DSIJ.in JULY 22 - AUG 4, 2019 I DALAL STREET INVESTMENT JOURNAL (^125)
I bought shares of SRF Ltd. at `2,900. Should I book
profits or hold?
- Rohit K.
I purchased some shares of Aditya Birla Capital Ltd.
at `95. Should I hold or sell?- Mihir Shah
ADITYA BIRLA CAPITAL LIMITED (ABCL) SRF LIMITED
SRF Limited is a Gurgaon headquartered holding company
engaged in manufacturing of chemicals and polymers, technical
textiles and packaging films. The company’s business segments
include technical textiles business (TTB) that includes nylon tire
cord fabric, belting fabric, coated fabric, polyester tire cord
fabric and industrial yarns. The company’s research and
development focuses on chemicals and polymers business
(CPB) that includes refrigerant gases, pharmaceuticals and
allied products, engineering plastics business and its research
and development and also packaging films business (PFB)
including polyester films. SRF’s chemicals and polymers plants
are located in Alwar, Rajasthan, Uttarakhand and in Bharuch,
Gujarat. Its technical textiles plants are located in Chennai in
Tamil Nadu, Bhind in Madhya Pradesh, Thiruvallur and
Pudukottai in Tamil Nadu and in Uttarakhand. The company’s
packaging films plants are located in Uttarakhand and in
Indore, Madhya Pradesh.Looking at the quarterly trends, for Q4 of FY19, the company
reported net sales of `1,789.42 crore, an increase of 31.44 per
cent as against the net sales of `1,361.37 crore for the same
quarter of the previous fiscal. PBDT also increased by 43.77 per
cent for Q4 of FY19 and was `314.99 crore as compared to
`219.09 crore for Q4 of FY18. For the Q4 of FY19, the net profit
increased by 56.15 per cent to `165.30 crore when compared to
`105.86 crore recorded for Q4 of the previous financial year.On the annual front, net sales for FY19 were `6,459.34 crore,
which is an increase by 38.08 per cent when compared to
`4,677.93 crore for FY18. For FY19, the PBDT increased by
29.14 per cent to be `1,021.15 crore compared to `790.75 crore
for FY18. The net profit for FY19 was reported at `517.18 crore,
an increase of 27.49 per cent when compared to net profit of
`405.66 crore for the previous financial year. Therefore, we
recommend a HOLD to the investor-readers of our magazine.A
ditya Birla Capital Limited (ABCL) was formerly known
as Aditya Birla Financial Services Limited. Through its
subsidiaries, the company provides financing, investment,
protection and advisory services to its customers and clients. As
part of financing operations, ABCL provides services such as
lending, financing and wealth management solutions, customised
solutions in areas of personal and business loans, corporate
finance, mortgages, capital market based lending, housing finance
solutions such as home loans, home improvement and
construction loans. As part of investment operations, the company
provides services such as asset management, investment solutions,
portfolio management investment advisory and securities
broking. ABCL’s protection services include protection solutions,
children’s future solutions, wealth with protection solutions, health
and wellness solutions and, lastly, health insurance. Its advisory
services include insurance broking and risk advisory solutions to
companies and individuals.
On the financial front, the net sales for the fourth quarter of
FY19 came in at 78.90 crore which is an increase of over 500 per cent as compared to net sales of12.37 crore for the fourth
quarter of FY18. For Q4 of FY19, the PBDT stood at 6.73 crore and for the same quarter of the previous fiscal, the company posted an operating loss of18.40 crore. In Q4 of FY19, the
company posted net profit of 6.52 crore as against a net loss of 18.55 crore in Q4 of the previous fiscal.
Looking at the annual trend, the net sales were reported at
177.78 crore for FY19, thus increasing by 1.71 per cent when compared to net sales of174.79 crore for FY18. In FY19, the
company posted an operating loss of 10.77 crore as against a PBDT of61.98 crore for FY18. For FY19, the company incurred
a loss of 9.60 crore, whereas the company had reported a net profit of61.49 crore for FY18. Despite liquidity headwinds
across the industry, ABCL raised about `11,000 crore of
long-term funds in the second half of FY19. Based on our
analysis, we recommend a HOLD to our investor-readers.
BSE/NSE Code 540691 / ABCAPITAL
Face Value ` 10
CMP `89.20
52-Week High `152.35 / Low `77.55
Your Current
Profit/(Loss)(6.10 per cent)BSE/NSE Code 503806 / SRF
Face Value ` 10
CMP `2777.55
52-Week High `3,086.00 / Low `1,531.00
Your Current
Profit/(Loss)(4.22 per cent)HOLD HOLD(Closing price as of July 16, 2019)