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Q2FY22 results of Engineers India Ltd.

According to the brokerage, the company’s “Execution on HPCL Barmer remained low as LSTK execution during Q2FY22 fell 12.3% YoY to Rs3bn. Consultancy execution was also subdued with a muted 1.8% YoY growth to Rs3.5bn over a low base. The margin for the segment contracted 156bps to 25.5%. For LSTK, although the margin expanded by 66bps, it remained low at 2.5%.”

ICICI Securities has stated in its research report that “The company provided Rs129mn during H1FY22 (Rs1.7bn in FY21) for any likely principal default under employee provident fund trust. This led to employee cost, as a proportion of sales, expanding 450bps hurting the overall margins, which declined 200bps YoY to 9.3%. Additionally, other income fell 47% YoY, further impacting the earnings, which shrunk 36% YoY.”

The broking firm also reported that the “Company won two large orders from CPCL Nagapattinam comprising of ~Rs10.4bn out of the total order inflow of Rs11.7bn in Q2FY22. With this, the total order book now stands at Rs80bn (2.4x TTM sales). Some large orders in the near term pipeline include one medium-sized order from Numaligarh; BPCL-related umbrella order of ~Rs2.5bn; HMEL’s petrochemical expansion (Rs6bn-7bn); and MRPL’s petchem expansion.”

Buy Engineers India Ltd with a target price of Rs 109

ICICI Securities claims in its research report that “The current valuation at 11x FY22E and 13.6x FY23E earnings is benign given the strong balance sheet with 22% RoE projection for FY23E. Accounting for the high cash balance, we value the core business separately and add back the cash with 70% weightage factoring in the risk of any likely further investment towards asset ownership. Due to lower execution and muted earnings during Q2FY22, we cut our earnings estimates for FY22E and FY23E by 9% and 6% respectively.”

The brokerage has further added that “Given that the Ramagundam facility has commenced operations, we have also factored in the company’s 26% stake worth Rs4.5bn into our valuation as well as the investments in NELP and Numaligarh. We arrive at our target price of Rs109, implying a multiple of 15x to FY23E core earnings. Delay in order finalisation, loss of market share and delay in execution are some of the major risks to our view.”

Disclaimer

The stock has been picked from the brokerage report of ICICI 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.

Q2FY22 results of Ipca Laboratories Limited

According to the brokerage, the company’s “Revenues grew 13.5% YoY to Rs 1544.4 crore (I-direct estimate: Rs 1591crore). Strong YoY growth of 30.4% in domestic formulations to Rs 698.2 crore (I-direct estimate: Rs 621.2 crore) was offset by 3.7% YoY de-growth in export formulations to Rs 351 crore (I-direct estimate: Rs 404.5 crore) along with API sales decline of 5.6% YoY to Rs 359.7 crore (I-direct estimate: Rs 430.8 crore).”

ICICI Direct has said in its research report that the company’s “EBITDA margins declined 279 bps YoY to 23.7% (I-direct estimates of 24.4%) due to lower gross margins (down 272 bps YoY). Subsequently, EBITDA grew 1.5% YoY to Rs 365.6 crore (I-direct estimate: Rs 388.9 crore). Delta vis-à-vis I-direct estimates were mainly due to lower than expected topline performance and margins. PAT de-grew 6.3% YoY to Rs 250.2 crore (I-direct estimate: Rs 289.6 crore). Delta vis-à-vis EBITDA was mainly due to higher tax rate being partially offset by higher other income.”

Key triggers for future price performance of Ipca Laboratories Ltd. according to ICICI Direct

• Incremental growth in other therapies (excluding malaria), especially non-communicable diseases like pain management, cardio-diabetology, etc, the overall portfolio is poised for steady growth.
• Sustained traction from branded and generics exports sales with a revival in EU is likely to mitigate the US void.
• Commissioning of Devas plant and additional capacities from Ratlam.
• US traction will take longer due to USFDA import alerts for the Ratlam facility that is the only API source for Silvassa and Pithampur formulations.

Q2FY22 Earnings Conference Call highlights of Ipca Laboratories Ltd According to ICICI Direct

• Domestic formulations grew 30.4% YoY: Segment wise YoY growth: Pain-management: 33%, cardio & antidiabetic: 13%, anti-bacterial: 37%, dermatology: 65%, antimalarial: 75%, cough & cold: 95%.
• Segment wise percentage of revenue: Pain management: 47%, cardio & anti-diabetic: 17%, anti-bacterial: 8%, dermatology: 5%, anti-malarial: 7%, cough & cold: 4%.
• Gross margins were affected by – Rise in raw material cost (in some cases two to threefold). The management has not indicated at any respite in inflated raw material cost and rise in packaging, logistic and power cost.
• The management guided that Q3 would remain impacted for APIs with a possible recovery from Q4.
• The management maintained its guidance for domestic business in FY22 while withholding the guidance of ~ 25% FY22 EBITDA margins.
• Devas is expected to be operational in FY23 while the Ratlam facility will be operational by Q3FY22. API capacity will increase by 20% post-completion of both projects.

