Query Board

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



A one-stop shop for all your logistics needs since 1993, Allcargo Logistics offers integrated solutions including warehousing, transportation and handling of all cargo types. Allcargo Logistics is a global company with a presence in 180 countries, and a significant portion of its revenue has been derived from the APAC region (38 per cent), followed by ISC, ME and Africa (26 per cent), Europe (19 per cent) and America (17 per cent). Allcargo Logistics’ financial performance has taken a significant hit with net profit in Q1FY23 plunging to ₹52 crore compared to ₹316 crore in Q1FY22. This decline is reflected in the operating margin shrinking from 7 per cent to 4 per cent and a sharp drop in EPS (earnings per share) from 2.51 to 0.63. The company’s low-interest coverage ratio suggests potential challenges while managing debt and capitalising interest costs might be further straining the finances. With a PE ratio of 48 compared to the industry average of 39. Considering the current market volatility, particularly the Mid-Cap correction since early March, and a less-than-optimistic global outlook, Allcargo Logistics’ stock price of 73 appears overvalued, especially given its high book multiple of 2.6. Hence, we recommend SELL. 

Kalyan Jewellers India Ltd., a leading Indian jewellery retailer by revenue as of FY20, offers a comprehensive selection of gold, diamond-studded and other jewellery at various price points, catering to everyday wear and special occasions. It caters to a broad spectrum of customers with diverse jewellery collections, from aspiration-driven pieces for high-end buyers to staple regional designs for value-conscious shoppers. It also offers wedding jewellery and work wear collections. To expand its reach quickly and improve profitability, it has adopted a FOCO model, resulting in 15 new showrooms opening in the last fiscal year. However, the company’s financial health appears weak considering the significant drop in other income from ₹11 crore in Q1FY22 to – ₹19 crore in Q1FY23. Additionally, the stock’s PE ratio of 69.4 is considerably higher than the industry average of 26. The stock price is trading at 9 times its book value. Moreover, the company’s dividend payout history is inconsistent, and its sales growth over the past five years has been poor at around 6 per cent. Considering these factors, investing in this company might be risky due to the potential for overvaluation and lack of consistent returns. At this point when the stock is trading at ₹375, we recommend SELL. 

Kotak Mahindra Bank is a major Indian financial services group with a diverse range of offerings. It provides banking products (retail, corporate, treasury), investment options (stock broking, asset management), insurance (life and general), and vehicle financing. The bank has a significant presence across India spread across 1,700 branches with a focus on digital services as well. Kotak Mahindra Bank reported strong financial performance in Q3FY24 with a consolidated post-tax profit of ₹4,265 crore. The key contributors were growth in vehicle loan book (Kotak Prime – ₹239 crore profit), microfinance business (₹104 crore profit), life insurance (₹140 crore profit), and Kotak Mutual Funds (AUM grew 32 per cent YoY to ₹3.54 trillion). The securities business grew its profit by 27 per cent with market share gains in derivatives, while commercial banking saw decent growth across various segments. Its strong financial position is reflected in a healthy capital adequacy ratio aided by past equity raise, comfortable LDR of 88 per cent, and a solid liquidity coverage ratio of 126.9 per cent at the group level. The cost of term deposits is managed within 6.5-6.7 per cent while maintaining strong liquidity. Despite a treasury loss due to bond swap volatility, Kotak Mahindra Bank maintains spread protection. The market strategy involves growing commercial vehicle loans despite industry challenges and increasing deposit rates in higher tenures to capitalise on market opportunities. The bank demonstrates strong fundamentals with consistent quarterly sales growth. This positive trend is further supported by an attractive valuation. The current price-to-book value (PBV) ratio of 3.05 sits below its historical three-year median of 4, indicating the stock might be undervalued. Additionally, the bank’s return on assets (ROA) of 2.56 per cent surpasses its peers, highlighting its efficient management of assets and generation of profits. Based on these factors, we recommend BUY. 

