Your Stock Queries
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MAHARASHTRA SEAMLESS
I am holding 250 shares of Maharashtra Seamless, purchased at Rs 200 per share. Should I continue to hold them or book profit?
- Deven Gupta, Via Email
BP
| BSE/NSE Code | 500265/MAHASEAMLES |
| Face Value | Rs 5 |
| CMP | Rs 237 |
| 52-Week high/low | Rs 399/Rs 199 |
| Current Profit/(Loss) | 18.50 per cent |
This looks like the right time for you to have raised a question about your shares in Maharashtra Seamless. Let us first take a look at what business the company is into.
Maharashtra Seamless, a subsidiary of the D P Jindal group engages in the manufacture and sale of seamless pipes and tubes primarily in India. These seamless pipes and tubes have applications in the oil and gas, automotive, hydrocarbon processes, as also in bearing, hydraulic cylinder, boiler, heat exchanger, super heater and condenser to name a few. The company also manufactures and sells ERW pipes for applications in the fields of natural gas or oil, diesel, drinking water, and sewage/water treatment. In addition, it is involved in the generation of electricity through a wind power generation plant.
The company has seen some sort of disappointment as far as the financial numbers are concerned for the recently concluded third quarter of FY13. The topline witnessed a decline of 36.58 per cent on a YoY basis for Q3FY13 to stand at Rs 391.62 crore as against Rs 617.47 crore for Q3FY12. On the other hand, the bottomline too witnessed a decline of 64.94 per cent on a YoY basis to stand at Rs 28.40 crore for Q3FY13 as against Rs 81.01 crore for Q3FY12. If we look at the results carefully, we find that the topline and the bottomline have been on a southward journey since the last four consecutive quarters. On the valuation front, the company discounts its trailing twelve-month earnings by 7.55x and the EV/EBITDA stands at 3.52x. Although the valuations look attractive and the company is virtually debt free, some concerns remains on its performance. At this juncture, we feel that you are sitting on a considerable amount of profits. Therefore we suggest you to book profit in the counter.
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VAKRANGEE SOFTWARES
I have bought the shares of Vakrangee Softwares at Rs 55 per share. Shall I exit or hold the counter as it has reached a 52-week high?
- Hiten Dholakia, Via Email
HOLD
| BSE/NSE Code | 511431/VAKRANSOFT |
| Face Value | Rs 1 |
| CMP | Rs 70.65 |
| 52-Week high/low | Rs 70.65/Rs 30 |
| Current Profit/(Loss) | 28.45 per cent |
Since you have not mentioned the number of shares you hold, we are not too sure of the amount of money that is at stake. However, here’s an analysis of the company’s business and its financial performance which will enable you to take a call.
Vakrangee Softwares, together with its subsidiaries, provides e-governance related solutions, system integration, and IT enabled services in India and internationally. The company serves the government, telecommunication, banking and financial services, utilities, transport and aviation, education, e-publishing, healthcare and life sciences, and retail and other industries. It has tied up with major software and hardware companies in the world to offer the best in class technology solutions. Vakrangee also has one of the largest capacities in delivering large scale document and print management solutions.
The financial performance of the company for Q3FY13 has been a decent one. The topline witnessed a growth of 14.19 per cent on a YoY basis for Q3FY13 to stand at Rs 388.91 crore as against Rs 340.58 crore witnessed during Q3FY12. The bottomline witnessed a growth of a stupendous 89.46 per cent on a YoY basis to stand at Rs 32.72 crore for Q3FY13 as against Rs 17.27 crore for Q3FY12. The December 2012 quarter has been the fifth consecutive quarter where the bottomline has witnessed a northward journey. On the valuation front, the stock discounts its trailing twelve-month earnings by 34.53x and the EV/EVITDA stands at 15.44x.
The reason behind a strong rally in the counter in the recent past is due to the grant of an ‘In-principle Authorisation’ by the Reserve Bank of India for setting up of White Label ATMs (WLAs) in India. As a White Level ATM operator (WLAO), it will set up, own and operate at least 15000 ATMs under its own brand in a three year timeline across the country. This is a positive development for the company. Coming to your query, you can book partial profits as you can earn a profit of up to 30 per cent and hold the rest till the company’s FY13 results are out.
