PC Jeweller Ltd.    
09 Dec 2019, 07:16PM
24.80
-4.80%
Crisil downgrades PC Jeweller's credit ratings to default

CRISIL Limited has downgraded PC Jeweller's long term and short terms rating to the bank loan facilities of the Company to CRISIL D (default). Crisil said that the downgrade in the ratingis due to invocation of letters of credit, the company's overutilization in working capital limits for more than 30 days, and the fact that the liquidity profile of the group has deteriorated in past few months on account of cash flow mismatches. There has also been rising concern of regulation in the sector, including further increases of import duty on jewellery. 

The company however said that after a weak September quarter, Q3 has seen a cash flow recovery due to the festive season. "The cash flows have started," the company said, "by the end of November, 2019 PC Jeweller has adjusted 90% of the devolved SBLCs".

PC Jeweller Ltd. has lost -24.51% in the last 3 Months
Pharmaceuticals & Biotech.    
SECTOR | 09 Dec 2019, 02:00PM
Industry Leaders in September 2019 Quarter Results

Most companies have announced their September 2019 quarter results by now, and the outlook is a mixed one in a slowing economy. National Statistical Office data showed India’s GDP growth rate slowing down to 4.5% in Q2FY20. It is the slowest growth rate for the economy in the last six and a half years. 

As we near the end of the third quarter, let’s have a quick review over the industries that outperformed in Q2FY20:

  • Pharmaceuticals: The pharmaceutical industry in India expanded 11.5% in Q2FY20 as per market research firm AIOCD-AWACS. Volume growth stood at 3.2%, while price growth was at 5.5%. Around 147 companies declared their September quarter results in thepharmaceuticals industry, out of which 88 firms posted positive profit growth while 59 declared negative profit growth. 

The total revenue growth for these companies was 11.1% with total EBITDA growth of 18.8% and total operating profit growth of 17.5%.Sun Pharmaceuticals,Aurobindo Pharma and Dr. Reddy’s Laboratories are on top of the list  based on the quarter operating revenue. Jenburkt Pharmaceuticals, Alembic and Amrutanjan Health Care are on top of the list based on net profit QoQ growth while Medi-Caps, Unichem Laboratories and Kabra Drugs have witnessed the highest net loss among the rest of the companies in the pharmaceutical industry.

  • Finance (including NBFCs): The diversified financial sector of India is undergoing a rapid expansion both in terms of strong growth of existing financial services and the entering of new entities in the market. Around 150 companies declared their September quarter results in finance (including NBFCs), out of which 76 companies published positive profit growth and 73 companies posted negative profit growth.

The total revenue growth for the finance industry was 11.1%.Power Finance Corporation, REC Ltd, Bajaj Finance, Reliance Capital and Shriram Transport are on the top list of the industry based on the quarter operating revenue in Q2FY20. Mehta Integrated Finance, Balmer Lawrie Investments and Polytex India are on the top based on net profit QoQ growth while Bampsl Securities, EPIC Energy and Dhenu Buildcon Infra Ltd  performed badly with the highest net loss compared to the rest of the companies in this space.

  • Real Estate: Real Estate is among the most globally recognized sectors. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The investment in real estate rose to Rs 39,182 crore, up 19% from last year during the first three quarters. As per data from Cushman & Wakefield India, private equity investment stood at Rs 9,983 crore for Q2FY20.

Around 106 companies declared results from real estate sector, out of which 48 companies posted positive results and 57 negative results. Total revenue growth for the industry for Q2FY20 was 0.8%, while total EBIDT growth was 12.8% and total operating profit growth 11.6%.Prestige Estates, DLF and Indiabulls Real Estate are on the top list of the real estate industry based on operating revenues of the quarter declared in the September quarter results. Based on net profit QoQ growth, RTCL Ltd, Maxheights Infrastructure and Prime Property Development are at the top while Satra Properties, Radhe Developers and Prozone Intu Properties are the bottom three.

  • Specialty Chemicals: The specialty chemicals business performed well with strong demand witnessed in the overseas markets. This industry is likely to clock a growth rate of 12-13% over the next five years with the intensity of specialty chemicals in end-use domestic markets to rise, as per a report. “However, slowdown in the global economy is likely to hamper the overall growth potential for chemicals. Nevertheless, despite shutdowns in China and lack of capacity additions in other developed countries, India still stands to benefit in the export market,” CRISIL noted. 

