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TULSI EXTRUSIONS

I have 1000 shares of Tulsi Extrusions purchased at Rs 25 per share. Please advise as to whether I should hold or sell these.
-R Raj, Kottayam, Kerala

Tulsi Extrusions, BSE/NSE Code 532948/TULSI, with a face value of Rs 10, is currently trading at Rs 9.35. This is at a 62 per cent discount to your acquisition cost. Its 52-week high/low are Rs 28 and Rs 8 respectively.

Tulsi Extrusions engages in the manufacture and sale of plastic pipes in India. The company provides a range of pipes, including those for sprinkler irrigation systems, nano drip irrigation systems, CPVC pipes and fittings, polyvinyl chloride (PVC) pipes, PVC casings and screen pipes, among others. It also offers fittings such as inline drippers, PVC fabricated fittings, PVC moulded fittings and SWR fittings. In addition, the company is also involved in the trade of construction input items such as tore steel, MS angles, MS channels, MS plates and cement.

On the financial front, its performance for H1 FY12 has been quite mixed. The topline witnessed a growth of 29 per cent on a YoY basis, and stands at Rs 78 crore for H1 FY12 as against Rs 60 crore for H1 FY11. The bottomline has witnessed degrowth of 32 per cent on a YoY basis, and stands at Rs 2.62 crore for H1 FY12 as against Rs 3.88 crore for H1 FY11. Another worrying factor is that there has been a steep jump in the interest costs for H1 FY12 by nearly 42 per cent on a YoY basis.On the valuations front, the stock discounts its trailing 12-month earnings by 33x. This is much higher as compared to its peers in the listed space, which trade at a single digit PE. The EV/EBITDA stands at 5.66x. The stock looks on the expensive side, and therefore, we suggest that you exit the counter even if you have to book losses.

HYDERABAD INDUSTRIES


I have 35 shares of Hyderabad Industries purchased at the rate of Rs 400 per share. Please suggest what I should do.
-T Bhatt, Via Email

Hyderabad Industries, BSE/NSE Code 509675/HYDRBADIND, with a face value of Rs 10, is currently trading at Rs 297.40, at a 26 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 516 and Rs 255 respectively. [PAGE BREAK]

Hyderabad Industries manufactures and markets building and thermal insulation products. It provides a range of roofing sheets, including accessories and moulded goods, fibre cement corrugated sheets, metal roofing sheets, and PVA fibre cement corrugated sheets. The company also offers partitions, such as flex-o-boards, fibre cement flat boards, and green building panels. It also manufactures and markets calcium silicate insulating materials used in the cement and fertilisers sectors, as well as the power sector, in kilns, furnaces and boilers.

The company offers its products primarily under the brand names Charminar, Aerocon and HYSIL. On the financial front, the company’s performance for H1 FY12 has been pretty flat. The topline witnessed a growth of 14 per cent YoY, and stood at Rs 416 crore for H1 FY12 as against Rs 365 crore for H1 FY11. The bottomline witnessed de-growth of 3.83 per cent on a YoY basis, and stood at Rs 32.43 crore for H1 FY12 as against Rs 33.72 crore for H1 FY11. On the valuations front, the stock discounts its trailing 12-month earnings by 4.50x and the EV/EBITDA stands at 2.94x. A point worth mentioning here is that the company has a dividend yield of 5.65 per cent. However, the company’s performance has been witnessing some fluctuation in the bottomline, and a real trend cannot be established. It is also finding it difficult to secure acceptance for its products among real estate developers. Therefore, we suggest that you exit the stock even if you have to book losses.

MAHANAGAR TELEPHONE NIGAM

I have 300 shares of Mahanagar Telephone Nigam purchased at an average price of Rs 75 per share, and have been holding these for more than one year. Should I hold the stocks or book a loss?
-Nitin Raichura, Pune, Maharashtra

Mahanagar Telephone Nigam (MTNL), BSE/NSE Code 500108/MTNL, with a face value of Rs 10, is currently trading at Rs 27, which is at a 64 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 56 and Rs 22 respectively.

MTNL provides telecommunication services in Delhi and Mumbai. The company offers a range of telecom services such as fixed landline telephones, 2G and 3G, GSM and CDMA mobile connections, international long distance, broadband, IPTV, VOIP and leased line services.

On the financial front, the company has not been performing well and has remained in the red for the past eight quarters. The topline witnessed de-growth of 14 per cent on a YoY basis, and stood at Rs 1739 crore for H1 FY12 as against Rs 2035 crore for H1 FY11. On the bottomline front, the company reported a loss of Rs 1714 crore for H1 FY12 as against a loss of Rs 1056 crore in H1 FY11. This is particularly because of the steep increase in the interest cost of the company, which went up to Rs 421 crore from Rs 172 crore during the corresponding period last year. Its debt-to-equity ratio stands at 1.13x, which is not a pleasant sign in view of the high interest rate scenario.

The telecom sector has been reeling under pressure for long. Moreover, there have been no initiatives taken by the company
to rejuvenate its subscriber base. Therefore, at this point we suggest that you exit the stock even if you have to book losses.

DREDGING CORPORATION OF INDIA

I am holding 500 shares of Dredging Corporation of India purchased at Rs 450 per share. What should I do with these?
-Pravin C Singhi, Via Email

Dredging Corporation of India (DCI), BSE/NSE Code 523618/ DREDGECORP, with a face value of Rs 10, is currently trading at Rs 288, which is at a 36 per cent discount to your acquisition cost. Its 52-week high/low are Rs 440 and Rs 187 respectively.[PAGE BREAK]

DCI provides a range of dredging and allied services to major and minor ports, the Indian navy, fishing harbours and other maritime organisations in India and abroad. It offers maintenance dredging services and capital dredging services that comprise removing virgin soil to create the designed depth in water bodies/adjacent to water bodies. The company also provides beach nourishment in the coastal line from the adjoining areas. As of March 31, 2011, the company operated a fleet of 10 trailer suction hopper dredgers and three cutter suction dredgers.

For H1 FY12, the company’s performance has been pretty muted. Its topline declined by five per cent on a YoY basis, and stood at Rs 228 crore as against Rs 239 crore for H1 FY11. The bottomline too witnessed de-growth of 31 per cent on a YoY basis, and stood at Rs 12.82 crore for H1 FY12 as against Rs 18.65 crore for H1 FY11. On the valuations front, the stock discounts its trailing 12-month earnings by 23.92x. The sole positive for the company is that it is a zero-debt company. The bottomline has witnessed some uptick in the recently concluded Q2 FY12, and hence, we suggest that you hold on to the stock till the end of this fiscal before taking any further call.

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