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Zomato- Losses increase but a potential upside of 37% expected?

by 5paisa Research Team 12/11/2021

The company has reported a higher than expected revenue growth of 140% YoY with a major push from the food delivery business. Zomato witnessed a higher than expected EBITDA loss of Rs.3.1 billion in Q2 FY22 which is a huge leap from the Rs.1.7 billion loss in Q1 FY22. This loss has been attributed to a lower contribution margin which fell from 2.8% in Q1 FY22 to 1.2% in Q2 FY22, and higher spending on ads. The company reported a Net loss of Rs.435 crore in Q2 FY22 versus the Rs.230 crore loss reported in Q2 FY21.

Increase in loss can be due to the following reasons:

1. Increased investments in the food delivery sector

2. Higher spending on branding and marketing to increase the customer base. The amount spent increased by Rs.0.4 billion QoQ

3. Unpredictable weather and fuel costs have increased the delivery costs by Rs.5 QoQ.

The food delivery business has witnessed a huge growth of 158% YoY and it contributed to 83% of the reported revenues. The dine-out segment of the business has remained a drag on the resources even in this quarter whereas the hyperpure business has seen a rapid upscale of 49% QoQ.

After a hiatus of 2 years, the company has started food delivery services in emerging cities. Even though the demand is not very high, once the customers try restaurant food and the habit sinks in, the sky is the limit. This will lead to more and more restaurants opening up to meet the demand of the customers and in-turn increasing the company’s business substantially. To support this point, Zomato has noticed a 30% increase in order frequency in cities where the number of restaurants are more.

Zomato has been on an investment spree over the last 6 months. It invested $100 million in Grofers in early August,2021. The total investment now stands at $275 million. Currently Zomato is in the process of selling Fitso to Curefit for a whopping $50 million. Another $50 million will be invested in cash, in Curefit to acquire a 6.4% shareholding. Zomato also plans on investing $75 million in Shiprocket for an 8% stake. Final documents have been signed for a 16% stake in Magicpin for $50 million.

The revenue estimates have been increased to 14-15% for the period of FY22-24. Analysts expect Zomato to be good for the long term given its high growth rate and thus retain a BUY call with a price target of Rs.170. Morgan Stanley and Goldman Sachs have set their price target as Rs.185 as they believe that the second quarter was driven by a strong user acquisition.

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Berger Paints- 1% decline in profit but a potential upside of 21%?

by 5paisa Research Team 12/11/2021

Berger Paints reported a small decline in profit of 1%, at Rs.219 crore for the quarter ended September 2021-22 as opposed to the Rs.221 crore profit in Q2 FY21. This year the profit has been impacted by the high raw material costs and the pandemic, in unison. The cost of materials has shot up from Rs.750 crore to a whopping Rs.1,303 crore.

Revenue from operations showed a significant increase of 27.70% YoY, from Rs.1,743 crore in Q2 FY21 to Rs.2,225 crore in Q2 FY22. But, the total expenses witnessed an increase of Rs.468 crore in Q2 FY22. The EBITDA margin has been compressed by 333bps YoY.

Management commentary on the demand side, which is scheduled for 12 November, is eagerly awaited by analysts. Meanwhile, a 12 month price target of Rs.935, with a potential upside of 21% has been estimated by analysts.

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Penny Stock Update: These stocks gained up to 10.00% on Friday

Penny Stock Update: These stocks gained up to 10.00% on Friday
by 5paisa Research Team 12/11/2021

Today on the last trading day of the week, the Indian equity market closed up positive. BSE TECk index is the top gainer which is up by 2.03%.

On the last trading day of the week, the Indian equity market closed up on a positive note. In today’s trade, all the sectoral indices closed up with a green mark.

After Nifty 50 and BSE Sensex closed in red for 3 days in a row, today they closed in positive, up by 229.15 points i.e., 1.28% and 767.00 points i.e., 1.28% respectively. Stocks pulling the BSE Sensex index up is Reliance Industries Ltd, HDFC Ltd, Infosys Ltd, Bajaj Finserv Ltd and Bajaj Finance Ltd. Whereas, stocks that dragged the BSE Sensex down is Bajaj Auto Ltd, Tata Steel Ltd, Power Grid Corp Ltd, NTPC and Axis Bank Ltd. Besides, Stocks pulling the Nifty 50 index up are the same as BSE Sensex while stocks pulling the Nifty 50 index down are IOC, Hero Motorcorp Ltd, Axis Bank Ltd, Tata Steel Ltd and Bajaj Auto Ltd.


In Friday's trading session the S&P BSE TECk, S&P BSE Information Technology, S&P BSE Telecom and S&P BSE Realty are top gainers. BSE TECk index consisting of stocks such as Tanla Platforms Ltd, Vodafone Idea Ltd, Larsen & Toubro Infotech Ltd, Tech Mahindra Ltd, Sterlite Technologies Ltd and Wipro Ltd is the top gainer. 

