Category: Personal Finance

1. Tata Tele Business Services Limited:

This telecommunications stock on a YTD basis has generated return of 957 percent, while 1-year return comes in at . The price of the penny scrip just 6 months back as on May 22 was at a mere Rs. 12.5 per share, implying huge gains of 572% considering last traded price of Rs. 84.05 per share on the NSE. In an otherwise weak market, the scrip hit 52-week high price today (November 22, 2021) on Bharti Airtel’s announcement of new hiked tariff rates for prepaid connections.

Though the scrip saw intermittent correction and traded range bound between July to October, it again saw sharp momentum after this period.

In May this year, reports suggesting that Tata Sons will provide the necessary support system to revive Tata Tele and in the new form called Tata Tele Business Services (TTBS)- the company will extend services to SMEs, provided a boost to the company’s stock price. Importantly, the company’s retail mobile services were transferred to Bharti Airtel more than 2 years back in July 2019.

On November 10, 2021, the company clarified on price movement and said “…. we have always promptly intimated of any events, information, etc. required to be disclosed under Regulation 30 of the Sebi Regulations, 2015 and will continue to do so in future as and when any such event or information occurs in the Company. At this stage there is nothing further to disclose”.

Care Rating in its latest report reaffirm its rating on the company’s long and short term term bank facility etc. Also the continuing backing by Tata Sons- the company’s promoter suggests that it shall take all necessary steps to cover up any liquidity crisis for the following next year.

Tata Tele is a small cap company that offers an array of telephony services including mobile, fixed wireless phones (FWP), public telephone booths & wireline services. To cater to the Indian youth, the company offers services under the brand name Virgin Mobile.

2. Proseed India:

From a price of Rs. 1.75 per share as on May 23, 2021 almost 6 months back, the scrip has climbed to a price of Rs. 84.15 currently. This amounts to a staggering 6-month return of 4709 percent. The stock’s YTD and 1-year return are 15,200 and 23,943 percent, respectively. The stock on October 10 hit a price of Rs. 156.55 and since then has been losing ground.

Note the gains in the stock price are not in sync with the company’s financials and this company is indeed a loss making entity. From last several quarters, the company is logging zero sales, while the last time it registered sales worth Rs. 0.54 crore was for the Q3 period of Fy19.

For the just concluded quarter, the company’s loss widened YoY to Rs. 0.46 crore as against Rs. 0.09 crore during the same period a year ago. Sequentially also the company’s net loss increased by a steep 53 percent. Major shareholding in the company is of 3 promoters who have 97 percent stake in the firm as at the end of the September quarter. For the last concluded Fy, the company registered a profit to the tune of 12.67 crore.

Proseed India underwent the corporate insolvency process (CIRP) under the Insolvency and Bankruptcy Code, following which the NCLT allowed for its resolution plan in December end.

Founded in 1991, the Hyderabad-Telangana based company formerly known as Green Fire Agri Commodities Limited is a leading Agri Bio Technology company. The company’s specialities are in the field of Agri-Biotechnology nurturing farming community for increasing yield potential of the crops.

Disclaimer:

The stocks discussed above are penny stocks that carry a higher risk and hence may even offer a higher reward. Nevertheless, the story above just points to the potential run up in these stocks that even contradicted their financials. Note readers should not construe it to be a call to buy the above listed stocks.

GoodReturns.in

Q1FY22 results of GSL

HDFC Securities has said in its research report that “GSL, in Q1FY22, reported net revenue growth of 61% to Rs 371 Cr backed by an increase in the share of Rajasthan Medium Liquor (RML) in the Consumer Business segment and higher sales volume of 29.9 Mn liters in Bulk Alcohol Segment. EBITDA Margin grew for the 6th consecutive quarter and stood at a record high of 26.5% – up 940/183 bps YoY/QoQ in Q1FY22 on account of higher RML share in Consumer Business and better realizations. Bulk Alcohol sales volumes stood at 29.9 Mn litre in Q1FY22, up 45% YoY and 5% QoQ. The average realization for bulk alcohol came in at Rs. 51.6 per litre in Q1FY22. The share of Consumer Business grew to 42% in Q1FY22 from ~35% in Q1FY21, on the back of both volume and value growth.”

The company’s “Value Segment sales volumes grew by 65% YoY to 3.3 Mn cases and realisations by 16% YoY and 10% QoQ to Rs 462.5 per case in Q1FY22. Despite the 2nd wave of Covid-19, the Capacity Utilization in Q1FY22 stood at 98% (vs 58% in Q1FY21 and 99% in Q4FY21). On the expansion front, in West Bengal, expansion work of an additional 140 KLPD is nearing completion and likely to be commissioned in Q3FY22. In Jharkhand, work has commenced on a planned expansion of 140 KLPD and the project is expected to be commissioned in FY23. Additional 140 KLPD expansion is under evaluation between Bihar and another location; work expected to start later in FY22” said the brokerage.

