Your Stock Queries

BF UTILITIES

Q: I had purchased 400 shares of BF Utilities at Rs 1065 per share, but the stock price has fallen since then. Please suggest what I should do with these shares. I can hold them for up to one year more.

- Vinod Kumar Sharma, Via Email

A: BF Utilities (BFUL), BSE/NSE Code 532430/BFUTILITIE, with a face value of Rs 5, is currently trading at Rs 370.65. This is at a 65 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 787 and Rs 259 respectively.

BFUL is a part of the USD 2.4 billion Kalyani Group. It earlier operated in two business segments, viz. infrastructure and investment. The company has undergone a business restructuring process by way of a composite scheme of arrangement. As part of this restructuring, the infrastructure business has remained with BFUL and the investment business has been transferred to a separate company, BF Investment. Following this, the company has three infrastructure projects, two of which are under the Bangalore-Mysore Infrastructure Corridor Project and the third is for the Hubli-Dharwad bypass road. BFUL also has a wind energy project of 18.33 MW.

On the financial front, the company’s performance for H1FY12 (it follows the September calendar) has been a mixed bag. The topline witnessed better growth on a YoY basis, and stood at Rs 9.94 crore as against Rs 3.56 crore for H1FY11. The bottomline witnessed some improvement, as the loss has declined to Rs 0.01 crore as against Rs 5.79 crore for H1FY11.No clear cut direction is currently emerging with regard to the future of the company. At present, we suggest that you exit the counter even if you have to book losses.

JET AIRWAYS

Q: I have purchased 250 shares of Jet Airways at Rs 450 per share. What should I do with these?

- Joy Dey, Noida, Uttar Pradesh

Jet Airways, BSE/NSE Code 532617/JETAIRWAYS, with a face value of Rs 10, is currently trading at Rs 322, which is at a 29 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 518 and Rs 167 respectively. Jet Airways provides passenger and cargo air transportation services in India and internationally. The company operates a fleet of 97 aircrafts, including 10 Boeing 777-300s, 12 Airbus A330-200s, 55 Boeing 737-700/800/900s, and 20 ATR 72-500 Turboprop aircrafts. It operates flights to 75 destinations, including 24 international destinations.

On the financial front, the company’s performance for FY12 is nothing to write home about. Its topline witnessed a growth of 16 per cent on a YoY basis, and stood at Rs 14815 crore as against Rs 12776 crore for FY11. At the bottomline level, it has reported a loss of Rs 1236 crore for FY12 as against a profit of Rs 9.69 crore for FY11. Jet has been reporting losses for the past five consecutive quarters, which is putting tremendous pressure on its already stretched balance sheet. As of FY12, the company has a loan of Rs 11030 crore, which is very high. More importantly, banks have become hesitant to extend further loans to the company for working capital purposes.

We suggest that you book losses in the counter and exit the sector as a whole, as it has been reeling under pressure for some time now.

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MANAPPURAM FINANCE

Q: I have purchased 2500 shares of Manappuram Finance at Rs 24.50 per share. Should I buy some more of these shares or sell those that I am holding?

- Ravindra Shanbhag, Via Email

A: Manappuram Finance, BSE/NSE Code 531213/MANAPPURAM, with a face value of Rs 2, is currently trading at Rs 21.85 with a 52-week high/low of Rs 69 and Rs 19 respectively. It is trading at a 10 per cent discount to your acquisition cost.

Manappuram Finance is a Non-Banking Finance Company (NBFC) that provides funds and fee-based services. Its loan portfolio includes gold loans, personal loans, business loans, hypothecation loans and vehicle loans. It also offers money transfer facilities, insurance, gold coins, asset financing, distribution of mutual funds and foreign exchange services.

The company’s operating income for FY12 stood at Rs 2615.55 crore as compared to Rs 1165.42 crore for FY11, up by a solid 124 per cent. Its net profit grew to Rs 591.46 crore as compared to Rs 282.66 crore for FY11. The provision towards income tax stood at Rs 285.75 crore as against Rs 141.23 crore for the preceding year. The capital adequacy ratio (CAR) for FY12 has been maintained at a higher level of 23.26 per cent. During the year, the company has expanded its nationwide branch network from 2064 branches in FY11 to 2908 branches in FY12. The increase in profits can be attributed to the growth in AUM, which stood at Rs 11630 crore for FY12, a 54 per cent increase on a YoY basis. The total gold loan disbursements during the year amounted to Rs 31698 crore as against Rs 18057 crore for FY11. On the valuations front, the scrip trades at a P/E of 3.11x.

At present, we suggest that you hold on to the shares that you own to garner better returns over the longer term. It is not advisable to add further shares to your portfolio.

PRATIBHA INDUSTRIES

I am holding 100 shares of Pratibha Industries purchased at Rs 48 per share. What should my next step be with regard to these?

- Anuj Hombali, Via Email

Pratibha Industries, BSE/NSE Code 532718/PRATIBHA, with a face value of Rs 2, is currently trading at Rs 39.70 with a 52-week high/low of Rs 60/28. This is at a 17 per cent discount to your acquisition cost.

Pratibha Industries, together with its subsidiaries, operates in the infrastructure and construction space in India. The company has a robust order book of Rs 6159 crore as of 31st December, 2011, which provides ample revenue visibility for the next 30-36 months. The government’s thrust on infrastructure development is likely to further improve its order inflows. During FY12, the company bagged projects in specialised verticals like micro-tunnelling and metros.

On the financial front, its performance for FY12 has been quite good. The topline witnessed a growth of 30.75 per cent on a YoY basis, and stood at Rs 1664 crore as against Rs 1273 crore for FY11. The bottomline witnessed a growth of 13.51 per cent, and stood at Rs 81.09 crore as against Rs 71.44 crore for FY11. On the valuations front, the stock discounts its trailing 12-month earnings by 4.95x and the EV/EBITDA stands at 3.89x. The dividend yield for the stock stands at 1.59 per cent, and the debt-to-equity ratio of the company for FY11 stands at 0.90x.

At present, we suggest that you hold on to the counter for a longer term with better returns in mind.