in the past year. The company’s revenue from the US and Europe has been spectacular due to rupee depreciation and robust demand. The company has given a good quarter and has recently announced bonus shares in the ratio of 1:3. It is almost net debt free and has a good track record of Return on Equity (ROE). Hence, we recommend HOLD.

TORRENT PHARMACEUTICALS LTD.

I am currently holding shares of Torrent Pharmaceuticals at ₹1,480 per share. Should I exit? - Umesh Shinde 

Torrent Pharmaceuticals, the flagship company of Torrent Group, is one of the leading pharmaceutical companies of the country. The company’s quarterly consolidated financials reveal that the operating profit for Q1FY23 was ₹742 crore as compared to the operating profit of ₹717 crore for Q1FY22, which has improved by 3.49 per cent. Net sales for Q1FY23 were at ₹2,292 crore, recording an increase of 8.11 per cent as compared to net sales of ₹2,120.00 crore in the same quarter last year. The net profit has also been on the higher side and stands at ₹354 crore since the same period which was at ₹330 crore, a 7.27 per cent increase from Q1FY22. The annual performance of net sales reported is ₹8,419 crore compared to last year’s value of ₹7,886 crore. The operating profit for FY22 stood at ₹2,628 crore as compared to ₹2,537 crore for FY21, an increase of 3.59 per cent. The company has delivered net profit of ₹777 crore for FY22 as compared to net profit of ₹1,252 crore for FY21, recording a substantial decrease of 37.94 per cent. In Q1FY23, Torrent Pharmaceuticals added 300 MRs and brought the total strength of field force to 4,200. Two new divisions (CNS and cardiovascular) have been commercialised. Key branded generic markets saw excellent revenue growth, which is likely to continue. Additional price increases in branded generic businesses and cost-cutting measures have helped profitability. Hence, we recommend HOLD. 

FORBES & COMPANY LTD.

The shares of Forbes & Company are near a 52-week high. Should I buy or wait for a correction? — Sachin Srinivasan

Forbes & Company, established in 1919, is one of the oldest companies of the world that is still in business. The company traces its origin to the year 1767 when John Forbes of Aberdeenshire, Scotland, started his business in India. Over the years, the management of the company moved from the Forbes family to the Campbells, to the Tata Group and finally to the well-known Shapoorji Pallonji Group. They are leaders in infrastructure, construction and real estate businesses, amongst many others. Forbes & Company has three main businesses: engineering, shipping and logistics and business automation.

It serves a wide range of industry segments from refineries to chemical/process plants and sugar manufacturing units, pharmaceuticals, paper, food processing, oil production, carbon black, steel plants, cogeneration plants, etc. The company’s quarterly consolidated financials reveal that the operating profit for Q1FY23 was ₹208.66 crore as compared to the operating profit of ₹6.21 crore for Q1FY22, which has improved by 3,260.06 per cent. Net sales for Q4FY22 were at ₹121.85 crore, recording a decrease of 6.36 per cent as compared to net sales of ₹130.12 crore in the same quarter last year. The net profit has also been on the lower side and stands at ₹143.84 crore since the net loss incurred for the same period last year which was at ₹6.73 crore.

The annual performance of net sales reported is ₹514.73 crore as compared to last year’s value of ₹932.42 crore. The operating profit for FY22 stood at ₹83.88 crore as compared to ₹210.93 crore for FY21, a decrease of 60.23 per cent. The company has delivered net profit of ₹4,212.76 crore for FY22 as compared to the net loss of ₹121.43 crore for FY21. The company has recently incorporated its wholly owned subsidiary company in the name of Forbes Precision Tools and Machine Parts Limited on August 30, 2022. The company has successfully managed to reduce its debt component and has been consistently improving its profit margins. Hence, we recommend HOLD.

GENERAL INSURANCE CORP. OF INDIA

I purchased GIC shares at its IPO listing and now currently hold 600 shares at an average price of ₹272. Kindly guide regarding the stock holding. - Sandip Sharma

GIC was formed for the purpose of superintending, controlling and carrying on the business of general insurance. As soon as GIC was formed, the Government of India (GOI) transferred all the shares it held of the general insurance companies to GIC. Simultaneously, the nationalised undertakings were transferred to Indian insurance companies. The company provides reinsurance across many key business lines including fire (property), marine, motor, engineering, agriculture, aviation/space, health, liability, credit and financial and life insurance. As a sole reinsurer in the domestic reinsurance market, it provides reinsurance to the direct general insurance companies in the Indian market.

The company’s quarterly consolidated financials reveal that the operating profit for Q1FY23 was ₹1,025.69 crore as compared to the operating loss of ₹1,510.96 crore for Q1FY22. Net sales for Q4FY22 were at ₹10,734.29 crore, recording a decrease of 3.42 per cent as compared to net sales of ₹11,113.95 crore in the same quarter last year. The net profit has also been on the lower side and stands at ₹708.85 crore since the net loss incurred for the same period last year which was at ₹1,117.89 crore. The annual performance of net sales for FY22 reported is ₹39,556.83 crore compared to last year’s value of ₹39,984.66 crore. The operating profit for FY22 stood at ₹3,754.65 crore as compared to ₹3,069.31 crore for FY21, an increase of 22.33 per cent. The company has delivered net profit of ₹2,198.76 crore for FY22 as compared to net profit of ₹1,824.99 crore for FY21, which is a worthy gain of 20.48 per cent.

The company is almost debt-free and is expected to give a better performance in the future. It has made a provision of ₹163 crore for equity investments for the upcoming quarters. The company is also aggressively pruning its portfolio in order to reduce underwriting losses in loss-making areas. The company hopes that this move will make its balance stronger and improve its margins in the upcoming quarters. Hence, we recommend HOLD.

(Closing price as of Sept 02, 2022)