Buy Globus Spirits Limited (GSL) with a target price of Rs. 1761

The brokerage has said that the company’s “Net revenues/ EBITDA/ PAT have grown at a CAGR of 15%/40%/94% over the last 5 years with EBITDA/PAT margin expanding from 9.5%/1.4% to 20.7%/11.4%. In fact the company has reported EBITDA margin expansion over the past 6 consecutive quarters, with it reaching a high of 26.5% in Q1FY22. Stable working capital, lower cash outlay for tax due to availability of MAT credit and a reduction in interest cost led CFO to improve to Rs 148.4 Cr in FY21 from Rs. 30.6 Cr in FY19. The company strengthened its balance sheet by reducing the debt of Rs. 75 Cr despite ongoing CAPEX. Robust cash flow generation will further aid debt reduction.”

HDFC Securities claims that “Going ahead, we expect GSL’s Net Revenues/EBITDA/ PAT to witness a strong CAGR growth of 21%/23%/28% over FY21-24E driven by capacity expansion in bulk alcohol and faster growth in IMIL business, led by increasing pricing gap vs. IMFL players in key states and the emergence of the ‘premium country liquor’ (medium liquor), which in our opinion is a game changer. Medium liquor realisations are ~50% higher than the value segment and offer strong growth and upgrading opportunities across the company’s key markets. While its foray in premium IMFL (highly margin accretive) through Unibev is at a nascent stage, a successful ramp-up here can drive the profitability.”

HDFC Securities has clarified in its research report that “Govt’s aim of 20% blending target by 2025 has created sheer supply-deficit of Ethanol (details inside) and has led to the diversion of ENA towards ethanol, creating structural support for ENA prices. While GSL may witness some moderation in margins (from 26.5% in Q1FY22), we expect the company to maintain 20%+ over near to mid-term, driven by higher realizations for bulk alcohol and benign input costs. Robust sales growth and improvement in profitability coupled with stable working capital is likely to aid higher cash flow generation in the coming years. We expect GSL to generate strong cumulative cash flows of ~Rs. 900 Cr to be utilised for its ongoing and future CAPEX programmes and, debt reduction.”

The brokerage has further stated that “Though the stock has rallied ~4x over the past 6 months, we believe there’s still upside to this rally, with the caveat that the Government maintains its supportive stance on ethanol blending. We think the base case fair value of the stock is Rs 1,619 (17x Sept’23E EPS) and the bull case fair value is Rs 1,761 (18.5x Sept’23E E EPS). Investors can buy the in stock Rs 1,454-1,482 band (15.5x Sept’23E EPS) and add more on dips to Rs 1,273-1,297 band (13.5x Sept’23E EPS). At LTP of Rs 1,469, it quotes at 15.4x Sept’23E EPS.”

Disclaimer

The stock has been picked from the brokerage report of HDFC Securities Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Wedding Loans

This loan is intended to assist couples and families in dealing with the financial stress of planning a wedding. It can be used to cover key wedding expenses such as the venue, guest accommodations, jewellery, food, and decoration. During peak wedding season, interest rates for these loans are usually higher than during the off season. The Personal Loan product will help you finance your dream wedding. It’s intended to be a one-stop shop for all of your financial demands and issues.

Home Renovation

Do you want to rebuild your kitchen, replace your old furniture around the house, or perhaps spruce up your patio?

Renovations to a home can be expensive, especially if the modifications are significant. Not everyone has the cash on hand to complete a renovation when they want to, so a Home Renovation Loan is a simple alternative. You can get a Personal Loan for Home Renovation from HDFC Bank and give your house the makeover it deserves. You will not only improve the aesthetic appeal of your property, but you will also increase the value of your home for future sale.

Vacation loan

You can take out a travel loan to support your holiday plans without jeopardising your savings and investments. This form of personal borrowing is then referred to as a travel loan. You will be required to present travel documentation in order to qualify for this loan. For example, airline tickets, hotel reservations, passport or visa information for international travel, and so on. With the help of a personal loan, you may take your family on a well-deserved vacation without depleting your funds. Your travel expenses are covered by a personal loan, and the funds can be utilised anywhere and at any time.

You can take out a travel loan to support your holiday plans

Consumer durable loan

Consumer durable loans are also available from banks at no cost EMI. Any consumer durable item, such as a phone, refrigerator, furniture, washing machine, microwave, and so on, can be purchased using this form of loan. The product’s cost is divided into EMIs, which can be returned over a set period of time. Some products may require a deposit or a processing fee, while others do not.

Pension loan

Yes, retirees can take out loans worth at least 7 to 10 times their pension to cover any financial emergency. Typically, this loan can only be obtained from the same bank where the pensioner receives his or her pension.