Sterling and Wilson Renewable Energy, formerly known as Sterling and Wilson Solar, started in 2011 as a solar power division and became an independent company in 2017. It is a global leader in designing, building and maintaining large-scale solar energy projects, offering customised solutions for various clients and working across 26 countries. Highlighting the financials, the company has a market capitalisation of over ₹11,000 crore with an order book of ₹8,750 crore. Its sales figures for Q3FY24 and the first nine months of the fiscal year i.e. 9MFY24 were ₹583 crore and ₹1,858 crore, respectively. However, it incurred net losses of ₹62 crore and ₹212 crore during the corresponding periods. The company’s financial situation is of concern, marked by negative profitability (ROE of -345.11 per cent and ROCE of -65.41 per cent) and weak debt servicing capacity (low interest coverage ratio). This financial health appears weak across several metrics. Promoter holdings have dropped significantly (-14.6 per cent in the last quarter), suggesting a potential lack of confidence in the company’s future. Furthermore, sales growth has been poor (-21.8 per cent over the past five years) and profitability is negative, as evidenced by the return on equity being in the red for the past three years (-118 per cent). Adding to the concern, a substantial portion of promoter holdings are pledged (37.4 per cent), which could indicate financial strain. The company’s liquidity also seems weak, reflected in the increase in debtor days from 86.4 to 143 days and working capital days from 122 to 271 days, implying that it is taking longer to collect payments from debtors and convert inventory to cash. The company’s recent financial data shows a decrease in revenue and an increase in material costs. These trends could potentially impact profitability. Based on the current valuation, further analysis is recommended before making an investment decision. Hence, we recommend AVOID. 

IRB Infrastructure Developers, a leading Indian infrastructure firm, specialises in roads and highways with experience in diverse sectors like construction, maintenance, airport development and real estate. Currently, the company manages projects under various models (TOT, BOT, HAM) and boasts the largest TOT project (Mumbai-Pune Expressway) while holding a notable 20 per cent share of the Golden Quadrilateral network. Geographically diversified with a strong presence in Maharashtra, Rajasthan and Gujarat, IRB Infrastructure Developers also leverages its construction expertise through EPC contracts for government agencies. The company boasts a market capitalisation exceeding ₹40,000 crore and an order book of over ₹35,000 crore. In Q3FY24, its net sales surged by 30 per cent to ₹1,968.5 crore, while the net profit witnessed a remarkable 54.8 per cent increase to ₹238.2 crore compared to Q3FY23. Looking at the nine-month results (9MFY24), its net sales reached ₹5,348 crore and net profit stood at ₹417 crore. For the full financial year FY23, the company reported net sales of ₹6,402 crore and a net profit of `720 crore. IRB Infrastructure Developers reported a stellar 25 per cent year-on-year jump in toll collection for January 2024, exceeding expectations despite a nationwide transporters’ strike at the month’s start. This robust growth, building on the 22 per cent seen in the previous nine months, reflects strong traffic across all its projects. The stock is trading at 2.98 times its book value with a threeyear stock price CAGR of 85 per cent. Despite high valuation and strong financials, IRB plans to inject further equity of ₹4.1 billion in FY24 and ₹2.2 billion in FY25. This move comes while maintaining the previously announced construction revenue guidance and an EBITDA margin target of approximately 25 per cent for FY24. Hence, we recommend BUY. 

Easy Trip Planners, a leading online travel agency (OTA) in India, offers a comprehensive suite of travel services including flights, hotels, holidays, trains, buses, taxis and value-added services like insurance, visa processing and activity bookings. It boasts the largest travel agent network in India, primarily serving individual travellers while also catering to corporate and agent bookings. The company boasts a market capitalisation exceeding ₹8,000 crore despite its stock price trading below ₹60 per share. It has delivered impressive profit growth, averaging 103 per cent CAGR over the past five years, and maintains a strong return on equity (ROE) track record, evidenced by its three-year ROE of 48.7 per cent. The company’s financial performance has been consistent, with net sales exceeding ₹100 crore for the last six quarters and net profit ranging between ₹30 crore and ₹51 crore during the same period. Both half-yearly (H1FY24) and nine-month (9MFY24) results further solidify the company’s positive financial standing. Trading at a PE ratio of 51.2 times, which is currently below its five-year median of 64.5 times, the stock presents an attractive entry point. Boasting diverse landscapes, rich cultures and over 11 million annual foreign visitors, India’s travel and tourism industry thrives as a major economic force, contributing a staggering USD 122 billion to its GDP. With over two billion domestic travellers joining the adventure, this sector offers unique experiences, solidifying India’s position as a leading destination for international tourism expenditure. This undervaluation coincides with promising industry tailwinds fuelled by tourism infrastructure development, increased connectivity and rising disposable income, all of which drive growth in hotel bookings and online ticketing. Taking into account all these factors, we recommend BUY. 

(Closing price as of March 28, 2024)