Around 72 companies declared September quarter results in the specialty chemicals industry, out of which 42 reported positive profit growth and 30 posted negative profit growth.BASF India, Pidilite Industries and Aarti Industries are on top of the list based on the operating revenue declared for the quarter. Based on the net profit QoQ growth, Generic Pharmasec, Vikas Ecotech and Crestchem are on the top list while AVI Polymers, CJ Gelatine Products and Organic Coatings are on the bottom list reporting negative net profit QoQ growth.

  • IT Consulting & Software: India is the leading source destination for the IT industry with a market share of around 55%. Around 68 companies declared September quarter 2019 results in IT Consulting & Software, out of which 37 companies reported positive profit growth while 30 other companies posted negative profit growth. 

The total revenue growth for the industry was reported at 9.3%, total EBIDT growth at 7.6% and total operating profit growth at 7.2%. Tata Consultancy Services, Infosys, HCL Technologies, Wipro and Tech Mahindra are the top five performers in the stock market based on operating revenues for the quarter. Based on the net profit QoQ growth, CESC Ventures, 3i Infotech and Trejhara Solutions saw the strongest performance, while Empower India, Bharatiya Global Infomedia and Southern Infosys bottomed out with negative figures.

Dr. Sunil Sinha, Principal Economist of India Ratings and Research commented on the second quarter performance, “The 2QFY20 GDP growth at 4.5% is in line with India Ratings’ (Ind-Ra) projection of 4.7%. Also as expected the slowdown in GDP growth is largely on account of the slump in consumption expenditure and degrowth in exports. But for government expenditure growth, 2QFY20 GDP growth would have been much lower. Investment as measured by gross fixed capital formation in any case has been down for the last two quarters and again came in at just 1.0%. This shows that the economy is passing through a declining growth momentum and there is no easy way out. Therefore Ind-Ra believes under the current domestic and global macro environment the government will have to do the heavy lifting to support growth”. 

Dish TV India Ltd.    
09 Dec 2019, 12:13PM
13.55
7.97%
Top Gainers in the News: Dish TV India, Va Tech Wabag, Adani Transmission, EID Parry, Coromandel

by Ritmbarah Arora

Dish TV India: The shares of Dish TV India are among the top gainers today in the stock market. The share price surged over 15% at Rs 14.4 with around 60.6 million shares in volume traded today so far. The company’s share price advanced after Dish TV India clarified on the CARE rating downgrade. The company said the default in debt repayment was on account of a temporary cash shortfall due to peak payment commitments to suppliers.

“The company’s deferral to service the loan amount is due to bunching of repayment obligations and utilization of funds for other business requirements including, both capital expenditure and payment of operating liabilities to broadcasters and suppliers,” Dish TV India said. The Group CEO, Anil Dua also commented on the debt repayment timeline saying, “The company has debt of Rs 2,500 crore at current level and will be paying Rs 600 crore by March-end”. As per data on Trendyne, the shares of Dish TV India increased by 8.6% since the last week and is listed in 21 screeners. Link

Va Tech Wabag Ltd: The shares of Va Tech Wabag advanced 8.7% at Rs 14.4 as of this writing. Around 4.7 lakh shares in volume have been traded today so far. The share price of the company has increased by 2.9% since the last week as per Trendlyne data. The company has recently got an order of Rs 217 crore from Bangalore Water Supply and Sewerage Board (BWSSB). The company mentioned that Rs 194 crore worth order is for the construction of 60 MLD waste water treatment plant at K&C Valley with power generation and the balance Rs 23 crore is for operation and maintenance for seven years.

The water treatment firm, Va Tech Wabag has witnessed a fall in its revenues for the year 2019 at Rs 2,781 crore. Va Tech Wabag is listed in 18 screeners on Trendlyne. Link

Adani Transmission Ltd: The shares of Adani Transmission rose 6.5% at Rs 339.5 and is among the top gainers today in the stock market. Around 8.9 lakh shares in volume have been traded today so far. The share price has increased by 9.5% since last week, as per Trendlyne data. The company incorporated a wholly owned subsidiary namely, ‘Adani Electricity Mumbai Services’ (AEMSL) on December 6, 2019. AEMSL is yet to commence its business. Adani Transmission is listed in 18 screeners on Trendlyne. Link

EID Parry (India) Ltd: The shares of EID Parry (India) surged 6.6% at Rs 204.4 in the stock market today as of this writing. Around 1.5 million shares in volume have been traded today so far. As per Trendlyne data, the share price has increased by 15% since the last week. EID Parry had posted a net profit of Rs 6 crore for Q2FY20 as compared to Rs 11 crore for Q2FY19. The revenue of the company grew 26% at Rs 443 crore as against Rs 351 crore in Q2FY19. EID Parry is listed in 25 screeners on Trendlyne.

