Category: Personal Finance

SKF India- Solid revenue growth compensates for low gross margin

The brokerage firm recommends a buy with a target price of Rs. 3960. The stock was last trading at Rs. 3340, representing a gain of 19 percent.

Q2FY22 Result

SKF announced strong Q2FY22 performance.

Revenue for the quarter was | 966.4 crore (I-direct estimate: Rs 787.2 crore), up 37.4 percent year over year and 39.3 percent quarter over quarter.

In Q2FY22, EBITDA was Rs 159.8 crore, up 40.7 percent from the previous quarter.

Consequent PAT was Rs 117.6 crore in Q2FY22, with a tax rate of 24.7 percent.

Target and Valuation

“SKF has been making strides towards innovation and R&D and has made significant inroads in REP. Going ahead, a recovery in auto, upcoming e-market & commencement of DFC should augur well for the company. Build in revenue, EBIDTA, PAT CAGR of 21.4%, 20.8%, 21% respectively Target Price and Valuation: We value SKF at Rs 3957 i.e. 40x P/E on FY23E EPS,” the brokerage has said.

Key triggers for future price performance

• The auto industry’s recovery should help the manufacturing sector.
• The upcoming DFC in mid-CY22, which will push out Class K bearings, as well as metro developments in 25-26 new cities, would give the industrial industry a boost.
• Gross and EBITDA margins will improve as the industrial segment bearings become more indigenized.

Wabco India

The brokerage firm recommends a buy with a target price of Rs. 8800. The stock was last trading at Rs. 7475, representing a gain of 18 percent.

Q2FY22 Results

The firm had a strong second quarter of fiscal year 22.

For the quarter, the total operating income was $ 616.5 crore, up 47.2 percent year on year.

EBITDA margins were 10.2 percent, up 160 basis points from the previous quarter.

PAT for the period was Rs 32.3 crore compared to Rs 35 crore in Q2FY21.

Target and Valuation

“WIL share price has grown at ~6% CAGR from ~Rs 5,600 in October 2016, thereby outperforming Nifty Auto index in that time. We retain BUY; CV recovery play focused on exports, content increase. Target Price, and Valuation: We value the company at a revised target price of Rs 8,800 i.e. 50x P/E on FY23E EPS (earlier target price Rs 8,020),” the brokerage has said.

Key triggers for future price-performance:

• New product development, including connected, driverless, and electric vehicles, is one of the company’s top priorities.
• Mix and operating leverage pushed margins up to 15.5 percent and 18.2 percent, respectively (FY23E).

Sagar Cement

The brokerage firm recommends a buy with a target price of Rs.350. The stock was last trading at Rs. 265, representing a gain of 32 percent.

Q2FY22 Results

• In Q2FY22, higher gasoline prices resulted in a significant decrease in margins.
• During Q2FY22, the margin shrank by 1568 basis points year over year and 1081 basis points quarter over quarter to 16.5 percent, owing mostly to a substantial increase in gasoline prices.
• Non-trade demand was strong, resulting in a 13.2 percent increase in revenue year over year to Rs 368.9 crore. The rainy season had a negative impact on retail demand.
• PAT fell 58.6% year on year to Rs 20.8 crore (vs. I-forecast direct’s of Rs 35.3 crore).

“With capacity expansions into high growth regions like East & Central, we expect strong growth momentum going forward. Given the healthy outlook, cost efficiency, healthy b/s and relatively inexpensive valuations, we maintain BUY rating Target Price and Valuation: We value Sagar at Rs 350 i.e.8.5x FY23E EV/EBITDA,” the brokerage has said.

Disclaimer

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. This article is for educational purpose.

Why companies issue special dividends?

A special dividend may be paid by a company for a variety of reasons.

A special dividend may be paid if the company’s financial performance is especially strong. When a firm earns a lot of money, it may decide to pay a special dividend rather than reinvesting it in the business or using it for anything else.

Asset sales have been linked to special payouts in the past. When a corporation realises a substantial profit on the sale of a subsidiary or other asset, it may choose to distribute some or all of the earnings to shareholders rather than reinvesting them in the business.

When a company makes significant changes to its capital structure, it may declare a special dividend. Paying a single sum of money to shareholders can quickly boost a company’s debt ratio, which may be advantageous when transitioning to a new business model.

