Your Stock Queries

Repro India

I have purchased shares of Repro India at Rs 245 per share. What is the medium-term target to exit from this counter?

- Nilesh D Patel, Via Email

Repro India, BSE/NSE Code 532687/REPRO, with a face value of Rs 10, is currently trading at Rs 224 with a 52-week high/low Rs 261 and Rs 138 respectively. This is at an 8.57 per cent discount to your acquisition cost.

Repro India provides integrated content, print and fulfilment solutions to corporate and educational markets. It has a presence primarily in India. On the overseas front, it has a presence in markets like Africa, the United States, Australia and the United Kingdom. Its services include the digitisation, conversion and management of content, printing and binding of books, warehousing and delivery. Repro has a combined capacity spread over 500000 sq.ft. For printing and binding, it has two plants, one at Surat, Gujarat and the other at Mahape, Mumbai. The Surat facility, which started in 2009, can print and bind up to a 100 million books a year. The Mahape plant can manufacture from one copy (POD) to a million (web/sheet offset) copies per day. The Mahape plant is India’s first commercial integrated printing facility.

On the financial front, the company has posted mixed results for Q1FY13. The topline witnessed a growth of 29 per cent on a YoY basis, which stood at Rs 93.81 crore as against Rs 72.76 crore for Q1FY12. The bottomline witnessed a flat growth of 3.68 per cent YoY for Q1FY13, which stood at Rs 9.02 crore as against Rs 8.70 crore for Q1FY12. However, the company has reported a compounded growth of 14.05 per cent and 28.18 per cent in its sales and profits respectively for the past three years. On the valuations front, the stock discounts its trailing 12-month earnings by 6.73x and the EV/EBITDA stands at 6.02x.

Rather than suggesting a target, we advise you to hold the scrip for one more quarter and take a call accordingly after looking at its financial performance.

Visaka Industries

Is it the right time to buy the stock of Visaka Industries at the current price?

- Sunanda Manna, Kolkata, West Bengal

Visaka Industries, BSE/NSE Code 509055/VISAKAIND, with a face value of Rs 10, is currently trading at Rs 136 with a 52-week high/low of Rs 141 and Rs 57 respectively.

Visaka Industries is a diversified company with a presence in fibre cement sheets, yarn and building products. The company has an installed capacity of 630000 tonnes of fibre sheets, with a network of 5000 stockists/dealers across India. It also has depots in 36 major cities and towns country-wide to ensure a smooth supply of its products.

On the financial front, the company has witnessed a better show for Q1FY13. The topline witnessed a growth of 34 per cent on a YoY basis for Q1FY13, which stood at Rs 282 crore as against Rs 210.58 crore for Q1FY12. The bottomline witnessed a stupendous growth of 92.68 per cent YoY for Q1FY13, which stood at Rs 30.25 crore as against Rs 15.70 crore for Q1FY12. On the valuations front, the stock discounts its trailing 12-month earning by 4.42x, which is lower as compared to that of its other listed peers like Ramco Industries and Everest Industries. The company is virtually debt-free, and the EV/EBITDA stands at 2.21x. It also has a healthy dividend yield at 3.68 per cent.

We suggest that you look at the stock from a longer-term perspective, but follow a staggered investment pattern rather than investing on a lump sum basis.[PAGE BREAK]

Welspun India

I have 500 shares of Welspun India purchased at Rs 80 per share. I would like to know its future and whether I can add more of these to my portfolio.

- Kishore HM, Via Email

Welspun India, BSE/NSE Code 514162/WELSPUNIND, with a face value of Rs 10, is currently trading at Rs 53.80 with a 52-week high/low of Rs 62 and Rs 22 respectively. It is currently trading at a discount of 32 per cent to your acquisition cost.

Welspun India is engaged in the manufacture and sale of home textiles. The company offers bed products such as bed sheets and pillow cases, as well as basic and decorative bedding. It also deals in bath products, including terry towels, bath rugs and bath robes. It distributes its products to approximately 32 countries including India, the United States, the United Kingdom, Canada, Australia, Portugal and Spain.

On the financial front, the company has witnessed a better show for Q1FY13. The topline witnessed a growth of 37.66 per cent on a YoY basis for Q1FY13, which stood at Rs 745.93 crore as against Rs 541.88 crore for Q1FY12. The bottomline witnessed a growth of 45.84 per cent YoY for Q1FY13, at Rs 38.53 crore as against Rs 26.42 crore for Q1FY12. On the valuations front, the stock discounts its trailing 12-month earning by 3.59x and the EV/EBITDA stands at 7.64x. The company has a debt of Rs 1741 crore as of FY11, taking its debt-to-equity ratio 2.60x, which is a cause for concern. However, in view of its performance, we suggest that you take a decision once the company announces its Q2FY13 results. Till then, hold on to the counter if you are not in a hurry to liquidate your position.

Smartlink Network Systems

Is it feasible to look for an entry in Smartlink Network Systems at the current price levels?

- Satish Pradhan, Pune, Maharashtra

Smartlink Network Systems, BSE/NSE Code 532419/SMARTLINK, with a face value of Rs 2, is currently trading at Rs 51.75 with a 52-week high/low of Rs 55 and Rs 38 respectively.

Smartlink Network Systems engages in developing, manufacturing, marketing, distributing and servicing networking products. In the last fiscal, the company had signed a business transfer agreement with Schneider Electric India for the sale of its structured cabling business (comprising the manufacture, sale and marketing of structured cabling products under the brand name ‘DIGILINK’) on slump sale basis as a going concern. The deal signed was for a consideration of Rs 503 crore to be adjusted for any net working capital adjustments.

On the financial front, the company has witnessed a muted show for Q1FY13. The topline witnessed a growth of 16.22 per cent YoY for Q1FY13, which stood at Rs 22.79 crore as against Rs 19.61 crore for Q1FY12. The bottomline witnessed de-growth from Rs 104.57 crore in Q1FY12 (after adjusting for the EOI) to a loss of Rs 0.51 crore for Q1FY13. The company has not witnessed any growth in the last three years on a CAGR basis in terms of both its sales and net profit. At present, there is no clear indication about its future strategy. The dividend yields may look good to you, but it must be noted that the dividend of Rs 32 that it had paid out is due to the selling off the business to Schneider. Therefore, we suggest that you avoid the counter and look at other options that will be value accretive in the long run.