This is the 11th post in our quarterly result update series for Q3FY21.
In this post, we’re sharing the latest updates of the stocks from our watchlist. Please don’t treat this as a buy recommendation. We find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in the future. The purpose of this post is to bring clarity to our understanding of the businesses we are tracking. We make our notes on the quarterly results and conference calls. Putting it up here makes it easier for us to refer them at a future date.
You can see the earlier updates here.
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Please click on the read more button for more details on each stock.
BSE had a decent quarter with rising volumes in all segments and seeing revenue growth in BSE Star despite lowering the transaction costs on the platform. The company is doing well to continue to expand its strength in the equity and commodity derivatives space and continue the growth momentum of BSE Star. The company is still looking for opportunities for value unlocking for BSE Star and has also received a few bids from investors. The company continues to face tough competition from other rivals especially NSE in emerging segments like INX which has forced them to maintain zero charges for the platform. It remains to be seen how the company will get value unlocking from BSE Star and whether it will be able to exercise any pricing power on the platform & how will it handle the trio of new growth businesses going forward. Nonetheless, given the company’s long-standing brand value and its market execution experience, and the potential of its new businesses, BSE can turn out to be a dark horse wealth creator in the next few years.
KNR has seen a phenomenal quarter with a 24% YoY rise in revenues. The company has done well to source a new HAM project and is looking to replace the 3 HAM projects that will be over in the next 6-8 months. It is already bidding for new projects and has made bids for orders of Rs 21000 Cr. It has also started talks with Cube for the sale of the 3 HAM projects which will be over soon. It remains to be seen how the industry will fare going forward and how long will it take for the Govt’s push in infrastructure to gain proper momentum. Nonetheless, given its strong balance sheet, good operational history, and resilient order book, KNR Constructions remains a pivotal construction sector stock to watch out for.
Minda has had a very good quarter with a 35% YoY rise in sales and >100% YoY rise in PAT. It is looking to focus on the new and rising businesses of alloy wheels and sensors and develop a full portfolio geared towards EVs. The company’s acquisition of Delvis is yielding steady orders from global auto majors and is also helping Minda compete effectively in the domestic market against international competitors. There is a big opportunity here for component makers like Minda from the recently announced PLI scheme for the auto industry. It remains to be seen whether this momentum will sustain and whether Minda will be able to realize its export ambitions with the new PLI scheme. The management has a goal of doubling revenues in 4-5 years. It is still early days to comment on that. Nonetheless, given the new orders that the company has bagged, their improving product portfolio, and massive import substitution opportunity, Minda remains a compelling auto ancillary stock to watch out for.
PI saw another stellar performance in Q3 on the back of sustained sales momentum in both domestic and export markets and the completed integration of Isagro. The company is evaluating options on how to use the Rs 2000 Cr through QIP. It is specifically looking for acquisition opportunities in the pharma sector to expedite the process of expansion into this sector. PI already has 2 earmarked opportunities that it is evaluating actively right now. It remains to be seen whether there are any other disruptions in-store from the expansion into the pharma space and whether the company will be able to match its lofty guidance for growth in all segments. Nonetheless, given the company’s strong track record, strong tailwinds of the industry, a good agricultural season, and opportunities arising from the China substitution phenomenon, PI Industries remains a pivotal agrichemical sector stock to watch out for.
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