Coromandel International: The shares of Coromandel International are among the top gainers today in the stock market. The share price rose 5.1% at Rs 521.2 while around 2.5 lakh shares in volume have been traded today so far. As per Trendlyne data, the share price increased by 9.8% since the last week. Coromandel International is listed in 24 screeners on Trendlyne.

Dish TV India Ltd. has lost -42.09% in the last 3 Months
Trendlyne Marketwatch    
09 Dec 2019, 09:59AM
Markets close higher, Axis Bank CFO resigns

Markets closed higher. Nifty 50 closed at 11938.80 (17.3, 0.2%) , BSE Sensex closed at 40487.43 (42.3, 0.1%) while the broader Nifty 500 closed at 9672.05 (2.7, 0.0%). Market breadth is in the red. Of the 1664 stocks traded today, 659 showed gains, and 916 showed losses.

  • HDFC Life Insurance management has met with Rakesh Jhunjhunwala and Vijay Kedia's investment companies (RARE Enterprises and Kedia Securities) as part of its investment raising efforts. Neither Jhunjhunwala nor Kedia currently have significant public holdings in the insurance space. Via Discover.
  • Axis Bank CFO Jairam Sridharan has resigned. 
  • Markets are up after a muted morning. KNR Constructions is up after the firm signed a concession agreement of HAM project with a bid cost of Rs 920 crore with NHAI.
  • Dish TV, Va Tech Wabag among top gainers.
  • Nifty 50 was trading at 11919.90 (-1.6, -0.0%) , BSE Sensex was trading at 40447.35 (2.2, 0.0%) while the broader Nifty 500 was trading at 9665.10 (-4.3, -0.0%). Market breadth is horizontal. Of the 1475 stocks traded today, 656 were gainers and 711 were losers.
Riding High:

Largecap and midcap gainers today include Adani Transmission Ltd. (332.10, 4.14%), MphasiS Ltd. (874.00, 3.62%) and Mahindra & Mahindra Financial Services Ltd. (338.50, 3.20%).

Downers:

Largecap and midcap losers today include PNB Housing Finance Ltd. (446.60, -8.00%), Aditya Birla Capital Ltd. (95.90, -7.07%) and HDFC Asset Management Company Ltd. (2988.80, -6.08%).

Volume Shockers

21 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Va Tech Wabag Ltd. (191.95, 15.81%), Bliss GVS Pharma Ltd. (156.70, 11.89%) and EID Parry (India) Ltd. (208.40, 8.65%).

Top high volume losers on BSE were PNB Housing Finance Ltd. (446.60, -8.00%), Aegis Logistics Ltd. (188.45, -1.77%) and Century Plyboards (India) Ltd. (163.90, -1.35%).

La Opala RG Ltd. (135.50, 1.19%) was trading at 20.9 times of weekly average. Solar Industries India Ltd. (1037.00, 0.32%) and Varroc Engineering Ltd. (413.75, -1.04%) were trading with volumes 15.3 and 5.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

5 stocks took off, crossing 52 week highs, while 14 stocks were underachievers and hit their 52 week lows.

Stocks touching their year highs included - Adani Transmission Ltd. (332.10, 4.14%), Coromandel International Ltd. (507.90, 2.38%) and Gujarat Gas Ltd. (230.45, 1.41%).

Stocks making new 52 weeks lows included - Allahabad Bank (21.50, -3.59%) and Chennai Petroleum Corporation Ltd. (115.30, -0.04%).

9 stocks climbed above their 200 day SMA including Bliss GVS Pharma Ltd. (156.70, 11.89%) and Sun Pharma Advanced Research Company Ltd. (162.30, 5.53%). 19 stocks slipped below their 200 SMA including JK Tyre & Industries Ltd. (74.50, -3.62%) and Tata Consultancy Services Ltd. (2058.25, -3.08%).

 
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The Baseline    
06 Dec 2019
Screener: Stocks with Sloan Ratios in the danger zone

The Sloan Ratio Screener is a Red Flag screener that looks at companies with an unusual amount of accruals in earnings. 12 companies qualify - all 12 companies are also classified as IE (Ineligible) for a Durability Score because of issues with their balance sheets. 

