Solara, GE Power, Stove Kraft tank up to 35% in one week on weak Q3 results

Shares of Solara Active Pharma Sciences, GE Power and Stove Kraft have tanked up to 35 per cent during this week after the companies reported a weak set of numbers for the quarter ended December 2021 (Q3FY22). In comparison, the S&P BSE Sensex was down 0.86 per cent in this time period. 

The stock of Solara Active hit a fresh 52-week low of Rs 620.20, down nearly 20 per cent in Friday’s intra-day trade, falling 36 per cent in the past two days on the BSE, after it reported a consolidated net loss of Rs 140 crore in December quarter (Q3FY22), due to lower revenue. The pharmaceutical company had posted a profit of Rs 65.78 crore in the year-ago quarter (Q3FY21).

Solara also announced that Bharath R Sesha has tendered his resignation as managing director & chief executive officer and director (MD & CEO) of the company to pursue interests outside the company. Rajesh Salwan, who currently is the executive vice chairman of the company, has been given the additional responsibility of MD & CEO, the company said.

In the past one week, the stock has declined 35 per cent from a level of Rs 949.25. It has corrected 67 per cent from its 52-week high level of Rs 1,859.30 touched on May 19, 2021.

In Q3FY22, the company's revenue declined 74 per cent sequentially and 76 per cent year-on-year (YoY) to Rs 105 crore. It reported operating loss of Rs 81.7 crore as against profit of Rs 88.5 crore in Q3FY21.

During the quarter, revenue from operations declined on account of continued demand softness of Ibuprofen & few other key products and delay in approval for Covld-19 products. Further, the group also accounted for provision towards sales return to execute its strategy of shifting towards sales to direct customer by significantly limiting sales through channel.

The management said besides this one-off impact Solara's Q3FY22 performance was muted mainly due to subdued regulated market demand and higher costs driven by volatile material pricing environment and increased logistics cost.

That said, the management believes that the situation has bottomed out on the demand side, and the business would start seeing normalcy from the Q4FY22.

Shares of Stove Kraft dipped 4 per cent to Rs 606.30 in intra-day trade today, tanking 30 per cent in the past one week. The home & kitchen appliances maker reported a sharp 67 per cent year-on-year (YoY) decline in its profit after tax (PAT) of Rs 11.1 crore in Q3FY22, due to higher operational cost. The company had posted PAT of Rs 33.50 crore in year ago quarter (Q3FY21).

In Q3FY22, the company’s revenue remained flat at Rs 298 crore, while earnings before interest tax and depreciation and amortization (ebitda) margin contracted 770 bps at 7.2 per cent during the quarter.

The company said it witnessed cost pressures from raw material price increase during the quarter. However, the company did not pass on this increase to end-consumers as it was expecting this increase to reverse, which did not happen. As a result, both gross margin and EBITDA margin saw a decline when compared to last year.

A tepid growth in revenue, primarily driven by a higher base in FY21 since Diwali was in middle of November last year and consequently had a positive impact in third quarter of FY21. For this year, majority of the Diwali purchases occurred before 3rd quarter and as a result volumes were relatively muted when compared to last year.

Shares of GE Power India too hit a fresh 52-week low of Rs 172, having plunged 10 per cent in intra-day trade today. In the past one week, the stock of the power generation equipment maker has slipped 29 per cent.

It has fallen 28 per cent in the last two trading days on reporting a consolidated net loss of Rs 34.12 crore in Q3FY22. The company posted net profit of Rs 35.09 crore in Q3FY21. Total income for the quarter remained flat at Rs 798 crore from Rs 790 crore in year ago quarter.

The management said the company has booked orders worth Rs 96.1 crore including a significant mills spare parts order for the year from NTPC Rihand.

“We have seen 65 per cent YoY growth in Q3 in core services and this was the highest quarterly intake in the FY. However, finalization of key orders in upgrades got postponed due to deferment of the customer’s outage schedule,” the management said.