Tech Mahindra

Tech Mahindra’s export revenues account for more than 93 percent of its total revenue. It earns 47.5 percent of its income in the United States, 26.5% in Europe, and 26.5 percent in the rest of the globe. It’ll be interesting to see how US corporations spend their money on technology.

On October 25, 2021, the company declared a dividend of Rs 15.0 per share, with a record date of November 5, 2021. The stock returned 115.71 percent over three years, compared to 72.47 percent for the Nifty 100 index.

Tech Mahindra special dividend

Over a three-year period, the stock returned 115.71 percent, while the Nifty IT delivered investors a 147.04 percent gain.

Since March 21, 2007, Tech Mahindra Ltd. has declared 21 dividends.

Tech Mahindra Ltd. has declared an equity dividend of Rs 30.00 per share in the last 12 months. This translates to a dividend yield of 2.03 percent at the current share price of Rs 1477.85.

Procter & Gamble Health

Only 1.06 percent of trading sessions in the last 16 years had intraday drops of more than 5%. The company has enough cash on hand to cover its contingent liabilities. The company’s QoQ revenue increase was 29.42 percent, the best in the prior three years. The stock returned 86.58 percent over three years, compared to 82.17 percent for the Nifty Midcap 100. Over a three-year period, the stock achieved an 86.58 percent return, compared to 43.69 percent for Nifty Pharma.

Procter & Gamble Special Dividend

Procter & Gamble Health Ltd., founded in 1967, is a Mid Cap business in the Pharmaceuticals sector with a market cap of Rs 9,003.09 crore.

Since May 29, 2001, Procter & Gamble Health Ltd. has declared 26 dividends.

Procter & Gamble Health Ltd. has declared an equity dividend of Rs 230.00 per share in the last 12 months.

This equates to a dividend yield of 4.24 percent at the current share price of Rs 5423.75.

Triveni Turbine

Triveni Turbine Ltd., founded in 1995, is a Mid Cap business in the Engineering industry with a market capitalization of Rs 6,201.00 crore. Over a three-year period, the stock returned 88.04 percent, compared to 57.97 percent for the S&P BSE Capital Goods index. The stock returned 88.04 percent over three years, compared to 82.17 percent for the Nifty Midcap 100. On October 26, 2021, the company declared a dividend of Rs 0.4 per share, with a record date of November 9, 2021.

Since November 8, 2011, Triveni Turbine Ltd. has declared 19 dividends. Triveni Turbine Ltd. has declared an equity dividend of Rs 1.20 per share in the last 12 months. This translates to a dividend yield of 0.63 percent at the current share price of Rs 191.80.

3 Special Dividends Stocks To Watch Out In November 2021

Disclaimer

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.

Sun Pharma Advanced Research

Sun Pharma Advanced Research Business (SPARC) is a clinical-stage biopharmaceutical company dedicated to consistently enhancing patient care standards around the world through therapeutic and delivery innovation. The stock returned -12.38 percent over three years, compared to 82.17 percent for the Nifty Midcap 100. The company’s annual revenue increase of 198.43 percent surpassed the 45.34 percent CAGR for the previous three years.

Sun Pharma Advanced Research Business Ltd., founded in 2006, is a Mid Cap company in the Pharmaceuticals industry with a market capitalization of Rs 6,915.62 crore. Over a three-year period, the stock had a -12.38 percent return, compared to 43.69 percent for Nifty Pharma.

Mahanagar Telephone

Bharat Sanchar Nigam Limited, d/b/a MTNL, is a wholly-owned subsidiary of Mahanagar Telephone Nigam Limited, based in New Delhi, India. MTNL provides services in India’s metro cities of Mumbai and New Delhi, as well as the African island nation of Mauritius.

For the fourth quarter in a row, the company has lost Rs 688.7 crore. Stock returned 38.58 percent over three years, compared to 83.58 percent for the Nifty Smallcap 100. Over a three-year period, the stock returned 38.58 percent, compared to 78.18 percent for the S&P BSE Telecom index.