The Sloan Ratio is a metric that looks at company earnings, and identifies stocks that have red flags in their numbers. The ratio checks specifically whether the earnings of a company contain a lot of non-cash value - accruals that are items like changes in account receivables, unbilled service fees (where no cash has been exchanged). 

Shareholding Screener (Promoters)
Stockpromoter Holding(Sep 2019)promoter Holding(Jun 2019)Change from Jun 2019
73.76%13.30%60.46
70.04%33.91%36.13
75.00%57.00%18.00
37.01%32.61%4.40
79.28%75.00%4.28
See all
Stockpromoter Holding(Sep 2019)promoter Holding(Jun 2019)Change from Jun 2019
25.35%53.93%-28.58
22.37%35.79%-13.42
10.48%22.00%-11.52
30.83%42.17%-11.34
32.50%42.50%-10.00
See all
StockPledged
DHFL100.00%
RELINFRA98.11%
GAYAPROJ97.62%
FLFL97.42%
RELCAPITAL96.39%
See all
StockCurrent Pledge(Sep 2019)Previous Pledge(Jun 2019)Change from Jun 2019
100.00%0.00%100.00
76.65%0.00%76.65
97.42%26.38%71.04
48.54%0.00%48.54
51.29%13.02%38.27
See all
Agro Tech Foods Ltd.    
06 Dec 2019
609.50
-0.16%
Despite the popcorn, Agro Tech Foods has yet to see growth pop

by Suhani Adilabadkar

Affiliated to Conagra Foods and also held by Rakesh and Rekha Jhunjhunwala, Agro Tech Foods offers popular brands ACT II Popcorn, Sundrop Peanut Butter, Sundrop oil and ACT II Nachoz. The company offers products under categories such as edible oil, spreads, ready to cook, ready to eat snacks, puddings and desserts. 

The firm has a manufacturing network of five plants across the country at Jhagadia, Kashipur, Unnao, Kothur and Mangaldai. Agro Tech Foods is also in the process of expanding its manufacturing base by adding two more plants, one in Chittoor, Andhra Pradesh and another in Kolkata. The company has three wholly owned subsidiaries, Sundrop Foods Private Ltd, Agro Tech Foods Bangladesh and Sundrop Foods Srilanka. 

Primarily known as a refined oil company, it has been rapidly scaling up its food business with the aim of becoming one of the best performing food companies in India. Overall revenues however, have been flat in recent years. 

Quick Takes:

  • The company offers popular brands, ACT II Popcorn, Sundrop Peanut Butter, Sundrop oil and ACT II Nachoz.

  • The company is aiming towards becoming a Rs. 500 crore business in the next few years. 

  • The oil business contributes roughly two thirds of total revenues, and consequently has a big impact on the overall revenue and profitability growth of the company. 

  • Revenues have been flat. The oil business has low entry barriers and being a commodity business, is highly susceptible to volatile price variations. 

  • In the long run, growth will have to be driven by the food business with higher investments, introducing new products and strengthening its retail network. 

The September Quarter was a mixed one for Agro Tech

Agro Tech Foods reported standalone revenue from operations of Rs. 204 crore in Q2FY20 against Rs. 211 crore same period previous year, declining 3% YoY. Operating profit stood at Rs. 18.4 crore compared to Rs. 17.8 crore same period previous year growing 4% YoY. Operating margin expanded 58 bps coming out at 9.0% in September quarter FY20 against 8.4% corresponding quarter previous year. 

Aided by stagnant depreciation expenditure, low finance costs and deferred tax credit, PAT came out strongly despite revenue falling, rising 70% YoY and 119% sequentially. Net Profit or PAT stood at Rs. 15.4 crore for September quarter compared to Rs. 9.1 crore same period previous year. Agro Tech Foods has been reporting stagnant numbers over the past few years, revenue growing at a CAGR of 1.5% for the past five years, but the company is still in the prized kitty of stock market czar, Rakesh Jhunjhunwala. 

The revenue engine has been sputtering

Agro Tech Foods is the pioneer in popcorn category with more than 50% market share. The company over the past few years has built a sizeable foods portfolio apart from oil business. Sundrop edible oil gives it 45-50% market share in the premium oil segment and with the brand Crystal together constitutes roughly two thirds of total revenues.

