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Orchid Chemicals & Pharmaceuticals

I have purchased Orchid Chemicals & Pharmaceuticals shares at Rs 71.25 per share. Please suggest what should be my next step.

- Mohit, Via Email

EXIT

Orchid Chemicals & Pharmaceuticals is an India based pharmaceutical, operating in therapeutic areas like cardio, anti-diabetic, neuropsychiatry and APIs.

The company has not been able to show enthusiastic results for the last few quarters. This trend has continued for the quarter ended September 2013 too. The company for Q2FY14 posted a net loss of Rs 200 crore as against a loss of Rs 19.95 crore reported during the same quarter last fiscal. The company has failed to remain in black even on the operating profit front too. The operating loss for the quarter stood at Rs 50.77 crore as against a loss of Rs 0.11 crore reported during Q2FY13. The reason behind the company posting a loss at the operating level can be attributed to higher raw material cost and higher other expenses which went up by 49 per cent and 75 per cent respectively for Q2FY14 on YoY basis. The company has also paid interest of Rs 121 crore during the quarter, which is 58 per cent higher than what was reported in Q2FY13. However, the topline has gone up by 15 per cent on YoY basis to stand at Rs 380.47 crore for Q2FY14 as against Rs 330.55 reported during Q2FY13. Looking at the financials it can be said that the company is struggling hard to come out of the losses. We are aware that you are sitting on a considerable losses, still we suggest you to exit the stock for the time being.

SpiceJet

I bought some shares of SpiceJet at Rs 19.70 per share. Should I hold or exit? 

- Mandoz Singh, Via Email

HOLD

Promoted by the Sun Group, Spicejet is an Indian company engaged in airline business. The company operates in only one segment which is transportation. The company operates both domestic and international flights. At present the company has a fleet of 57 aircrafts connecting different domestic and international destinations.

The Indian airline sector has been reeling under pressure for some time now. This can be substantiated by looking at the quantum of losses that the airlines company has posted in the past. Spicejet is no exception to this. After posting a profit of Rs 50.56 crore in Q1FY14, the company has again gone back to red posting a net loss of Rs 559.49 crore for Q2FY14. Even on the operating front during Q2FY14, the company has posted operating loss of Rs 534 crore as against a loss of Rs 150.27 crore for the same quarter last fiscal. The drop in the profitability can be attributed to higher Fuel (+11 per cent), depreciation (+118 per cent) and other expenses (+57.44 per cent) on YoY basis.

However, it can be said that the second quarter is a seasonally weak one. Hence, we suggest you to hold the counter for the time being till the company comes out with its December quarter results which is a seasonally strong quarter and take your call accordingly.

Dena Bank

I am holding 250 shares of Dena Bank at the average rate of Rs 85.40 since the last six months. What should I do hold or exit?

- Anupam Bhatnagar, Via email

EXIT

Dena Bank, incorporated in 1938, is a mid-sized public sector bank with 1509 branches. Around 60 per cent of the branches are located in Gujarat and Maharashtra while 57 per cent of the total branches are in rural and semi-urban areas.

On the financial front the company continues to face pressure on the asset quality front. Fresh slippages of Rs 480 crore (slippage ratio of 2.9 per cent) have been the highest in the last several quarters for Q2FY14. The outstanding restructured book has risen to Rs 7079 crore which is 11 per cent of the total advances and remains a cause of concern. The management expects fresh slippages to remain elevated at Rs 400 crore while the restructured asset pipeline of Rs 750 crore is envisaged. Further, the bank witnessed depreciation on its investment portfolio of Rs 387 crore of which one-third amounting to Rs 129 crore was provided in Q2FY14. The bank also made additional provision of Rs 48 crore on proposed wage revision. The net profit for the quarter fell by 55 per cent on YoY basis to stand at Rs 107 crore. GNPA and NNPA ratios stand at 3 per cent and 2 per cent, respectively which is higher at any point of time. At present we suggest you to exit the stock even if you have to bear losses.

Selan Exploration Technology

I am holding shares of Selan Exploration Technology for the last two years. Should I hold of exit?

- Dileep, Via Email

EXIT

Selan Exploration Technology (Selan) is engaged in oil exploration and production since 1992. Selan was amongst the first private sector companies to have obtained rights to develop three discovered oilfields situated in the state of Gujarat namely Bakrol, Indrora and Lohar all with proven oil and gas reserves. Selan was subsequently awarded two more fields in Gujarat namely Ognaj Oilfield and Karjisan Gas field.

The financial performance of the company has remained subdued for the quarter ended September 2013. The topline of the company has witnessed growth of 12 per cent on YoY basis to stand at Rs 26.93 crore for Q2FY14 as against Rs 24.05 crore reported during the same quarter last fiscal. The operating profit for Q2FY14 came in at Rs 14.71 crore as against Rs 15.55 crore reported during Q2FY13 witnessing de-growth of 5.40 per cent. The net profit of the company for the quarter came in at Rs 11.83 crore as against Rs 12.42 crore reported during the corresponding quarter last fiscal declining by 4.75 per cent. On the valuation front, the stock discounts are trailing twelve month earnings by 13.62x. There is few details on the future path of the company is available on the public domain. Hence, we suggest you to exit the stock at this juncture.