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| 3/7/2013 9:00 PM Thursday

ELGI EQUIPMENTS

I have bought 250 shares of this company. It is trading below my purchase price. Please suggest me the next step of action ?
Bhuvnesh Hasija, Via Email

HOLD

BSE/NSE Code 532488/DIVISLAB
Face Value Rs 2
CMP Rs 1070
52-Week High/Low Rs 1234/Rs 711
Current Profit/(Loss)

NA

Any investment decision should be based on one basic premise; do you have the capacity to hold on to it even if it means sitting on some losses? You are suggesting that the stock is currently trading below your purchase price. We are not clear about the quantum of losses that you are currently sitting on. However, here is our suggestion.

ELGI Equipments manufactures and sells air compressors and automobile service station equipment in India. The company also offers automotive equipment, including lifting equipment, wheel servicing equipment, diagnostic equipment, lube equipment, body shop equipment and fume exhaust extraction systems to name a few.

The performance of the company, on the financial front, has not been too great. Its topline for Q3FY13 witnessed a growth of 14.22 per cent to stand at Rs 286.87 crore as against Rs 251.15 crore for Q3FY12. The bottomline witnessed a decline of 29.86 per cent on a YoY basis for Q3FY13 to stand at Rs 12.10 crore as against Rs 17.25 crore for Q3FY12. The fall in the bottomline can be attributed to higher costs. The better part about this company is that it has a negligible debt of Rs 9 crore in its books. The financials may look weak but are not bad. The company is still into profits and the balance sheet surely bears strength owing to a negligible debt. So coming back to our original question, do you have the capacity of holding on to the scrip even though you may be down from the levels you bought it at? If yes, then we would suggest you to hold on to the counter till the full year results are declared and then take a call accordingly.

 

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