Your Stock Queries

Bliss GVS Pharma

I am holding 1000 shares of Bliss GVS Pharma for the past four years which were purchased at Rs 42 per share. Should I continue to hold or exit?

- Anand Modi, Via Email

Bliss GVS Pharma is a small-cap pharmaceutical company. It is mainly engaged in manufacturing of female contraceptives, suppositories and pessaries dosage forms. It has one of the largest portfolios in this category. The company exports its products in 60 countries globally.

On the financial front, the numbers posted by the company have remained muted for Q2FY14. The total income for Q2FY14 witnessed a decline of 5.24 per cent on YoY (Year to Year) basis to stand at Rs 99.38 crore as against Rs 104.87 crore reported during the same quarter last year. The bottom-line too declined by 4.70 per cent on YoY basis to stand at Rs 23.53 crore as against Rs 24.69 crore reported during Q2FY13. 

The decline in the bottom-line can be attributed to higher employee and interest cost which went higher by 49 per cent and 69 per cent respectively on YoY basis. The show on the EBITDA front is also not encouraging as the margins declined by 646 basis points on YoY basis for Q2FY14. But there are some positive factors too, firstly the stock trades at a TTM PE of 7.72x which is much lesser than other listed peers and also the company is a consistent dividend payer for the last eight years. 

At present we see that you are almost in a no profit and no loss kind of situation. Hence, we suggest that as we are already in the result season, it is better that you hold on to the counter till the company comes out with its Q3FY14 results and then take a call accordingly. 

Wockhardt

I am looking to invest in Wockhardt for a year’s time. Can I buy them at the current market price? 

- Anuj, Via Email

Wockhardt is one of the leading pharmaceutical companies in India. Its activities encompass pharmaceutical formulations, biopharmaceutical bulk and formulations, novel drug delivery system, new drug discovery programme and process engineering for Active Pharmaceutical Ingredients. Before we go into the financials let us take a look at the issues that have been surrounding the company. 

The company has been facing trouble in developed markets since early 2013, when its Waluj (Maharashtra) facility first came under the USFDA scanner, following manufacturing violations. Since then, many other of its domestic facilities have faced enforcements in the US and Europe. The import alert on the Chilkalthana plant is a big one as this unit has generated sales of around Rs 1700 crore in FY13. These factors have played a spoilsport and we have seen the prices decline from the levels of Rs 2000 to the current levels. 

Let us take a look at the financial performance of the company. The top-line witnessed a decline of 11 per cent on YoY basis for Q2FY14 to stand at Rs 1197 crore as against Rs 1347 crore reported in the same quarter last year. The bottom-line declined by 69 per cent on YoY basis to stand at Rs 138.50 crore for Q2FY14 as against Rs 452.64 crore for Q2FY13. The stock trades at a TTM PE of 3.65x. This may look cheap and lure investors to invest in it. But until and unless there is a clear clarity on the regulation front, we suggest you to avoid the stock for the time being.

Info Edge (India)

I am holding 100 shares of Info Edge (India) purchased at Rs 480 per share. What should be my next step?

- Nadeem, Via email

Info Edge is India’s premier on-line classifieds company in recruitment, matrimony, real estate and education. The company has a bouquet of websites and associated businesses in each of these segments. 

On the financial front, the company had witnessed mixed results for Q2FY14. The top-line of the company grew by 15.56 per cent on YoY basis to Rs 123 crore for Q2FY14 as against Rs 106 crore posted during Q2FY13. The EBITDA stood for the quarter stood at Rs 44.18 crore witnessing a jump of 20 per cent on YoY basis for Q2FY14. 

But, the bottom-line had remained flat declining by mere 0.15 per cent to stand at Rs 33.27 crore. This is mainly due to higher tax out go of Rs 15.54 crore during the quarter witnessing a jump of 26.65 per cent on YoY basis. 

On the valuation front, the stock discounts its trailing twelve month earnings by 56.47x and the company is also a consistent dividend payer for the last eight years. The valuation may look to be more but it is cheaper than that of Just Dial (although not a direct peer). At present we suggest you to hold the stock for longer term to garner better returns.

VST Tillers Tractors

I am holding 25 shares of VST Tillers Tractors bought at Rs 650 per share. Kindly advice whether this is the right time to buy some more shares at the current market price?

- Srinivasa, Via Email

VST Trillers Tractors is engaged in the business of Manufacturing of power tillers and diesel engines. The company’s products are power tillers, tractors, paddy transplanters and engines. The company operates in only one business segment viz. manufacturing and trading of agriculture machinery.

The company had witnessed better results for the quarter ended Q2FY14. The top-line of the company gained by 71.21 per cent on YoY basis to stand at Rs 152.12 crore for Q2FY14 as against Rs 88.85 crore reported during Q2FY13. The EBITDA margins for the period improved by 633 basis points on YoY basis to stand at 17.82 per cent. The bottomline of the company grew by 175 per cent on YoY basis to stand at Rs 18.08 crore for Q2FY14. The outlook given by the management is positive as it expects as the tractor sales is likely to double by FY15 to 12000 units from 6233 units reported during FY13. The company is trading at a PE of 9.54x. We suggest that you hold the stock for long term to garner better returns.