Ready to cook (RTC) which mainly constitutes ACT II popcorn reported value growth of 14% YoY largely driven by volume growth of 12% YoY in category performance. Ready to eat (RTE) category with RTE Popcorn, tortilla chips and extruded snacks came out with lower revenue growth of 7% YoY and volume growth of 14% YoY. 

This segment has been impacted by supply chain issues on Tortilla Chips and also to some extent on extruded snacks. RTE popcorn on the other hand delivered growth of 38% YoY. In the spreads category, peanut butter revenues increased 9% YoY with volume growth of 12% YoY with the business continuing to demonstrate steady growth momentum. Coming to the edible oil business, there was a decline in revenues and volumes both for Sundrop and Crystal edible oil brands. Revenues dropped 5% and 22% whereas volumes fell 3% and 23% respectively YoY in Q2FY20. 

Agro Tech Foods has not been able to fire up its revenue engine over the past few years. The company has been reporting lacklustre revenue and PAT growth for the past five years. Revenue for the past four quarters has been either been in the negative zone or stagnant sequentially. The oil business has been holding back quarter performance , reporting low or flattish growth. Edible oils have low entry barriers and being a commodity business, is highly susceptible to volatile price variations. With the oil business contributing roughly two thirds of total revenues, it impacts the overall revenue and profitability growth of the company. 

The management is aware of this drawback and has been formulating a strategy to nullify the vulnerability of this verical. Foods with the categories ready to eat, ready to cook and spreads have been introduced and being scaled up to provide resilience. The company has recently introduced two new products, sweet corn popcorn in RTC and sundrop popz cereals in RTE contributing 20pbs and 180 bps respectively of food growth in Q2FY20. In addition to these two products, the company has started commercial production for Sundrop Cocoa Nut, a choco almond spread and Sundrop Duo for entering confectionary market. Altogether, these four products will contribute 500 bps growth to food business. 

With respect to the spreads business which currently is approximately Rs. 50-60 crore, the company is looking forward to growing it to Rs. 100 crore in the next few years. Spreads has a market of about Rs. 2050 crore, and has sub-segments such as honey which is about Rs. 1220 crore, jams worth Rs. 394 crore, nuts and seeds worth Rs. 272 crore and chocolate spread worth Rs. 162 crore. 

With presence in the nut and seed segment through its Sundrop peanut butter, the management keen on the choco spread segment, noting that the segment had been underperforming as products are being made available at high price points. The company is targeting this space with plans to introduce chocolate, almond, cashew and their combinations in the spread category. Mr Sachin Gopal, MD and CEO, Agro Tech Foods added, “We will be having the strongest spread basket in the industry in the next 3-4 years”. 

Though the company  has not been providing the growth impetus needed in the edible oil business, the Sundrop brand is extremely well known, providing a healthy image rub off to other products and much-needed cash flows to sustain the scaling up of food business. In the long run, growth will have to be driven by the food vertical with higher investments, introducing new products and strengthening its retail network. In fact, the company aims to grow this into a 500 crore business, currently at around Rs. 225 crore, in the next few years.  Whether the food and snack business would be able to scale up and provide the requisite balance to its revenue platform, only time will tell.

 

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Agro Tech Foods Ltd. is trading above all available SMAs
The Baseline    
06 Dec 2019
Top Gainers in the News: MMTC, Eris, Bharti Infratel, FDC, Narayana Hrudayalaya

by Ritmbarah Arora

MMTC: The shares of MMTC Ltd are among the top gainers in the stock market today. The share price advanced 12.8% at Rs 20.3 while around 8.3 million shares in volume have been traded today so far. The trading volume was almost 50 times the 20-day average. Among the shares traded, 20% were at the ask price while other 29% at the bid.  

MMTC had placed a fresh order of 4,000 tonnes of onions from Turkey, as per an official statement. This order is in addition to the already placed order of 17,000 tonnes of onions, 11,000 tonnes from Turkey and 6090 tonnes from Egypt. As per the data on Trendlyne, the stock price has increased over 12.5% since the last week. MMTC is listed in 19 screeners on Trendlyne. Link

Eris Lifesciences: The shares of Eris Lifesciences advanced 5.7% at Rs 468.6 as of this writing. Around 1.4 lakh shares have been traded today in volume so far. The share price of Eris Lifesciences had already gained 3% on December 4 following the acquisition of trademark Zomelis. Citigroup has issued a ‘buy’ call on the stock in the long term and raised target price to Rs 750 from Rs 730. The company had reported consolidated sales of Rs 280.5 crore as against Rs 271.9 crore in Q2FY19. Net profit after tax was at Rs 92.7 crore in Q2FY20. The price of the stock has increased by 1.9% since the last week, as per Trendlyne data. Eris Lifesciences is listed in 15 screeners on Trendlyne. Link

FDC Ltd: The shares of FDC Ltd surged 5% to Rs 207.9 with around 1.2 lakh shares traded in volume so far. FDC Ltd is a pharmaceutical company engaged in the manufacture of specialized formulations and oral rehydration salts. The stock price has increased by 1% only since the last week, as per Trendlyne data. FDC Ltd is listed in 22 screeners on Trendlyne.

