Looking for debt-free stocks or dividend-paying stocks with a proven track record might be a good defensive approach in the midst of market turbulence since most stocks have fallen around their 52-week low. We’re discussing SKF India’s shares, which have recommended a final dividend of Rs. l4.50/- per equity share for the fiscal year ending March 31, 2022. Polycab, on the other hand, is on the list, and the Board of Directors has recommended a dividend of 140 per cent or Rs.14 per equity share with a face value of Rs.10 for the fiscal year 2021-22. Suven Pharmaceuticals is also on the list, with the Board of Directors declaring a 2nd Interim Dividend of Rs. 1.00 per equity share (100 per cent of Face Value of Rs. 1.00 each) and a one-time special dividend of Rs. 1.00 per equity share totalling Rs. 2.00 per equity share (200 per cent of Face Value of Rs. 1.00 each) for the fiscal year 2021-22, with a record date of May 17, 2022.
The brokerage firm Anand Rathi has said in its latest report that “Suven’s pharma CDMO sales (down 21% q/q to Rs2bn) were less than expected as the contribution from one Covid molecule wasn’t as huge as expected. Specialty CDMO clocked sales of a good Rs1.3bn (up 30% q/q); formulation sales were Rs184m (up 28% q/q). The gross margin was steady at 69-70%. Staff costs and other expenses were higher (more transportation and distribution costs) at respectively 8.6% (avg. 6-6.5%) and 17.4% of sales (vs. avg. 14-15%).”‘
“This translated to a 43% EBITDA margin. The higher tax rate (43% vs avg. 25-33%) eroded profit, which was Rs917m (42% y/y, adj. for the share of profit from rising pharma). We slightly trim our earnings estimate, factoring in higher formulations sales (boosted from Casper’s site) which would drag on margins. We retain our Buy rating, with a lower TP of Rs.627 (earlier Rs.660),” the brokerage has claimed.
The brokerage firm ICICI Securities has said that “Polycab’s share price has grown by ~3.6x over the past two years (from ~Rs 680 in May 2020 to ~Rs 2439 levels in May 2021). We maintain our BUY rating on the stock. We revise our target price to Rs 2850/share valuing the stock at 35x P/E on FY24E EPS.”
Q4FY22 of Polycab as per ICICI Securities
- Strong revenue growth of 35% YoY to Rs 3970 crore led by ~40% growth in the wire & cable segment. FMEG grew albeit a slow pace of 9% YoY.
- EBITDA margin declined ~173 bps YoY to 12% due to higher raw material prices. Sequentially, margin improved 127 bps.
- PAT increased ~15% Rs 325 crore; tracking strong topline growth.
Key investment rationale for Polycab according to the brokerage
- Set a target to achieve Rs 20,000 crore revenues by FY26 (13% CAGR).
- Beneficiary of government’s plans to invest ~Rs 111 lakh crore in FY20-25 under its National Infrastructure Pipeline.
- Total ~1.7 crore new houses under PMAY, urbanisation and rising aspiration level will give a significant boost to demand for home appliances.
- Model revenue, earnings CAGR of ~12%, ~15%, respectively, in FY22-24E.
According to the brokerage firm, ICICI Securities “SKF has been making strides towards innovation and R&D and has made significant inroads in REP. Going ahead, a recovery in CV, upcoming e-market & commencement of DFC should augur well for the company. We continue to remain positive and retain our BUY rating on the stock. We value SKF at Rs 3720 i.e. 36x P/E on FY24E EPS.”
Q4FY22 results of SKF India as per ICICI Securities
- Revenue for the quarter came in at Rs 1039 crore (I-direct estimate of Rs 1038.9 crore), up 22.6% YoY and 7.4% QoQ.
- EBIDTA margins came in at 15.3% vs. 12.7% in Q3FY22. Absolute EBIDTA came in at Rs 159.4 crore (I-direct estimate of Rs 139.1 crore), up 29.4% QoQ.
- Ensuing PAT came in at Rs 109.5 crore (I-direct estimate of Rs 102.6 crore) compared to Rs 104.9 crore in Q4FY21 and Rs 88.8 crore in Q3FY22.
Key investment rationale for SKF India as per the brokerage
- Recovery in auto sector should improve manufacturing segment.
- Railways tender for about 100000 new wagons in the next couple of years, indigenisation of industrial segment bearings.
- Announcement on manufacturing 400 new Vande Bharat trains in three years.
The stocks have been picked from the report of different brokerage companies. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.
For investment related articles, business news and mutual fund advise
You have already subscribed
Story first published: Friday, May 13, 2022, 11:47 [IST]