Query Board

Investment Horizon : Query-Specific : Subscribers can ask their queries regarding stocks they hold and get our expert guidance. 

HFCL Ltd. (Himachal Futuristic Communications Limited) is a multifaceted telecom infrastructure provider that actively engages in telecom infrastructure development, system integration and the manufacturing and supply of premium-quality telecom equipment and optical fibre cables. The company’s net sales and net profit decreased in the second quarter of FY23 (Q2FY23) compared to Q2FY22. In the first half of FY24 (H1FY24), net sales decreased by 5.3 per cent to ₹2,106.7 crore compared to H1FY23. However, net profit increased by 4.8 per cent to ₹145 crore. For the entire FY23, net sales increased by 0.34 per cent to ₹4,743.31 crore compared to FY22. However, net profit decreased by 2.43 per cent to ₹317.80 crore. The company’s shareholding structure is of concern with promoters reducing their stake while simultaneously pledging a significant portion of their remaining shares. Additionally, the company’s financial performance has been lacklustre with underwhelming sales growth, low return on equity and meagre dividend payouts. Ageing and outdated telecom infrastructure has led to poor network performance and connectivity issues. The high cost of maintaining and upgrading telecom infrastructure hinders innovation and progress in the sector. These factors suggest that the company is a risky investment. Hence, we recommend AVOID.

Established in 1974, Lloyds Engineering Works Ltd. (also known as Lloyds Steels Industries Ltd.) is primarily engaged in the design, manufacturing and commissioning of heavy equipment, machinery and systems for the hydrocarbon sector, oil and gas, steel plants, power plants, nuclear plant boilers and turnkey projects. In the second quarter of fiscal year 2024 (Q2FY24), the company’s net sales, operating profit and net profit increased significantly compared to the same period in FY 2023 (Q2FY23). The net sales increased by 311.68 per cent to ₹121.78 crore and net profit increased by 148.84 per cent to ₹18.79 crore in Q2FY24 compared to Q2FY23. In the first half of FY 2024 (H1FY24), the company’s net sales, operating profit and net profit increased significantly compared to the same period in FY 2023 (H1FY23). Net sales increased by 192.33 per cent to ₹234.98 crore, operating profit increased by 82.36 per cent to ₹41.83 crore and net profit increased by 79.43 per cent to ₹31.63 crore. The company has reported good numbers in its recently announced results and has a strong order book worth ₹921.4 crore as of September 30, 2023. We would recommend booking partial profit and keeping a trailing stop loss of ₹50 or 20-day moving average on the remaining quantity. The rest of the stake should be HOLD.

Suzlon Group is a leading renewable energy solutions provider with a global presence across 17 countries. Founded in 1995, Suzlon Energy has established itself as a pioneer in the wind energy sector, having installed over 12,780 wind turbines across six continents. The company offers a comprehensive range of wind energy solutions, including wind turbine generators (WTGs), towers, blades and nacelles.

According to the company’s Quarterly Results, net sales decreased by 1.14 per cent to ₹1,421.43 crore while the net profit increased by 81.14 per cent to ₹102.29 crore in Q2FY24 compared to Q2FY23. In its annual results, the net sales decreased by 9.29 per cent to ₹5,970.53 crore in FY23 over FY22. The company reported a turnaround story as it reported a net profit of ₹2,887.29 crore in FY23 compared to a net loss of ₹166.19 crore in FY22, an increase of 1,836.3 per cent. 

As of September 2023, FIIs increased their stake from 7.79 per cent to 10.88 per cent and DIIs increased their stake from 5.90 per cent to 9.81 per cent stake in the company. CRISIL has upgraded Suzlon Energy’s ratings to CRISIL BBB+ | A2 with a positive outlook due to the company’s strengthened financial position, operational excellence and favourable sectoral tailwinds. This upgrade is also a result of Suzlon Energy’s successful repayment of its entire term debt through a QIP of approximately ₹2,000 crore.

The company has also been included in the closely watched MSCI Global Standard Index, which is expected to bring in an inflow of USD 264 million. Suzlon Energy is a global leader in renewable energy solutions and the company is committed to playing a key role in the transition to a sustainable future. It is well-positioned to benefit from the strong growth in the Indian wind energy sector. The company’s strong product portfolio, improving financial performance and positive outlook from rating agencies make it a compelling investment opportunity. Hence, we recommend HOLD.

Sonata Software Ltd. is primarily engaged in the business of providing information technology (IT) services and solutions to its various customers in the US, Europe, the Middle East, Australia and India. According to its quarterly results, net sales increased by 27.9 per cent to ₹1,912.6 crore and the net profit increased by 10.2 per cent to ₹124.2 crore in Q2FY24 over Q2FY23. In its annual results, the net sales increased by 34.1 per cent to ₹7,449.1 crore and the net profit increased by 20 per cent to ₹451.9 crore in FY23 over FY22.