Bharti Infratel: The shares of Bharti Infratel rose 4.7% to Rs 257.5 and round 14.1 million shares in volume have been traded so far. The stock price has decreased by 6.8% since the last week, as per the data on Trendlyne. Bharti Infratel is listed in 11 screeners on Trendlyne.

Narayana Hrudayalaya: The shares of Narayana Hrudayalaya surged over 4% at Rs 309 as of this writing. Around 5.7 lakh shares in volume have been traded today in the stock market. Narayana Hrudayalaya plans to establish a 130 bedded hospital project in Nairobi, Kenya announced in 2016. The plan then couldn’t proceed due to the inability to fund the project by a financial institution partner. As per data on Trendlyne, the stock price has increased over 4% since the last week. Narayana Hrudayalaya is listed in 28 screeners on Trendlyne.

Trendlyne Marketwatch    
06 Dec 2019
LIVE: Markets close lower, JB Chemicals announces buyback

Markets closed sharply lower today after initial gains. Nifty 50 closed at 11914.15 (-104.3, -0.9%) , BSE Sensex closed at 40445.15 (-334.4, -0.8%) while the broader Nifty 500 closed at 9663.25 (-94.4, -1.0%). Market breadth is moving down. Of the 1656 stocks traded today, 436 were gainers and 1134 were losers.

  • Sheela Foam, Gujarat Gas among stocks that received recent upgrades from brokerages.

  • JB Chemicals & Pharma has announced a buyback of 29.54 lakh shares at a price of Rs 440, with an aggregate amount not exceeding Rs 130 crore marked for this buyback. The offer, which represents 9.33% of the total paid-up equity share capital, will start on December 16 and end December 30. 

  • Maruti Suzuki is down on the recall of nearly 63,500 vehicles, citing a potential problem with the motor generation unit.

  • YES Bank falls after Moody's downgrade of the bank's long-term foreign currency issuer rating to B2 from Ba3.
  • Shares of Allcargo Logistics are up, while Gati is down after Allcargo Logistics’s board approved the acquisition of 44.6 percent stake in Gati. The move gives ACL control of Gati's board and decision-making. 
  • Markets are higher today on expectations of the US and China reaching a trade deal. Nifty 50 was trading at 12044.30 (25.9, 0.2%) , BSE Sensex was trading at 40893.48 (113.9, 0.3%) while the broader Nifty 500 was trading at 9777.35 (19.8, 0.2%). Market breadth is in the green. Of the 1309 stocks traded today, 777 were in the positive territory and 448 were negative.
Riding High:

Largecap and midcap gainers today include Bharti Infratel Ltd. (252.50, 2.62%), Berger Paints (India) Ltd. (504.40, 2.21%) and Edelweiss Financial Services Ltd. (121.05, 2.07%).

Downers:

Largecap and midcap losers today include YES Bank Ltd. (59.60, -4.03%), Voltas Ltd. (675.25, -3.04%) and Vodafone Idea Ltd. (7.15, -2.05%).

BSE 500: highs, lows and moving averages

2 stocks took off, crossing 52 week highs, while 1 stock hit their 52 week lows.

Stocks touching their year highs included - City Union Bank Ltd. (234.65, 0.56%) and Max Financial Services Ltd. (533.00, 1.08%).

Stock making new 52 weeks lows included - Omaxe Ltd. (178.50, -0.81%).

8 stocks climbed above their 200 day SMA including Tata Metaliks Ltd. (601.00, 1.36%) and Grindwell Norton Ltd. (589.20, 0.56%). 6 stocks slipped below their 200 SMA including Tata Consultancy Services Ltd. (2108.80, -0.59%) and Housing and Urban Development Corporation Ltd. (38.15, 0.26%).

