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South Indian Bank provides retail and corporate banking, para-banking activities such as debit cards and third-party financial products distribution in addition to treasury and foreign exchange business. The bank recently declared Quarterly Results with the total business for the bank increasing by 8 per cent at ₹156,440 crore as of September 2022. It reported net profit of ₹233 crore as against loss of ₹187 crore during the corresponding quarter last year. The CASA amount increased 14 per cent year-on-year (YoY) from ₹26,773 crore to ₹30,548 crore as of September 2022. The CASA ratio improved 370 bps YoY to 34.53 from 30.83. The overall gross NPA reduced to 5.67 per cent from 6.65 per cent YoY. The net NPA reduced to 2.51 per cent from 3.85 per cent as of September 2022. The net interest income for the bank in this quarter increased 38 per cent on YoY basis to ₹726 crore. The net interest margin also improved with 72 bps to 3.21 per cent while the bank is endeavouring to achieve NIM of 3 per cent in FY23. The bank has shown positive traction and has given multi-bagger returns of over 141 per cent in just six months and over 105 per cent on a year-to-date basis. The entire PSU bank sector has witnessed breathtaking momentum as it still continues to grow and attract buyers’ attention. Hence we recommend BUY.





MIRC Electronics Limited was established in 1981 and promoted by Gulu Mirchandani and Vijay Mansukhani. It has had an established presence for over four decades. The company’s goal was to manufacture television sets which transformed into a complete consumer durable company with a wide product portfolio. The company is engaged in the business of manufacturing and marketing electronics goods primarily under the brand named Onida and IGO. The company recently released standalone quarterly results which show that the net sales are down by 31 per cent to stand at ₹268.58 crore on a year-on-year basis. The EBITDA level was down by a massive 84.96 per cent from the previous quarter last year, standing at ₹1.7 crore. The company reported net loss of ₹3.02 crore, witnessing de-growth of 153.74 per cent from the corresponding quarter last year. It has faced some pressure as it has given negative returns to its shareholders of more than 47 per cent on a year-to-date basis. With a negative PE of -16.83 and ROE of -10.70 per cent, the company’s valuation and fundamentals don’t stand strong. The company is also trading close to its 52-week low level of ₹11.55. Hence we recommend AVOID.





ITC is the largest cigarette manufacturer and seller in the country. It operates in five business segments at present – cigarettes, FMCG, hotels, paperboards, paper and packaging and agriculture products. The company’s quarterly consolidated financials show that the net sales and other operating profit for Q2FY23 stood at ₹18,608 crore as compared to the net sales and other operating profit of ₹14,844.38 crore for Q2FY22, rising 25.35 per cent. Operating profit for Q2FY23 was at ₹6,713.78 crore, recording an increase of 22.37 per cent as compared to an operating profit of ₹5,486.37 crore in the same quarter last year. The net profit also soared, standing at ₹4,670.32 crore since the same period which was at ₹3,763.73 crore, indicating a 24.09 per cent rise from Q2FY22.

ITC is trading at a lower PE ratio compared to the peer average and its fair value. The annual performance of net sales and operating income was at ₹65,204.96 crore for FY22, which improved by 22.67 per cent from last year’s value of ₹53,155.12 crore. The operating profit for FY22 stood at ₹22,494.76 crore as compared to ₹19,635.26 crore for FY21, an increase of 14.56 per cent. The company showed a 15.65 per cent increase in net profit, recording at ₹15,485.65 crore for FY22 as compared to net profit of ₹13,389.80 crore for FY21.

The company showed robust growth across all the segments. Cigarette revenue improved 3 per cent on a YoY basis where the volume growth was approximately 20 per cent. The FMCG segment witnessed volume-led growth across discretionary and OOH, staples and convenience foods whereas health and hygiene portrayed an impactful performance due to a strong base as it saw rapid growth in e-commerce, quick commerce, MT and institutional channels. Considering the recovery in the cigarette business and predicted advancement in agriculture, hotels and paperboard segments in the near term, we recommend BUY.


 

Gujarat Fluorochemicals Limited, earlier known as Inox Fluorochemicals Limited, is one of the leading producers of fluoropolymers, fluorospecialties, chemicals and refrigerants in India. They are also used in sectors like wire and cable, automotive, agrochemicals, pharmaceutical intermediates, textiles, solvent pharmaceuticals, air-conditioners, etc. The company’s quarterly consolidated financial results reveal that the operating profit for Q2FY23 was ₹560.04 crore as compared to ₹341.71 crore for Q2FY22, an increase of 63.89 per cent. Net sales for Q2FY23 stood at ₹1,461.34 crore, recording growth of 51.59 per cent as compared to ₹964.01 crore in the same quarter last year. 

