Vikas Eco Tech(BSE Code 530961)

The market agog with rumours that Vikas Eco Tech which is friendless today at around Rs. 3 is all set to climb up to Rs. 100 level. It is aid that operators are active to push up the price of this penny stock. A research analyst, after studying the company's working and prospects ahead doubts such claims. The company's financial numbers are far from satisfactory. During the last five years while its sales turnover has modestly improved from Rs. 232 crore in the fiscal 2018 to Rs. 250 crore in the fiscal 2022, its profit at net level has slumped from Rs. 26.73 crore to just Rs. 1.39 crore! Till 2019, the company used to pay a nominal dividend of 5 per cent but during the last 3 years, it has not paid any dividends. Surprisingly, the promoters have been selling their stake in the company and at present their equity holding is just 9.20 per cent. Most of the shares (around 83 per cent) are with the public.

In these circumstances, how can one expect the share price to shoot up from Rs. 3 to Rs. 100, asks the analyst. Of course operators can do what they want but retail investors should not be the victims of such a game. Better to wait and see.

(CMP Rs. 3.35, 52 week H/L Rs. 7/1, BV Rs. 2.50, FV Re. 01)

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Bharat Petroleum Corporation(BSE Code 500547)

Maintaining that the first half of the fiscal 2023 was one of the worst period for oil marketing companies like BPCL, a research analyst recommends that despite poor performance, investors should not sell their holdings as the long term prospects for the company are quite promising and they can expect a price target of Rs. 375.

In fact during the Q2 FY2023, BPCL reported a net loss of Rs. 304 crore due to a sharp fall in gross refining margins at US$ 16.8 per barrel, one-time LPG subsidy of Rs. 5582 crore and lower marketing inventory loss of Rs. 384 crore. Adjusting for LPG subsidy, the net loss works out to Rs. 4148 crore but this was much lower than expected loss of Rs. 6552 crore.

Marketing segment remained under pressure due to negative diesel marketing margin. Volume performance was mixed with 7 per cent beat in refining throughput at 8.8 mmt, while marketing volumes were 4 per cent below, the expected level of 11.7 mmt.

The analyst expects normalization of refining margins which would drive earnings recovery in the second half of the fiscal 2024. He recommends buy these stocks at the current attractive prices as he sees the price to climb up to Rs. 375 in the third quarter of 2024.

(CMP Rs. 304.00, 52 week H/L Rs. 416/288, BV Rs. 215.80, FV Rs. 10)

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Welspun India(BSE Code 514162)

A research analyst working with a leading brokerage house insists that Welspun India has been attracting selling on account of the company weak performance and the headwinds will continue to haunt the company for quite sometimes as demand for the company’s products is expected to face higher consumer inflation, European energy crisis and reduced share of discretionary spends. However, the long term prospects seem to be encouraging as margins are likely to remain stable to better in coming quarter with softening raw material and freight costs. Medium to long term growth drivers include scaling up of D2C domestic branded and e-commerce businesses and consistent growth in the flooring business.

No doubt, the Q2 FY2023 was another weak quarter with revenue declining by 15 per cent y-o-y as weak market sentiments impacted demand in the international market. Revenue of the home textile business declined by 15.3 per cent y.o.y. while revenue of the flooring business stood flat at Rs. 159.6 crore. Capacity utilisation for the quarter came in significantly lower on y-o-y basis at 60 per cent for bath linen, 57 per cent for bed linen and 58 per cent for rugs and carpets. Gross margins contracted sharply by 47.3 bps y-oy to 41.6 per cent while EBITDA margin fell to 6.1 per cent from 16.5 per cent in Q2 FY2022 to, primarily impacted by the surge in raw material prices, adverse currency movement and lower operating leverage. And the profit at net level fell by 96 per cent y-o-y to Rs. 8.3 crore.

(CMP Rs. 78.10, 52 week H/L Rs. 160/62, BV Rs. 39.00, FV Re. 01)

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Suzlon Energy(BSE Code 532667)

Suzlon Energy, an Indian multinational wind turbine manufacturer which was saved from the Jaws of death several times has once again raised hopes of revival of the company as it has pleasantly surprised investors with an encouraging performance during the Q2 FY2023. With total income rising to Rs. 1442.58 crore during the quarter as compared to Rs. 1361.62 crore in the corresponding quarter a year ago, the company has earned a net profit of Rs. 56.47 crore for the quarter in striking contrast to a net loss of Rs. 12.40 crore in the same quarter last year.

Points out Mr, Himanshu Mody, Chief Financial Officer “In the performance of the Q2 FY2023 we can see the full impact of our consistent efforts to reduce debt on our decreasing finance costs further strengthening our balance sheet in addition to our net debt position as on September 30, 2022 which stood at Rs. 2722 crore. We have subsequently reduced our debt by Rs. 583.50 crore through the rights issue which was oversubscribed by 1.8 times. This show of confidence of our investors has reinforced our commitment towards creating more value for our stakeholders.