Kilpest India

Kilpest India Ltd is a significant agribusiness company in India. Kilpest is an ISO-certified firm with a presence in India in the agricultural market, which includes Crop Protection and Public Health Products, Bio Products, Micronutrients, and Mix Fertilizers. In the fiscal year ended March 31, 2021, the company had a ROE of 86.23 percent, exceeding its five-year average of 60.74 percent. The company’s annual sales growth of 653.53 percent surpassed its three-year compound annual growth rate of 112.21 percent. Stock returned 545.74 percent over three years, compared to 83.58 percent for the Nifty Smallcap 100.

HCL Infosystems

After three consecutive quarters of losses, the company made a profit of Rs 40.58 crore in the quarter ending June 30, 2021. The stock returned -49.71 percent over three years, compared to 83.58 percent for the Nifty Smallcap 100. Revenue fell by 70.67 percent on a quarter-over-quarter basis, the lowest level in the last three years. Stock returned -49.71 percent over three years, compared to 83.58 percent for the Nifty Smallcap 100.

PNB Gilts

PNB Gilts Ltd., founded in 1996, is a Small Cap business in the Financial Services industry with a market capitalization of Rs 1,166.47 crore. In the fiscal year ended March 31, 2021, the company generated a return on equity of 34.49 percent, surpassing its five-year average of 17.23 percent. The stock returned 128.17% over the last three years, compared to 83.58 percent for the Nifty Smallcap 100.

Since July 3, 2001, PNB Gilts Ltd. has declared 24 dividends. PNB Gilts Ltd. has given an equity dividend of Rs 10.00 per share in the last 12 months. This translates to a dividend yield of 15.43% at the current share price of Rs 64.80.

5 Small-Cap Stocks With High ROCE Annual Percentage

Conclusion

Although ROCE is a key statistic for determining shareholder value, it is rarely included in annual reports. It has been noted that organizations with a higher ROCE than their industry have a relentless focus on driving their organizations to achieve it. All of their strategic and operational efforts, including performance measures across functions and levels, are linked to important ROCE value drivers including fixed asset productivity, working capital turns, and operating margins in such organizations.

BharatPe

BharatPe, an Indian merchant payment service, was valued at $2.85 million in a $370 million funding round led by Tiger Global, a US investment firm.

To enable offline merchants to accept electronic payments, BharatPe has developed a QR code-based payments service that uses India’s UPI infrastructure. It also provides working finance to small businesses and this year created its own card acceptance terminal, which has already been placed in over 50,000 locations.

Five of the seven current institutional investors – Coatue Management, Insight Partners, Sequoia Growth, Ribbit Capital, and Amplo – returned to the latest round, along with new investors Dragoneer Investment Group and Steadfast Capital.

CoinDCX

At a valuation of $1.1 billion, CoinDCX raised $90 million (INR 670 crores) in Series C fundraising. CoinDCX has now achieved the designation of ‘Unicorn,’ making it the first Indian crypto exchange to do so.

CoinDCX has been committed to making cryptocurrencies accessible to the Indian audience with simpler, secure, and compliant solutions since its beginning in 2018. It has onboarded over 3.5 million users so far, and on track to fulfil goal of onboarding 50 million Indians by the end of the year

Furthermore, the Covid-19 pandemic enticed many investors to invest in cryptocurrencies because of their lucrative yields and decentralised nature. Since its beginning, CoinDCX has amassed a user base of over 3.5 million people thanks to a combination of these characteristics.

Ofb Business

Ruchi Kalra, Vasant Sridhar, Bhuvan Gupta, and Nitin Jain launched OfBusiness, which provides raw material procurement services and finance to small and medium companies (SMBs). Ofbusiness, a B2B firm based in Gurugram, has reached the unicorn club after raising $160 million from SoftBank’s Vision Fund 2.

According to a press release from the firm, existing investors Falcon Edge Capital and Matrix Partners also participated in the round. By September 2021, OfBusiness hopes to be profitable, with a revenue run rate of more than $1.1 billion. The company claims to be growing at a rate of four times every year.

Chargebee

Chargebee, the premier subscription billing and revenue management platform (in the SaaS industry), is the city’s newest unicorn, with a valuation of $1.4 billion following a new round of $125 million in series G funding. Zoho and Freshworkks are two other Unicorns from Chennai (both in the SaaS space).