Asset quality outlook improving

According to the brokerage firm, the asset quality outlook for public sector banks is improving gradually after a prolonged corporate NPL cycle – gross non performing asset ratios had reached the peak of 15% in FY18. a) Government initiatives to boost manufacturing; b) rising commodity prices; c) deleveraging by large corporates; and d) balance sheet cleanup, along with the increasing pace of stressed asset resolution, have resulted in GNPA ratios moderating to 9.5% as of FY21.

“Most public sector banks carry healthy PCR in the 63-70% range (barring BoI with 79%). This places them broadly in line with private peers. Thus, we estimate credit costs to moderate, but believe normalization to be an FY23 event,” the brokerage has said.

Strong rebound in earnings

Motilal Oswal in its latest report has also said that these banks are well-placed to deliver a strong rebound in earnings as we estimate FY22E PAT to be 11 times of the sum of FY17-21 PAT, while FY22-24E earnings would grow at a healthy 25% CAGR.

“We estimate RoA/RoE to improve to 0.8%/13.2% for FY24E v/s 0.4%/6.1% for FY21. For the past few years, PSBs have focused on strengthening their balance sheets by improving the coverage ratios, which improved significantly to 68% in FY21 v/s 47% in FY18. During FY15-21, the Top seven public sector banks took a significant stock of provisions towards stressed accounts, with the total provisions coming in at Rs 7.2t. Thus, provisions as a percentage of PPoP stood elevated at 63-144% in FY20,” the brokerage has said.

But the stocks of Bank of Baroda, Union Bank, Canara Bank, SBI and Indian Bank

Motilal Oswal has a buy call on the stocks of public sector banking names like State Bank of India, Union Bank of India, Indian Bank, Canara Bank and Bank of Baroda. The highest stock price gains that are being seen are in the stocks of Union Bank of India, State Bank of India and Bank of Baroda.

As far as we at goodreturns are concerned, while there maybe value in PSB stocks to buy them, the indices have run-up too sharply, thanks to huge inflows into mutual funds. We believe that it makes sense to avoid pumping large sums of money into stocks at the moment. Be a little cautious only because of where the markets are at the moment.

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal Financial Services. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

2QFY22 results of Astec Lifesciences Ltd

According to the brokerage “Export volumes grew 8% YoY in 2QFY22, whereas domestic volumes fell 28% YoY, as the company allotted the limited capacity available with it (in the context of the Mahad shutdown) to exports. Exports were also impacted by container shortages and higher freight costs. Almost 33% of 2Q export sales (including CRAMS) were deferred to 3Q: this translates into ~Rs215m of deferred sales that will be recorded in 3QFY22.”

IIFL Securities has also said that “Besides, another ~Rs80m worth of material could not be despatched due to logistical hurdles. Hence, overall, ~Rs300m of revenues has spilled over from 2Q to 3Q. Volume growth was 11% in 1HFY22. Exports accounted for 55% of the company’s revenues for 2QFY22. Capex is seen at ~Rs1.5bn in FY22, although management indicated that CAPEX plans may need to be revised upwards. Projects that have been under implementation include the herbicide unit (now commissioned), the new R&D center (expected to be ready by FY23- end), and the new fungicide plant (details on CAPEX for this unit to be shared by the next investor call).”

Management’s expectation

IIFL Securities in its research report has said that “The company’s management has guided to very aggressive and high growth in the CRAMS business; specifically, management guided for ~50% CAGR in the CRAMS business for the next three years. Management expects to successfully achieve its FY22 profit growth target of 15-20%. Management also expects EBITDA margins to go up to ~24% in the next few years, from 20- 22% at present.” The brokerage has also clarified that “This year, management expects 20-25% growth in enterprise sales, of which 15pps should come from volume growth. Four new CRAMS products are expected to be launched in FY22, plus another one in enterprise sales. Thereafter, two large enterprise products should be commercialised by 4QFY23: these are triazole fungicides.”

Buy Astec Lifesciences Ltd with a target price of Rs. 1572

IIFL Securities claims that “Ramp-up of capacity utilisation at the new herbicide unit, to be followed by commercialisation of two new triazole fungicides by 4QFY23, should drive strong growth. Besides, higher prices of propiconazole should boost margins, and visibility is strong. Hence, we raise FY22ii EPS by 8% to Rs39.3, to reflect a likely jump in earnings in 2H on revenue deferrals, rising prices and strong demand; we tweak up FY23-24ii EPS by 3% each. Our TP, rolled over to Dec-22, rises to Rs1,572. We keep our target 1YF P/E unchanged at 30x, and believe it is justified by promising growth prospects, healthy financial metrics and strong parentage.”

Disclaimer

The stock has been picked from the brokerage report of IIFL Securities Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.