Buy Ipca Laboratories Ltd with a target price of Rs 2490

ICICI Direct in its research report has said that “Ipca’s share price has grown by ~4.3x over the past five years (from ~Rs 488 in June 2016 to ~Rs 2121 levels in November 2021). Maintain BUY due to good traction in domestic formulations and sustainable growth amid some margin pressure in the medium term.”

“Quarterly performance gyrations notwithstanding, the company remains a decent player with a judicious mix of strong domestic franchise and a spread out exports model with a healthy balance sheet. Going ahead, with firm growth tempo in domestic formulations, good prospects both for API exports, formulation exports, we expect further improvement in financial parameters” ICICI Direct claims.

“We value Ipca at Rs 2490 i.e. 26x P/E on FY23E EPS” the brokerage has said.

Disclaimer

The above stock was picked from the brokerage report of ICICI 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.

Hedge Against inflation?

What would you say if I tell you that in 7 Years the value of Cash that you hold will become half?

Investors view bitcoin as digital gold and a hedge against inflation, expecting it to appreciate over time over-performing the current inflation rate. The same stands for Gold but it has not performed well in the past few years.

Below are 4 features that makes Bitcoin not just similar but a better asset than Gold

● Rarity: Bitcoin is rare. It cannot be created at will; there are only 21 million of them, and no one can create more. That means that no government can control it or fake it. No one is going to create more gold which will be feasible.The scarcity of gold changes depending on how much you put into finding it.

● Durability – Both bitcoins and gold are almost perfectly durable. As long as the internet operates, bitcoin will be in use. As far back as it can be traced, gold has been used to make jewelry, trade, etc.

● Divisibility – Bitcoin can be divided into individual satoshis, with 100,000,000 satoshis making up 1 BTC. Gold cannot be divided as easily or as precisely but it can be minted in smaller denominations

● They are hard to fake – Bitcoin and gold can’t be counterfeited and duplicated. Bitcoin is easy to recognize and impossible to counterfeit. Gold is pretty recognizable, though it must be tested for purity under some circumstances.

Conclusion

Gold can give you insurance against inflation and overvalued stock markets. Crypto analysts and experts believe that Bitcoin is the most asymmetric investment opportunity on the face of the planet right now. The upside in investing in Bitcoin is so much higher than the potential downside, that no other investment even comes close.

Manoj Dalmia, is the Founder and Director, Proaasetz Exchange.

Disclaimer

Investing in crypto currencies is extremely risky and investors are advised caution. It also remains largely unregulated in India. Investors must therefore exercise due caution. Greynium Information Technologies Pvt Ltd the author not liable for any losses caused as a result of decisions based on the article. Investors should seek professional advise before investment.

Q2 financial performance of Fine Organic Industries Ltd.

According to the brokerage, the company’s “Revenue grew 23/62% QoQ/YoY to INR 4.4bn, on the back of strong domestic demand, continued traction in exports driving volumes, and higher realisations. The contribution of exports to the total revenue was 60% in H1FY22. Gross margin came in at 33.3% (+104/- 431bps QoQ/YoY) in Q2, improving sequentially as customers are now accepting price hikes on account of higher raw material costs and higher freight costs.”

The brokerage has clarified that the company’s “EBITDA came in at INR 0.7bn, +41/+43% QoQ/YoY, with EBITDA margin improving sequentially to 16.7% (+212/-223bps QoQ/YoY), owing to lesser opex. APAT was INR 0.5bn (+39/+60% QoQ/YoY).”

Buy Fine Organic Industries Ltd. with a target price of INR 4,220

HDFC Securities in its research report has said that “Our BUY recommendation on Fine Organic Industries (FOIL) with a target price of INR 4,220 is premised on constant focus on R&D, diversified product portfolio, capacity-led expansion growth opportunity, and leadership in oleo-chemical based additives in the domestic and global markets with a loyal customer base.”

“We expect FOIL’s PAT to grow at a 41% CAGR over FY22-24E, led by a 36% CAGR in EBITDA. In the absence of any major Capex in the coming years, the RoCE would expand from 20% in FY22E to 29% in FY24E. Q2 EBITDA/APAT was 26/37% above our estimates, owing to a 22% rise in revenue, lower-than-expected raw material costs, lower-than expected depreciation and higher-than-expected other income. Q2 financial performance: Revenue grew 23/62% QoQ/YoY” the brokerage has further claimed.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities Ltd. 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.