TCI Express Ltd.    
05 Dec 2019
782.00
1.03%
TCI Express has the advantage compared to its competitors

by Suhani Adilabadkar

TCI Express had reported strong September quarter results, showing  resilience despite slowdown concerns. The stock has gained 24% over the past one year and more than doubled investor wealth in the last five years.

TCI Express casts a wide web: it is one of India’s leading express logistics companies with the largest hub and spoke network, and offers express delivery solutions both domestically and internationally. The firm provides services, including surface express, reverse express, domestic and international air express and e-commerce express for automotive, pharmaceutical, retail, engineering, apparel, e-commerce and other industries. It has nearly 40,000 pickup and delivery points with about 5,000 containerized vehicles. 

Over the years, the company has expanded its coverage to almost 95% of India’s pin codes, with a network of 28 sorting centres, 500 express routes, 2,500 feeder routes and 700 branch offices.

Quick notes

  • Revenue from operations jumped 9% and operating profit stood at Rs. 31 crore rising 12.5% YoY in Q2FY20.

  • Profit after tax was Rs. 26 crores increasing 60% YoY and 42% sequentially. 

  • The company expects volume growth of about 10-11% in FY20. 

  • TCI Express has outlined capex of Rs. 400 crore in the next 5 years. 

  • The company has become debt free in the June quarter of FY20. 

Double digit profit growth in the September Quarter 

TCI Express reported good numbers for September FY20, with PAT and operating profit seeing double digit growth and revenue growth stable at 9% YoY. Revenue from operations was reported at Rs. 270 crore, compared to Rs. 247 crore in the same period last year. The jump was driven by an increase in SME customers. 

Operating profit stood at Rs. 31 crore compared to Rs. 27 crore in Q2FY19, growing 12.5% YoY with margin coming out at 11.4% expanding 36 bps YoY aided by operational efficiency and better working capital management. 

Profit after tax was Rs. 26 crores in Q2FY20, increasing 60% YoY against Rs. 16 crore the same quarter last year. Commenting on the September results, Mr. Chander Agarwal, MD, TCI Express said, “Despite the headwinds, we were able to deliver robust growth which can be attributed to our unique value proposition, strong partnership arrangement with vendors and support from our growing and diversified client base of SMEs”.   

At an advantage compared to competitors

The express logistics industry owes its origin to the United States. After the deregulation of air cargo transportation in the US in 1977, the express cargo industry witnessed phenomenal growth, expanding into other parts of the world, including Europe by the 1980s and other developing countries.

Express logistics provides guaranteed, fast, on-demand, integrated door-to-door distribution services. The industry has evolved from delivering parcels and documents to distributing specialised high-tech products using airways, roadways and other modes of transport for deliveries in the shortest possible delivery. The services offered include door-step pickup and delivery, domestic and international air express and reverse express i.e transfer of goods from end user to manufacturer.  The major industries which utilize these services are auto components, apparel and lifestyle, electronics, medical equipment and pharmaceuticals. 

In the Indian landscape, the major express players are market leader Blue Dart, FedEx, Gati and market runner up TCI Express.Blue Dart has seen its growth dented by the slowing e-commerce segment, its core air express segment hit by faster growth in surface express and high capex outlays. The stock is at its 52 week low with revenue growth stagnant and PAT declining 34% YoY in Q2FY20. Gati, another important player reported negative PAT of Rs. 10 crore and revenue declining 6% YoY in September quarter FY20. The stock has declined 30% over the past one year, and has recently gained only on murmurs of AllCargo Logistics acquiring a controlling stake. 

Runner up TCI Express on the other hand, has been seeing strong growth momentum, adding new branches, outlining aggressive capex plans for the next 5 years, adding new SME customers, expecting double digit volume growth and strong margins in FY20. 

As per the TCI Express management, the company is cautiously optimistic on the domestic economy. The company managed to report strong numbers even though July and August business were impacted by floods and the J&K shutdown. With respect to slowdown concerns, the company has seen a pick-up in all its verticals including its auto parts segment which is doing well. Speaking on strong growth momentum of the company, Mr Chander Agarwal said, “We are expecting double digit growth and strong bottom-line for H2”. He further added that volume growth is expected to be around 10-11% in FY20 and for EBDITA margins, target is to improve 100 bps every year and reach 15% EBDITA margin level in the next three years. 

TCI Express has added 15 new branches during the quarter, 25 in H1FY20, and aims to add another 40 branches in H2FY20 with the objective to penetrate in metro cities and tap more SME customers. The company has also outlined robust capex plans for FY20. Annual capex target is Rs. 80 crore and roughly Rs. 400 crore in the next five years mainly for investment in sorting centres and for automation, and enhancing technological capabilities. 