Chargeebee’s customer portfolio includes Okta, Freshworks, Calendly, Study.com, and thousands of other high-growth subscription businesses in verticals ranging from vertical and horizontal SaaS to D2C e-commerce, OTT streaming, e-learning, publishing, and others, in over 60 countries, selling to end customers all over the world.

Digit

With a valuation of US$1.9 billion, Digit Insurance, a general insurer founded in 2017, has become India’s first unicorn of 2021.

A unicorn is a privately held startup with a market capitalization of more than $1 billion.

Digit’s premium income increased by 31.9 percent to US$186 million from April to December 2020, according to a statement, and the company has served over 15 million consumers since its establishment. Despite the economic downturn that afflicted other businesses, the insurance was profitable in the first three quarters of fiscal year 20-21.

Groww

Groww, an investment platform, raised $83 million in a Series D funding round led by Tiger Global Management, valuing the company at more than $1 billion. Sequoia India, Ribbit Capital, YC Continuity, and Propel Venture Partners were among the existing investors in the round.

Groww, which was founded in 2017, claims to have over 1.5 million registered members in over 900 cities. By simplifying the onboarding process, the company makes it simple for consumers to invest in stocks, mutual funds, ETFs, IPOs, and gold. It debuted stocks with an easy-to-use interface for do-it-yourself (DIY) investors in June of last year. Groww competes with online stock brokerages Zerodha and Upstox, as well as Paytm Money, One97 Communications Ltd’s wealth management subsidiary, which controls Paytm.

CRED

Cred, a fintech startup, has raised $215 million in a fundraising round led by new investment Falcon Edge Capital and existing investor Coatue Management LLP, valuing the company at $2.2 billion. Cred’s current Series D financing comes after the Kunal Shah-led startup secured $81 million at a $806 million valuation just a few months ago. DST Global, RTP Global, Tiger Global, Greenoaks Capital, Dragoneer Investment Group, and Sofina were among the new investors, as were current investors DST Global, RTP Global, Tiger Global, Greenoaks Capital, Dragoneer Investment Group, and Sofina.

Cred was created in 2018 to make it easier for customers to pay their credit card bills and earn incentives. Since then, it has expanded into financing via Cred Cash, as well as online commerce and brand discovery via its ‘Store’ and ‘Discover’ platforms.

Acko

Acko General Insurance, a digital insurance provider, said on October 28 that it has secured $255 million in a Series D round headed by General Atlantic and Multiples Private Equity. With this financing, the firm became the 34th startup in India to become a unicorn in 2021, bringing its worth to $1.1 billion.

A unicorn is defined as any privately held company with a valuation of $1 billion or more.

The round also includes current investors Intact Ventures and Munich Re Ventures, as well as the Canada Pension Plan Investment Board and Lightspeed. The Company is valued at USD 1.1 billion as a result of this fundraise. The entire amount raised by Acko is now $450 million.

Mutual funds have emerged as the go to option during the outbreak with surplus funds to multiply their wealth and the momentum remains intact amid the current bull run we are into. While the current times, throw a number of questions in the minds of mutual fund investors whether they should book profits, discontinue with their current SIPs, bull or bearish sentiment in the market should never provoke you to redeem or offload your investments.

Now as you very well know mutual funds can help you multiply your wealth be also put a simple rule that will help you ascertain 3 aspects related to your investment into mutual funds including:

1. Amount you would need to save on a month on month basis to reach your desired financial goal.

2. For how long you would need to invest.

3. At what rate you would likely see your money growth say to reach a target goal of Rs. 1 crore.

Understanding 15-15-15 rule in mutual fund investment

The rule uses figure 15 thrice reflecting all the 3 variables discussed above i.e. growth rate, number of years of investment and growth rate. So for accumulating a corpus of Rs. 1 crore, the annualized growth of 15 percent and investment for 15 years i.e. 15*12 months and a sum of Rs. 15000 per month shall help in reaching the target gold.

So, here on the investment of 27 lakhs made over the tenure of 15 years one can gain up to Rs. 73 lakhs. For a better realization of your targeted goal, you are advised to discount in the inflation aspect and target the inflation adjusted amount for that specific goal.