#Updates on Q3FY22 Results of Companies

COMPANIES COVERED

Aditya Birla Capital

Venus Remedies

First of all we would like to inform all the investors here that because of the nature of the business we strongly recommend to look at the performance of the company on an annual basis and not on a quarterly basis. 

There are a couple of reasons for that. One is that the product mix can have different level of profitability. Majority of the companies are not producing just one product or they are not catering to a single client. Even within the products, companies may have different pricing and different profit margins depending on the quality that it supplies to its customers or it may vary depending on the customers, the regions and the competitive pressure. So there are various elements are at play when it comes to profitability. 

That is why it would not be a wise decision to judge the company or take a call based on the worst quarter or a worst year company has been through. We as an investor need to understand this and have confidence in the management of the company. Management is always trying to do their best but often circumstances prevail which derail their strategies and rather then sticking to the old plans management needs to rethink everything from the scratch.

Also at the beginning of this year 2022 we had clearly issued a waring that 2022 would not be same as 2020 or 2021 in terms of returns. There would be extremely high volatility in the markets and we can see some stocks fall 20-25% without any change in the fundamentals. We stand by those words and users need be cautious while investing. 

All DARKHORSESTOCK ideas are suggested from a long term view of at least 2-3 years. Therefore once again we request users to not put queries about the stock movements over short term period.

#Updates on Q3FY22 Results.

ADITYA BIRLA CAPITAL

Aditya birla capital over the past one year despite good performance has failed to deliver any meaningful returns post suggestion. The stock was suggested back in June 2021 and as of date is down about 7% since the suggested price. Sometimes stocks may behave irrationally despite good fundamentals and that is why we always advice users to invest with a long term time frame which is atleast 2-3 years.

Performance Update

• Net Sales at Rs 5,705.53 crore in December 2021 up 13.52% from Rs. 5,025.98 crore in December 2020.
• Quarterly Net Profit at Rs. 576.74 crore in December 2021 up 99.79% from Rs. 288.68 crore in December 2020
• EBITDA stood at Rs. 1,567.36 crore in December 2021 up 21.43% from Rs. 1,290.75 crore in December 2020.
• AB Capital EPS has increased to Rs. 2.39 in December 2021 from Rs. 1.20 in December 2020 up 100% yoy basis.

Aditya Birla Capital’s profits trend exhibited outstanding and quality results once again in Q3FY22. Earnings were underpinned by a consistent superior NIM profile, a limited credit cost, and a constant ‘cost to income,’ making it confident of exceeding Rs15 billion in PAT in FY22. The expansion of the retail + SME mix (in NBFC), the affordable housing mix (in HFC), and the optimisation of borrowing costs indicate that AB Capital is on pace to meet its FY24 objectives set a year ago. More investment in franchise, cross-sell, and digital leveraging is projected to help improve RoEs.

Venus Remedies

After gaining about 55% post suggestion, stock is currently trading down about 25% since the suggested price.

Performance Update

• Net Sales at Rs 124.34 crore in December 2021 up 1.97% from Rs. 121.94 crore in December 2020.
• Quarterly Net Profit at Rs. 5.65 crore in December 2021 down 51.56% from Rs. 11.66 crore in December 2020.
• EBITDA stood at Rs. 13.65 crore in December 2021 down 31.44% from Rs. 19.91 crore in December 2020.
• Net Profit stood at Rs 5.65 crore in December 2021 down 51% from Rs. 11.66 crore in December 2020.
• Venus Remedies EPS has decreased to Rs. 4.22 in December 2021 from Rs. 9.44 in December 2020.

Over the past several months stock has been very volatile. Results for the current quarter were way below expectations. However sometime it is very difficult to take a call based on a single quarter results. Since the stock is already down 25% and since we have booked partial profits so instead of completely exiting from the stock or adding more to the portfolio we would be waiting for another quarter results to get some more clarity.

In past management has shown strong signs off turnaround during the toughest time company was going through. From a loss making company, Venus remedies has significantly turned around. Going by that and extremely low debt on the books we do not see a significant threat to venus remedies. However more clarity would be available only after the end of this financial Year.

We always keep suggesting users from time to time to keep booking partials profits post 25% returns at least until you get back your invested capital.

More companies to follow. Some other companies on which we will provide update would beW

• Zydus Wellness
• EPL
• Iol Chemicals

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