Your Stock Queries
6/28/2012 9:00 PM Thursday
DSIJ equity research experts add value to subscriber's stock portfolio by giving unbiased advice. Ask about your portfolio problem and get your stock queries answered.
VARUN SHIPPING COMPANY
Q: I have purchased 1500 shares of Varun Shipping at Rs 18 per share. Kindly advise me about the prospects of the company.
- Bhaskar Joshi , Via Email
A: Varun Shipping, BSE/NSE Code 500465/VARUNSHIP, with a face value of Rs 10, is currently trading at Rs 15, which is at a 16 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 26 and Rs 15 respectively.
Varun Shipping owns more than 20 vessels and operates in the hydrocarbons sector. It offers energy transportation as well as offshore exploration and production support services. The company deploys LPG carriers with some large charterers on a mix of time charters and spot charters. It also participates in the seaborne transportation of liquid cargo globally, and offers anchor handling, towing and supply vessels to offshore oil and gas companies for the exploration, production and development of oil and natural gas.
On the financial front, the company ended FY12 on a dismal note. Its topline stood at Rs 364.51 crore as against Rs 836.85 crore, marking de-growth of 56 per cent on a YoY basis. The bottomline witnessed de-growth of 37.76 per cent, and stood at Rs 9.18 crore as against Rs 14.75 crore for FY11. The company’s bottomline has been in a consistent decline over the past five fiscals, which is not encouraging at all. On the valuations front, it trades at a P/E of 24.76x and the EV/EBITDA stands at 7.10x, with the debt-to-equity ratio at 3.32x. It is better to exit the stock at this juncture even if you have to book losses.
Q: I am holding 1500 shares of KCP bought at Rs 33 per share. Kindly guide me on whether I should hold the stock or sell it off.
- J. Prabhakar, Via Email
A: KCP, BSE/NSE Code 590066/KCP, with a face value of Rs 1, is currently trading at Rs 30.50, which is at a 7.57 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 37 and Rs 22 respectively.
KCP engages in the cement, heavy engineering, sugar and biotechnology businesses, primarily in India and South-East Asia. The company manufactures and sells Portland cement. It also manufactures a range of machinery for companies in various industries including sugar, cement, steel, alumina, fertilisers, chemicals and petrochemicals, as also for power plants. In addition, the company produces a range of natural colouring products comprising paprika, curcumin and annatto for the food, cosmetics and pharmaceuticals industries. It also produces refined sugar and white sugar.
On the financial front, its topline witnessed a growth of 51.55 per cent for FY12 on a YoY basis, and stood at Rs 1016 crore as against Rs 670 crore for FY11. The bottomline witnessed a growth of 35 per cent, and stood at Rs 106 crore as against Rs 78.65 crore for FY11. On the valuations front, the stock discounts its FY12 earnings by 3.71x and the EV/EBITDA stands at 4.08x. The company has a dividend yield of 4.27 per cent, which is also worth a mention. We suggest that you hold the stock from a longer-term perspective.
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