Shares are quoted around Rs. 8 after fluctuating between Rs. 13 and Rs. 5.90. Some optimist operators maintain that Suzlon stock price is now expected to move up to around Rs. 100. However several research analysts insist that one should wait for the performance during the next two quarters before taking any major investment decision.

(CMP Rs. 8.19, 52 week H/L Rs. 12/5, BV Rs. -0.30, FV Rs. 02 )

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P.I Industries(BSE Code 523642)

A leading HNI (High Networth Investor) is all bullish on PI Industries a leading player in the domestic agricultural inputs sector, primarily dealing in agrochemicals and plant nutrients. Known for its technological capabilities in chemistry/engineering related services and on the other hand it has built leading brands over the last 75 years and connected with more than 70,000 retail points Pan India.

The company has put up a robust performance during the Q2 FY2023 registering a 31 per cent spurt in revenues to Rs. 17,700 crore for the quarter ended September 2022 and the profit at net level shooting up 46 per cent to Rs. 334.80 crore. This overall growth was led by volume scale up and price hike while favourable product mix and currencies would also have contributed to growth.

Future prospects are all the more encouraging. The management has given a guidance on delivering 20 per cent plus revenue growth in the fiscal 2023, with continued improvement in margins and returns. For the fiscal 2023, the company has planned a capex of Rs. 500 crore which will aid topline growth from the next year.

The company is also doing very well on the export front. During the Q2 FY2023 it recorded a 29 per cent growth in exports on a higher base, led by volume growth of approximately 25 per cent, favourable price as well as currency of around 4 per cent.

The stock of the company have shot up to Rs. 3379. The HNI thinks there is a lot of steam in the scrip and the price can easily reach Rs. 4050.

(CMP Rs. 3427.30, 52 week H/L Rs. 3699/2334, BV Rs. 436.20, FV Re. 01)

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Trident Ltd.(BSE Code 521064)

Punjab-based Trident Ltd. a leading manufacturer of textiles, papers and chemicals has shocked the investing publc by putting up a highly disappointing performance during the Q2 FY2023.

With the sales turnover of the company declining from Rs. 1662.52 crore in the Q2 FY2022 to Rs. 1419.17 crore durng the Q2 FY2023, the profit at net level has slumped from Rs. 228.80 crore to just Rs. 39 crore.

The share price has come down to Rs. 35.70 as the market sentiment has been vitiated by poor Q2 FY2023 performance.

However a research analyst tracking textiles sector for several years is highly optimistic about Trident in the long run. He strongly recommends accumulate the shares at every decline with a long term perspective.

(CMP Rs. 35.65, 52 week H/L Rs. 71/30, BV Rs. 7.50, FV Re. 01)

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Coromondel International(BSE Code 506395)

A research analyst tarcking food, agriculture and agrichemicals is bullish on Coromondel International, a subsidiary of EID Parry belonging to the Murugappa group, a renowned industrial group of south India. The company engaged in the businesses of fertilisers, pesticides and speciality nutrients. The company is also in rural retail business in the states of Andhra Pradesh, Karnataka and Maharashtra through its Mana Grover Centres. The company has put up a robust performance during the Q2 fiscal year 2023 with revenues shooting up by 65 per cent, EBITDA by 42 per cent and net profit by 43 per cent as compared to the corresponding quarter a year ago. The company’s performance pleasantly surprised several analysts who were forced to revise their estimates for the company. During the quarter, the company’s fertilisers sales volume moved up by around 12 per cent and derived EBITDA/tonne stood at Rs. 6600 and for first half 2023 at Rs. 6900 as against Rs. 5000/ tonne in the corresponding half of the last year (2022). The subsidy on fertilsiers outstanding stood at Rs. 4176 crore as on 30th September 2022 which is higher by RS. 2470 crore citing higher margins, the management has revised upwards its EBITDA/tonne guidance to Rs. 5500/tonne for the fiscal 2023 as against its earlier guidance of Rs. 4000/4500 a tonne.

What is more according to the management new product launches coupled with branding of its products both in the nutrition and CP segment is likely to reap rich benefits in the medium term. The company continues with its endeavor to invest on R&D expansion, in distribution reach and identifying newer off-patented molecules. The company has launched four new formulations including 3 insecticides and one fungicides in the CP segment in the first half FY2023.

The company’s stock price has shot up to around Rs. 953 and is all set to cross Rs. 1000-mark over a half a dozen research houses have given it a BUY rating with price target ranging from Rs. 1150 to Rs. 1350.

(CMP Rs. 921.05, 52 week H/L Rs. 1095/709, BV Rs. 252.70, FV Re. 01)

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