Fundamental Analysis
HDFC LIFE INSURANCE COMPANY
Face Value : Rs. 10 BUY: Rs. 635.55
Ticker: 540777 H/L: Rs. 646.40/345 Equity: Rs. 2017.7Cr
HDFC Life Insurance provides various individual and group insurance solutions across India. In Q2FY20, gross premium rose by 10.4 per cent YoY due to higher first year premiums. Thus, in Q2FY20, net premium income increased by 9.99 per cent to Rs 7,456.87 crore from Rs 6,779.26 crore in Q2FY19. Net profit was up by 7.27 per cent to Rs 308.98 crore in Q2FY20 from Rs 288.03 crore in Q2FY19. Despite issues with NBFCs, the company reported improved sales of its credit products. Rising stakes of FIIs across all insurance companies poses as a growth driver in the underpenetrated insurance market. HDFC Life benefits from partnerships, i.e with Airtel, which yielded in sales of more than 30 lakh policies. Hence, BUY.
HINDALCO INDUSTRIES LTD.
Face Value : Rs. 1 BUY: Rs. 214.70
Ticker: 500440 H/L: Rs. 228.40/171.25 Equity: Rs. 222Cr
Hindalco Industries Limited (HNDL) is engaged in the production of aluminium and copper products. On a consolidated quarterly front, net sales were reported at Rs 29,657 crore in Q2FY20, decreasing by 8.77 per cent from Rs 32,507 in Q2FY19. PBT fell by 30.67 per cent to Rs 1,492 crore in Q2FY20 from Rs 2,152 crore in Q2FY19. Net profit decreased by 32.73 per cent to Rs 974 crore in Q2FY20 from Rs 1,448 crore in Q2FY19. HNDL has planned a 500 Kt expansion of its Utkal Alumina refinery that will enhance additional resource security. There is a strong growth outlook for the company’s wholly-owned subsidiary, Novelis, on the basis of its expansion strategies, to upgrade recycling capacity. Thus, we recommend a BUY.
LARSEN & TOUBRO INFOTECH LTD
Face Value : Rs. 1 BUY: Rs. 1769.20
Ticker: 540005 H/L: Rs. 1,896.70/1,436.65 Equity: Rs. 17.4Cr
Larsen & Toubro Infotech (LTI) is engaged in computer programming, consultancy and related activities. On consolidated quarterly front, net sales grew by 10.27 per cent to Rs 2,570.7 crore in Q2FY20 from Rs 2,331.2 crore in Q2FY19. PBT was reported at Rs 473.4 crore in Q2FY20, a decrease of 11.78 per cent from Rs 536.6 crore in Q2FY19. Net profit fell by 9.97 per cent to Rs 360.4 crore in Q2FY20 from Rs 400.3 crore in Q2FY19. The recent acquisition of PowerUp will help LTI in building its service portfolio and enhance its capabilities. LTI’s healthy pipeline continued with large deal momentum and fast-growing digital services, giving a high scope for future growth. Thus, we recommend a BUY.
PIDILITE INDUSTRIES LTD
Face Value : Rs. 1 BUY: Rs. 1389.25
Ticker: 500331 H/L: Rs. 1494.90/1048.85 Equity: Rs. 50.8Cr
Pidilite Industries is engaged in manufacturing of adhesives and glues, including rubber-based products. On a consolidated quarterly front, the net sales grew by 2.81 per cent to Rs 1,806.58 crore in Q2FY20 from Rs 1,757.19 crore in Q2FY19. PBT went up by 0.03 per cent YoY to Rs 354.33 crore in Q2FY20. Cut in corporate taxes resulted in the growth of net profit by 40.60 per cent to Rs 325.04 crore in Q2FY20 from Rs 231.18 crore in Q2FY19. Pidilite reported double-digit growth in rural India along with future expansion strategies. The company’s growth is driven by the strong performance of subsidiaries in Bangladesh (with the start of an additional factory) and Sri Lanka. Thus, we recommend a BUY.
RITES LTD
Face Value : Rs. 10 BUY: Rs. 291.65
Ticker: 541556 H/L: Rs. 324.80/160.48 Equity: 250 Cr
Rites is an engineering and consultancy company offering transport infrastructure, consultancy and project management services. For Q2FY20 on consolidated basis, the company posted an increase of 68.47 per cent in net sales to Rs 746.24 crore, from Rs 442.95 crore in Q2FY19. PBDT stood at Rs 335.81 crore in Q2FY20, clocking a growth of 84.63 per cent, compared to Rs 181.88 crore in Q2FY19. In Q2FY20, net profit of Rites doubled to be Rs 235.83, compared to Rs 111.38 crore in Q2FY19. The company posted a healthy and sustainable margin growth in its quarterly performance. With a well-diversified order book and rise in government investment, Rites is a beneficiary of railway projects and transportation sector. Hence, we recommend a BUY.
STATE BANK OF INDIA
Face Value : Rs. 1 BUY: Rs. 329.85
Ticker: 500112 H/L: Rs. 373.70/244.35 Equity: Rs. 892.5Cr
SBI is a multinational, public sector banking and financial services statutory body. Net Interest Income rose by 17.67 per cent to Rs 24,600 crore in Q2FY20 from Rs 20,906 crore in Q2FY19. Net profit increased significantly to Rs 3,012 crore in Q2FY20 from Rs 945 in Q2FY19. GNPA ratio was 7.19 per cent in Q2FY20, down by 276 bps compared to 9.95 per cent in Q2FY19. Provision Coverage Ratio (PCR) improved significantly by 1049 bps to 81.23 per cent as of September 2019, from 70.74 per cent as of September 2018. CAR for Q2FY20 was 13.59 per cent and 12.61 for Q2FY19. SBI’s exposure to stressed pool is low and currently manageable. Listing of SBI cards will boost growth and profitability to the bank. Hence, BUY.