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PIPAVAV DEFENCE AND OFFSHORE ENGINEERING COMPANY
I am holding 650 shares of this company since the last one year. Should I hold the counter or exit?
- Shailesh Padhye, Via Email
EXIT
| BSE/NSE Code | 533107/PIPAVAVDOC |
| Face Value | Rs 10 |
| CMP | Rs 74.95 |
| 52-Week high/low | Rs 98/Rs 53 |
| Current Profit/(Loss) | NA |
It would have been easier for us to come to make a concrete analysis of your holdings in the company had you mentioned the amount at which you purchased these shares. Nevertheless, it is still possible to resolve your query, by looking at the company’s current position.
Pipavav Defence and Offshore Engineering Company engages in defence shipbuilding, and construction of offshore oil and gas exploration and production assets in India. It also provides commercial shipbuilding and repairs, and heavy engineering services, defense hardware and services for the Indian armed forces. The company’s product range comprises of crude oil products, and chemical tankers, VLOC, capesize, and post panamax bulk carriers. The company was formerly known as Pipavav Shipyard and changed its name to Pipavav Defence and Offshore Engineering Company in June 2011.
On the financial front, the company’s results for the quarter ended December 2012 have been muted. The topline witnessed a growth of 34.18 per cent on a YoY basis for Q3FY13 to stand at Rs 619.07 crore as against Rs 461.36 crore for Q3FY12. On the other hand, the bottomline witnessed a decline of 28.11 per cent on a YoY basis to stand at Rs 10.05 crore for Q3FY13 as against Rs 13.98 crore for Q3FY12. On the valuation front, the stock is trading at a PE of a whopping 686x for its trailing twelve-month earnings and the EV/EBITDA stands at 18.42x. The company has a debt of Rs 3209 crore on its books as of FY12, taking its debt to equity ratio to 1.61x.
Considering this performance, it is advisable that you exit the stock, although we cannot estimate the extent of profit or loss, being unaware of the purchase price.
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CAIRN INDIA
I have bought 1000 shares of this company recently. Should I consider it to be a long-term bet for my portfolio?
- Gauravi Pasricha, Via Email
BUY
| BSE/NSE Code | 532792/CAIRN |
| Face Value | Rs 10 |
| CMP | Rs 290 |
| 52-Week high/low | Rs 366/Rs 268 |
| Current Profit/(Loss) | NA |
You already seem to have a fair idea of your holdings and their potential. In any case, following is a peek at the company’s prospects and an answer to your query.
Cairn India is primarily an independent oil and gas exploration and production company. It holds interests in approximately 10 blocks located in the Barmer basin, the Krishna-Godavari basin, the Mumbai Offshore basin, the Kerala-Konkan basin, the Palar-Pennar basin, and the Cambay basin in India, as well as in the Mannar basin in Sri Lanka. The company also operates a pipeline and storage terminal. Cairn India sells its oil to refineries and gas to the public and private buyers. The company was incorporated in 2006 and is a subsidiary of Vedanta Resources Plc. In a recent development, Cairn India has made its latest oil discovery, the 26th discovery so far in the RJ-ON-90/1 block, following recent policy clarity by the Government of India to conduct exploration activity in development blocks.
The financial numbers of the company are quite impressive for Q3FY13. The topline witnessed a growth of 38.13 per cent on a YoY basis to stand at Rs 4277.61 crore for Q3FY13 as against Rs 3096.76 crore for Q3FY12. The bottomline witnessed a growth of 47.88 per cent to stand at Rs 3344.89 crore for Q3FY13 as against Rs 2261.93 crore for Q3FY12. On the valuation front, the stock discounts its trailing twelve-month earnings by 4.75x and the EV/EBITDA stands at 5.03x. The debt to equity ratio stands at a miniscule 0.06x.
Answering your query, we can say that it is a good idea to look at this counter as a long-term investment.