Adding more on sorting centers, Mr Agarwal said, “During the quarter, we held an official ground-breaking ceremony for our two new sorting centres at Gurgaon and Pune. Construction of the new 2 lakh sq.ft. sorting centre at Gurgaon and 1.5 lakh sq.ft. sorting centre at Pune, a total of 3.5 lakh sq. ft., are expected to be completed by the end of the current fiscal year with commercial operations projected to begin from Q1 FY2021”. 

The company has 28 sorting centers in total, of which 8 are owned and the rest are on lease. It intends to convert its sorting centers from leased to owned basis and add new sorting centers in cities like Delhi, Kanpur, Indore, Nagpur and Chennai. 

In fact, TCI Express aims to double its current 2 mn sq feet sorting centre area with the earmarked capex in the next few years.  The capex outlay is being funded by internal accruals as the company generates strong free cash flows which have increased from Rs. 14 crore in FY17 to Rs. 58 crore in FY19. TCI express has become debt free in June quarter FY20. 

The company is on a strong growth path in spite of headwinds and has been able to deliver consistent growth due to its strong operational efficiency, solid partnership with vendors and diversified SME client base. 

TCI Express’ timing is encouraging. Government efforts such as the five major industrial corridors planned across 15 states, development of 15 multimodal logistic parks, increasing the length of NH to 200,000 km and making India, the largest aviation market by 2030, would help the logistics industry as a whole significantly and also augment Rs 25,000 crore express logistics market, only the fittest players would be able to use these growth levers to hasten growth in the long run. 

TCI Express Ltd. has an average target of 890.00 from 2 brokers.
The Baseline    
05 Dec 2019
Top Gainers in the News: NESCO, Navabharat Ventures, Hathway Cable, Edelweiss

by Ritmbarah Arora

Nava Bharat Ventures: The shares of Nava Bharat Ventures are among the top gainers today. The shares surged 14.7% at Rs 80.3 with around 3.58 lakh shares traded today in volume so far. Ashwin Devineni, promoter of Nava Bharat Ventures acquired 81,000 shares on December 2 and 3. The company is a diversified group with businesses in metals manufacturing, power, mining, agribusiness and healthcare. The price of the stock has increased by 18.2% since last week. Nava Bharat Ventures is listed in 20 screeners on Trendlyne.

Nesco Ltd: The shares of Nesco Ltd advanced 7.8% at Rs 657.3 as of this writing. The share price touched its high at Rs 666.3 today. Around 1.17 lakh shares in volume have been traded today so far. Nesco posted a strong net profit growth, high net cash amid consistent operational cash flows in its September FY20 quarter results. Strong net profit growth of 50% YoY in the quarter was accompanied by operating cash flow post tax growth of 12% YoY. Nirmal Bang had recommended a ‘buy’ call for this stock with a target price of Rs 937 on November 13, 2019. The price of the stock has increased by 7.3% since last week. Nesco Ltd is listed in 19 screeners on Trendlyne.

Edelweiss Financial Services Ltd: The shares of Edelweiss Financial Services are among the top gainers today. The share price surged 5% at Rs 118.8 with around 1.8 million shares in volume traded today so far. The shares of the company had slumped 4.7% on December 3 and regained today in the stock market. Edelweiss Financial Services provides investment banking and advisory services and holding investments. The price of the stock has decreased by 1.9% since the last week. Edelweiss Financial Services are listed in 16 screeners on Trendlyne.  

Indiabulls Integrated Services: The shares of Indiabulls Integrated Services are gaining for the third day in a row. The share price advanced 5% at Rs 87.2 while around 1.73 lakh shares in volume have been traded today so far. The share price has been surging by 5% every day since Tuesday, December 3. The price of the stock has increased by 27.5% since the last week. Indiabulls Integrated Services is listed in 15 screeners on Trendlyne.

Hathway Cable & Datacom Ltd: The shares of Hathway Cable & Datacom surged over 5% at Rs 21.6 as of this writing. Around 8 lakh shares in volume have been traded today so far. Hathway Cable & Datacom is a cable television service operator acquired by Hathway Investments Pvt Ltd in 1999. The share price of the company increased by 6.5% since the last week. Hathway Cable & Datacom is listed in 16 screeners on Trendlyne.

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