Your Stock Queries

JYOTI STRUCTURES

I had purchased shares of Jyoti Structures at Rs 100 per share, but the stock price has fallen since then. Please suggest what I should do with these now.

- G. Babu, Bhopal, Madhya Pradesh

Jyoti Structures (JSL), BSE/NSE Code 513250/JYOTISTRUC, with a face value of Rs 2, is currently trading at Rs 44.80, which is at a 55 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 100 and Rs 35 respectively.

JSL provides turnkey solutions worldwide in the field of high voltage power transmission lines and substations. It offers a range of services, including the design, project management and installation of high voltage underground cables and optical fibre ground wire networks. It also engages in manufacturing prototypes, microwave towers, windmill towers and railway electrification structures, as well as in fabricating and galvanising transmission towers and structures.

For the nine months ended December 2011, its topline witnessed a growth of 12 per cent on a YoY basis, and stood at Rs 1856 crore as against Rs 1657 crore for 9MFY11. However, the bottomline witnessed de-growth of 18.22 per cent YoY, and stood at Rs 62.08 crore as against Rs 75.91 crore for 9MFY11. The stock discounts its trailing 12-month earnings by 3.79x and the EV/EBITDA stands at 2.47x. The decline in the net profit can be attributed to the 50 per cent rise in interest outgo on a YoY basis.

Currently, the power sector is in a kind of gloom as a whole, and the ripple effects of this are being witnessed in related
sectors too. We suggest that you exit the counter at present, even if you have to book losses.

SRF

Please advise as to whether I should buy shares of SRF at the current price.

- A Krishnan, Via Email

SRF, BSE/NSE Code 503806/SRF, with a face value of Rs 10, is currently trading at Rs 235.80 with a 52-week high/low of Rs 353 and Rs 231 respectively.[PAGE BREAK]

The company is engaged in the manufacture and sale of technical textiles, chemicals, packaging films and engineering plastics in India as well as in other global markets. Its technical textile products include tyre cord fabrics for use as reinforcement material in cycles, passenger cars, light commercial vehicles and heavy commercial vehicles. It provides engineering plastic products for various markets, including automobiles, electricals and electronics, telecom, railways and consumer durables.

SRF’s performance for the nine months ended December 2011 has not been that great. Its topline witnessed a growth of 22 per cent on a YoY basis, and stood at Rs 2701 crore as against Rs 2211 crore for 9MFY11. Despite this, the bottomline witnessed de-growth of 13.52 per cent YoY, and stood at Rs 300.40 crore as against Rs 347.36 crore for 9MFY11. The stock discounts its trailing 12-month earnings by 3.10x and the EV/EBITDA stands at 2.40x. The company has a very healthy dividend yield, which stand at 6.05 per cent, and this is a highly positive factor. Its debt-to-equity ratio is also at a comfortable level of 0.50x. Investors can look forward to a steady dividend income from this stock over the longer term. You can enter the stock at the current price from a long-term perspective.

MARATHON NEXTGEN REALTY

I have purchased 100 shares of Marathon Nextgen Realty at Rs 115. Please suggest whether I should hold or sell these.

- Jaya Patil, Via Email

Marathon Nextgen Realty, BSE Code 503101, with a face value of Rs 10, is currently trading at Rs 146.05, which is at a 32 per cent premium to your acquisition cost. Its 52-week high/low stand at Rs 295 and Rs 110 respectively.

The company engages in the development of residential and commercial properties in India. Its project portfolio includes residential complexes, industrial estates, signature homes as well as retail and corporate spaces. The company is involved in property rental activities. It has a presence in the trade of office interior products, and operates as a dealer for Godrej. It also undertakes interior contracting jobs and annual maintenance contracts for office interiors.[PAGE BREAK]

For the nine months ended December 2011, its performance has not been that great. The topline witnessed a growth of merely 3.12 per cent on a YoY basis, and stood at Rs 76.73 crore as against Rs 74.41 crore for 9MFY11. The bottomline witnessed de-growth of 7.82 per cent YoY, and stood at Rs 63.93 crore as against Rs 69.35 crore for 9MFY11. The stock discounts its trailing 12-month earnings by 3.34x and the EV/EBITDA stands at 2.91x. The decline in the net profit can be attributed to a 25 per cent decline in the ‘Other Income’ on a YoY basis.

At present, the real estate and related sectors are not attractive propositions from an investor’s perspective. Therefore, we suggest that you book full profits in the counter and look at other attractive investment options in the equity space.

GEI INDUSTRIAL SYSTEMS

I have invested in 1000 shares of GEI Industrial Systems at Rs 154 per share. Please advise as to what I should do with these now.

- Kalpana Sen, Durgapur, West Bengal

GEI Industrial Systems (GEI), BSE/NSE Code 530743/GEIINDSYS, with a face value of Rs 10, is currently trading at Rs 126.25, with a 52-week high/low of Rs 215 and Rs 102 respectively. The stock is trading at an 18 per cent discount to your acquisition cost.

GEI engages in the design, manufacture, fabrication, erection and commissioning of air cooled heat exchangers and air cooled vacuum steam condensers for the oil, gas and power sectors, primarily in India. It also provides ambient air heaters for LNG re-gasification terminals. The company offers heavy fabrication power plant structures for power equipment, transmission towers, power plant equipment and substation structures, as well as finned tubes. It exports its products to Africa, Europe, the Middle East, the South East and the Far East Asian countries as well as to the Americas.

On the financial front, the results for 9MFY12 were not very encouraging. Its topline witnessed a growth of 10.54 per cent on a YoY basis, and stood at Rs 275.68 crore as against Rs 249.40 crore for 9MFY11. However, the bottomline witnessed de-growth of 31.93 per cent YoY, and stood at Rs 15.71 crore as against Rs 23.08 crore for 9MFY11. The company discounts its trailing 12-month earnings by 9.75x and the EV/EBITDA stands at 4.46x. The debt-to-equity ratio is around 1.06x, which may prove to be a spoilsport going forward. At present, we suggest that you exit the stock even if you have to book losses.