The net profit was recorded at ₹357.23 crore, which was reported to be ₹204.94 crore in Q2FY22, thus improving 74.31 per cent. On an annual basis, the company reported a positive performance of net sales with ₹3,953.59 crore for FY22, zooming 49.16 per cent from the previous year’s value of ₹2,650.50 crore. The operating profit reached ₹1,329.04 crore as compared to ₹796.99 crore for FY21, which has increased by 66.76 per cent. The net profit earned was ₹775.87 crore for FY22 as compared to net loss of ₹221.51 crore for FY21. 

The company’s ROCE has jumped to 36.88 per cent in H1FY23 from 24.46 per cent in FY22. Similarly, ROE improved to 29.05 per cent in H1FY22 from 20.10 per cent in FY22. GFL is currently investing and has planned capital expansion towards expanding its capacities for chemicals for backward integration, fluoropolymers and new-age products. Fluoropolymer (PTFE) revenues grew 16.9 per cent on a QoQ basis to ₹440 crore on commissioning of TFE 3 plant. Fluorospeciality revenues rose 75 per cent on a YoY basis but fell 4.2 per cent on a QoQ basis to ₹110 crore. The prices for refrigeration gas and fluoropolymers have not displayed any weakness and are likely to improve EBITDA growth in the coming quarters. Hence, we recommend HOLD.





This IT-enabled services’ company offers direct marketers, brand advertisers and marketing agencies worldwide online or digital marketing services. The Internet of Things (IoT) is the main emphasis of Brightcom Group’s consumer products division. Due to its well-known global footprint, which spans the US, Israel, Latin America, Western Europe and Asia Pacific areas, Brightcom Group is able to assist partners in their attempts to capitalise on and prosper from the current global trends. The company’s leading blue chip clients include Airtel, British Airways, Coca-Cola, Hyundai Motors, ICICI Bank and Maruti Suzuki. 

Taking into account the company’s financial performance, on a consolidated basis it reported a strong growth of 52.48 per cent from ₹1,103.78 crore registered in Q2FY22, recording total revenue of ₹1,683.07 crore in Q2FY23. It has reported EBITDA growth of 45.86 per cent. Comparing the net profit for the second quarter of FY23 to the same quarter last year, it soared 51.16 per cent from ₹212.15 crore to ₹320.68 crore. In terms of annual performance, the net profit of the company skyrocketed by 88.86 per cent to ₹912.20 crore from ₹483.01 crore the previous year. Also, net sales surged by 75.77 per cent to ₹5,019.59 crore as against ₹2,855.80 crore during the previous year ended on March 2021. The stock is reasonably priced and is currently trading close to its 52-week low. 

Good ROE and ROCE levels indicate that the business is profitable. The Securities and Exchange Board of India (SEBI) has demanded a forensic audit of Brightcom Group’s financial statements for the financial years 2014-15 to 2019-20. According to the market regulator, it discovered inconsistencies in Brightcom Group’s disclosures that could be harmful to investors’ interests and the securities markets. The company’s solid financial fundamentals and leading position in the global markets protect it despite this unfavourable news. Investors should keep up with the latest corporate news and the audit’s findings. However, for the time being, we advise HOLD.





One 97 Communications (Paytm) is India’s leading mobile e-commerce website and digital ecosystem for both consumers and merchants. The business had more than 300 million customers and over 21 million registered merchants to whom it provided payment, financial, commerce and cloud services. On a consolidated basis, the company’s financial performance showed a strong growth of 76.18 per cent from ₹1,086.40 crore in Q2FY22, posting total revenue of ₹1,914 crore in Q2FY23, whereas the operating loss was ₹438.20 crore. When the second quarter of FY23 was compared to the same quarter previous year, the net loss widened from ₹466.90 crore to ₹562.30 crore. 

In terms of annual performance, net sales of the company surged 77.5 per cent to ₹4,974.20 crore as against ₹2,802.40 crore during the previous year ended on March 2021. But this year, the net loss climbed from ₹1,627 crore to ₹2,350.50 crore. Investor sentiment toward the company recently changed as a result of the management’s optimistic statement regarding growth and profitability and the shares of the company experienced a little rise. Nevertheless, there are worries since despite growing revenues the business is widening its losses. Given the company’s current liquidity or financial condition, the management believes that a buyback may be beneficial to its shareholders. 

Given this volatile scenario, the company announced that a meeting would be held on December 13, 2022 to consider a proposal for a buyback of the company’s fully paid-up equity shares. The outcome of the meeting was not known as the time of writing this report. The company’s application to function as a payment aggregator (PA) in India was rejected by the Reserve Bank of India (RBI). The business will resubmit its PA license application to the RBI and is still hopeful about it getting approved. Year-to-date, the company’s stock has tumbled roughly 60 per cent. Given the financials and recent developments, we recommend SELL.