Here is the list of penny stock that gained up to 10.00% on a closing basis on Friday, November 12, 2021:

Sr No.              

Stock              

LTP               

Price Gain%              

1.              

Manugraph India Ltd  

12.65  

10.00  

2.              

Sel Manufacturing Company Ltd  

8.10  

9.46  

3.              

JIK Industries Ltd  

0.70  

7.69  

4.              

Antarctica Ltd  

0.85  

6.25  

5.              

Visagar Polytex Ltd  

0.85  

6.25  

6.              

Tantia Constructions Ltd  

8.40  

5.00  

7.              

Sintex Industries Ltd  

8.45  

4.97  

8.              

Sintex Plastics Technology Ltd  

9.55  

4.95  

9.              

Hilton Metal Forging Ltd  

17.05  

4.92  

10.              

Kavveri Telecom Products Ltd  

7.50  

4.90  

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Bank of Baroda- 24% rise in PAT| Potential to grow more?

12/11/2021

A solid earnings growth of 24% YoY from Rs.1,679 crore to Rs.2,088 crore, was reported by the bank along with a 6% YoY increase in operating profit. The revenue increased by 8% YoY and the non-interest income also grew by 23% YoY due to higher treasury gains and more recoveries from write-offs.

The gross non performing loans decreased by 75bps QoQ to 8.1% and the Non performing loans fell by 20bps to 2.8%. The collection efficiency increased in Q2 FY22 to 96% from the 93% in Q1 FY22.

According to the management, a recovery of Rs.10-15 billion from the corporate NPA accounts can be expected. The bank has no contingency provision buffer. There is a 10% YoY growth in retail loans which was driven by 23% YoY increase in auto loans, 5% rise in home loans, 6% increase in mortgages and 11% YoY increase in educational loans.

The domestic deposit growth was a small 3% YoY which was supported by a strong CASA growth of 13% YoY. The Capital adequacy ratio increased by 110bps QoQ to 15.5%. The NII increased by 2% to Rs.7,566 crore. The Rs.877 crore recovery from DHFL was very welcomed by the bank.

The CEO, Sanjiv Chadha said that he expects the bank’s loan growth to be very close to double digits this financial year.

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Castrol India- 16% potential upside with 3 fold increase in PAT

by 5paisa Research Team 12/11/2021

Castrol follows a January- December financial year, making the July-September quarter, their third. Castrol India witnessed a three fold increase in PAT, standing at Rs.570 crore in Q3 CY21 from Rs.186 crore in Q3 CY20. Revenue from operations also increased from Rs.1,073 crore in Q3 CY20 to Rs.3,101 crore in Q3 CY21.

Due a sharp rise in input costs seen all over the market, the Cost of Goods Sold was a challenge that was handled very ingeniously by monitoring the price hikes very carefully along with timely increases in market and advertisement spending to increase the customer base. This in turn also helped in a 6% rise in volume growth in Q3 CY21. The EPS standing at Rs.1.88 was down by 9% YoY but up by 33% QoQ.

Castrol launched a new product for cars and commercial vehicles using the newest BS-VI technology available. Even then, there is a downside risk of low sales volumes. This is overshadowed by the potential upside of 16% due to the price hikes, along with a BUY call by analysts, with a price target of Rs.160.

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Britannia Q2- Rising prices of Palm oil caused 23% decline in Net profit?

by 5paisa Research Team 12/11/2021

Britannia's Q2 FY22 revenue witnessed an increase of 5% YoY, as estimated. The first half of the financial year saw the company gaining more market share with primary focus on increasing their rural coverage.

The gross margin decreased by 520bps mainly due to the high input cost inflation of palm oil(54%), industrial fuel (35%) and packaging material (30%) and a total inflation of approximately 14% this quarter. Rise in input costs were mitigated to a certain extent due to the forward covers taken on commodities as well as price increases across the entire portfolio. The operating margin also witnessed a decrease of 430bps YoY to 15.5%. The employee costs increased by 14% YoY whereas the EBITDA fell by 17% YoY.

PAT decreased by 23% mainly due to lower income and higher tax and also the increased prices of the raw materials as mentioned above. The cost of materials of the company increased by 8% YoY from Rs.1,768 crore in Q2 FY21 to Rs.1,915 crore in Q2 FY22.

The major sales rose by 6% in this quarter to Rs.3,554 crore. On a 24 month basis, the company reported a growth in sales and net profit by 21% and 18% respectively. Biscuits and high protein food compose of 70% of the total sales mix of Britannia.

The long term investments of the company, mainly in market securities have decreased to Rs.9.8 billion in 2nd half of FY22.

According to the management, the commercial paper proceeds are being used for buying future covers for wheat and sugar and this in turn has led to an increase in the inventories by Rs.2.3 billion.

A price target of Rs.4000, with an estimated upside of 7.6% and a BUY call has been reported by analysts.

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