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This is the 10th 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.


KRBL Limited

KRBL has had a mixed quarter with a decline in sales while all margins have risen YoY. Consumer pack sales were at their highest ever and the health portfolio has seen decent growth of 20% YoY in 9M period. The company has been marred by controversy due to the detention of Mr. Anoop Kumar Gupta, Joint Managing Director of the Company, by the Enforcement Directorate while cooperating with the investigation in the Augusta Westland case. This has seen the share price nosedive more than 25% in Feb and has resulted in the company being put under “Watch with Negative Implications” by credit rating agencies. It remains to be seen how the company will navigate this PR crisis and restore its image in the market while staving off market competition. Nonetheless, given the company’s long-standing brand image, its resilient operations and export structure, and its focus on maintaining its strengths and developing new avenues, KRBL may turn out to be a prime wealth creator in the next few years.

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Marico Limited

Marico has done well to maintain value and volume growth on a YoY basis in almost all categories and sustain growth momentum in domestic business. It is showing encouraging performance in the food category, especially in the health foods segment. The VAHO segment has seen a good recovery for Marico after 6 months of underperformance. The company has seen decent growth in overall volumes and has maintained its leadership position in all categories highlighting good brand resilience. In light of the COVID-19 disruption, the company has done well to develop direct distribution channels and rationalize its SKUs and develop towards the health category by launching Honey, Chawanprash, and Soya Chunks products. The company’s focus on expanding into new health food categories under the Saffola brand and the in-demand hygiene looks shows good room for growth in these segments. It remains to be seen how long the COVID-19 situation lasts and what second-order effects it has on the company and general consumer behaviour. Nonetheless, given the company’s solid standing in its core categories, its expansion plans for high margin food categories, and its robust distribution network, Marico looks like a pivotal FMCG stock to watch out for.

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Mayur Uniquoters

Q3 performance for Mayur was phenomenal with its highest ever quarterly revenues and profits. The management remains confident of the product’s technical and quality edge which has helped it bag multiple export orders from international auto majors like BMW and Mercedes. The company’s domestic orders for Volkswagen & MG should help the company maintain good growth in the medium term. The new import duty on PU should also help the company increase its PU sales which have stayed stagnant to date. It remains to be seen how long will the non-auto segments take to match the growth momentum of the auto segment and how long will it take for the management vision to materialize. Nonetheless, given its dominant market position both in the domestic and export segments and the management’s focus on not compromising on quality no matter what, Mayur Uniquoters remains a good small-cap stock to watch out for.

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Varun Beverages

VBL has seen a good YoY recovery in the quarter with sustained margins. Post lockdown demand has remained resilient and water volumes have risen dramatically as on-the-go consumption comes back to normalcy. VBL has also seen good growth in African territories except for Morocco. The company has also done well to shield itself from rising oil prices by covering for PET earlier on. It remains to be seen whether there is a further economic disruption in the future from the resurgence of COVID-19 cases which may have severe second-order effects on the company’s performance. Nonetheless, given the resilient sales network, the rising demand for the company’s products, and the arrival of the peak season for the beverages industry, Varun Beverages is a good consumption stock to watch out for at present. However, as it is a capital-intensive business, the current pandemic can put a strain on the Balance Sheet which is already laden with debt. The valuation at current levels does not provide any margin of safety.

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