Reviews

In this edition, we have reviewed Aditya Birla Capital and Torrent Power. We suggest our reader-investors to HOLD in Aditya Birla Capital and Torrent Power

We had previously recommended Aditya Birla Capital in Volume 34, Issue No. 13, dated May 27 – June 9, 2019, under the ‘Low Scrip’ segment. It was recommended based on the company’s strong operating performance, high margins, and stable asset quality. The scrip was then recommended at  Rs95.15.

Aditya Birla Capital is a financial services platform of the Aditya Birla Group, having a strong presence across various verticals such as life insurance, asset management, private equity, and more. On a consolidated quarterly front, the company’s total income from operation increased by 14.44 per cent in Q3FY20 to Rs4,325.72 crore from  Rs3,779.96 crore in Q3FY20. The company reported an operating profit of  Rs342.18 crore, down by 3.58 per cent from  Rs354.87 crore in Q3FY20. Net profit saw growth of 15.69 per cent to  Rs241.05 crore in Q3FY20 from  Rs208.36 crore in Q3FY19.

On an annual basis, the company’s total income from operations grew by 31.58 per cent to  Rs15,163.51 crore in FY19 from  Rs11,523.88 crore in FY18. Operating profit increased by 25.99 per cent in FY19 to  Rs1,380.65 crore as compared to  Rs1,095.84 crore in FY18.

On an annual basis, the company’s total income from operations grew by 31.58 per cent to  Rs15,163.51 crore in FY19 from  Rs11,523.88 crore in FY18. Operating profit increased by 25.99 per cent in FY19 to  Rs1,380.65 crore as compared to  Rs1,095.84 crore in FY18.

Despite the challenging business environment, the company has followed a disciplined approach to balancing growth with a strong focus on quality. Its diversified portfolio of businesses allows the conglomerate to capture opportunities in different segments of the market to deliver growth

Hence, we recommend a HOLD.

We had previously recommended Torrent Power in Volume 34, Issue No. 17, dated July 22 – August 4, 2019, under the ‘Analysis’ segment. It was recommended based on the company’s strong growth opportunities, strong balance-sheet among its private peers and revenue generation. The scrip was then recommended at  Rs310.50

Torrent Power Ltd (TPL) is engaged in the business of electricity generation, transmission and distribution and is considered a prominent player in the Indian power sector. In Q2FY20, on a consolidated basis, the company’s revenue increased by 12 per cent to  Rs3,842 crore from  Rs3,444.54 crore inQ2FY19. The PBDT for Q2FY20 stood at  Rs854.79 crore, an increase of 6.02 per cent as compared to  Rs806.25 crore for Q2FY19. In Q2FY20, the net profit increased substantially by 82.72 per cent to  Rs755.60 crore as against  Rs413.52 crore in Q2FY19.

Taking into consideration the annual financial trend, for FY19 the net sales of the company increased by 14.24 per cent to  Rs13,150.97 crore from  Rs11,512.09 crore for FY18. The PBDT decreased by 1.67 per cent and stood at  Rs2,490 crore for FY19 as compared to  Rs2,532.49 crore for FY18. The net profit fell by 5.07 per cent to  Rs903.83 crore in FY19 from  Rs952.12 crore in FY18.Recently, the regulator approved a long-term power procurement arrangement for 278 MW between Torrent Power’s distribution business and UNOSUGEN power plant which has a capacity of 382.5 MW.

Hence, we recommend HOLD.