The shares of the company have an ROE of 37.85 per cent and an ROCE of 42 per cent. The company has a healthy outstanding order book. Sonata Software Limited has demonstrated remarkable growth, achieving a 4.6 per cent QoQ and 40 per cent YoY increase in international business, propelling it towards its ambitious target of reaching revenue of 1.5 billion by FY26. The successful integration of Quant 3:00 Systems Inc. and securing multiple large deals has further solidified the company’s position in the industry.

With a strong focus on verticals such as banking, healthcare, retail, manufacturing and TMT, Sonata Software is strategically investing in AI and generative AI through its Harmoni.AI platform, aiming for it to contribute 25 per cent of the revenue in the next 2-3 years. The company’s commitment to shareholder value is evident through the 1:1 bonus share issue and an interim dividend of ₹7 per share.

It remains optimistic about long-term growth prospects, maintaining its position in the top quartile performance while expecting international EBITDA margins to be in the lower 20s. Overall, Sonata Software’s strategic investments, strong value proposition and unwavering commitment to growth position it for continued success and industry leadership. It expects huge growth opportunities from Generative AI, Microsoft Fabric and cloud solutions and the company will invest 1.5-2 per cent of its EBITDA going ahead. Hence, we recommend BUY. 
 

Canara Bank is a major public sector bank in India, founded in 1906 in Mangalore. It is one of the largest banks in the country, with over 8,000 branches and a presence in over 20 countries. Canara Bank offers a wide range of banking products and services to individuals and businesses, including savings and current accounts, loans, deposits, insurance and wealth management.

Canara Bank is a trusted and respected institution that plays a vital role in the Indian economy. According to its quarterly results, the total income increased by 23.9 per cent to ₹33,891 crore and the net profit increased by 41.8 per cent to ₹3,677 crore in Q2FY24 over Q2FY23. In its annual results, the total income increased by 18 per cent to ₹111,210 crore and the net profit increased by 86.5 per cent to ₹10,808 crore in FY23 over FY22. The shares of the company have a PE of 5.19 times whereas the industry PE is 13 times and an ROE of 16.37 per cent.

Canara Bank’s financial performance has been strong in the recent quarter with double-digit growth in total business, gross advances, operating profit and net profit. The bank has also achieved top ranking in digitalisation among Indian public and private sector banks. In terms of retail credit growth, Canara Bank has crossed a double-digit figure, led by housing loans, educational loans and vehicle loans. The bank expects better loan yields due to growth in the RAM sector and re-pricing of existing low-yielding advances in the corporate sector.

Overall, the bank’s financial performance is expected to remain strong in the coming years. Canara Bank is a fundamentally strong bank with a long history of profitability. It has a strong presence in the retail and SME segments, which are expected to be the key growth drivers for the Indian banking sector in the coming years. The bank is also well-capitalised and has a healthy balance-sheet. For the long term, the stock is good to invest and also the results of this quarter were better than expected. Hence, we recommend BUY. 

BSE Ltd. is an Indian Stock Exchange located in Mumbai. Established in 1875, it is the first stock exchange in Asia. It provides a platform for trading in equity, debt, derivatives and mutual funds. It also offers services to corporations and individuals. With a focus on expanding market share across all segments, the company is poised for growth in the existing trading segments. The market is experiencing significant expansion in terms of the number of registered investors and turnover, driven by rising disposable household incomes and a preference for financial savings.

By leveraging its strengths in innovation, a robust network of intermediaries and a strong distribution network, the company is well-positioned to tap this growing market. Additionally, the expansion of platform services, including book-building for IPOs, offer to buy, offer for sell and a new bond platform will solidify the company’s leadership position in fundraising for India Inc. across all segments. The company’s quarterly consolidated financial results for Q2FY24 indicate a 59 per cent increase in net sales and other operating income, rising to ₹314.5 crore from ₹197.7 crore in Q2FY23.

In Q2FY24, the company reported net profit of ₹99.4 crore compared to net profit of ₹14.4 crore in Q2FY23, an increase of 590 per cent. Regarding the annual figures, for FY23 the company achieved net sales of ₹815.53 crore, reflecting a 9.7 per cent increase from ₹743.1 crore in FY22.

In FY23, the company reported net profit of ₹156.42 crore as compared to net profit of ₹180.75 crore in FY22, indicating a decrease of 29.3 per cent. While the Q2FY24 results are encouraging, investors should exercise caution and consider the mixed annual performance before making investment decisions. Trailing stop-loss orders, set at a 20-day moving average, can be a useful risk management tool to protect profits and minimise potential losses. Hence, we recommend HOLD.

(Closing price as of November 24, 2023)