Your Stock Queries

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.

SURYACHAKRA POWER CORPORATION

Q: I am holding 7050 shares of Suryachakra Power Corporation bought at Rs 3.75 per share. Should I hold the stock or sell it off?

- Pankaj Sahu, Via Email

A: Suryachakra Power Corporation (SPCL), BSE Code 532874, with a face value of Rs 10, is currently trading at Rs 1.50, which is at a 60 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 14 and Re 1 respectively.

SPCL, together with its subsidiaries, engages in the generation and sale of electricity in India. The company owns and operates two biomass-based power plants at Champa-Janjgir and Raipur in Chhattisgarh. It is also developing two more biomass-based power projects of 10 MW each at Amravati and Hingoli in Maharashtra.

On the financial front, the company’s performance has not been very impressive. The topline witnessed a growth of merely 7.10 per cent for FY12, and stood at Rs 153.66 crore as against Rs 143.48 crore for FY11. For the first time in the last six years, the company has reported a loss of Rs 3.48 crore for FY12 as against a profit of Rs 4.04 crore for FY11. This was primarily on account of the higher interest cost, which went up by 56 per cent on a YoY basis for FY12. The operating and the net profit margins have witnessed a drop by 10 basis points and 497 basis points respectively.

At present, we suggest that you exit the stock even if you have to book losses.

ALLCARGO LOGISTICS

Q: I am holding 500 shares of Allcargo Logistics purchased at an average price of Rs 110 per share. Please guide me as to what I should do with this stock.

A: Allcargo Logistics, BSE/NSE Code 532749/ALLCARGO, with a face value of Rs 2, is currently trading at Rs 130.25, which is at an 18 per cent premium to your cost of acquisition. Its 52-week high/low stand at Rs 176 and Rs 108 respectively.

Allcargo provides logistics services globally. The company offers specialised logistics services across multimodal transport operations, container freight station operations and project & engineering solutions. It currently operates out of its 140 offices in 62 countries, and is supported by an even larger network of franchisee offices across the world.

It has posted its 15-month results as of March 2012, which is not comparable with its corresponding period performance. For a more meaningful comparison, we have considered its performance for CY11. The topline witnessed a growth of 18.70 per cent for CY11 to touch Rs 3396.30 crore. It reported a profit of Rs 222.87 crore in CY11 as against Rs 165.92 crore for CY10, witnessing a growth of 34.32 per cent. The stock discounts its trailing 12-month earnings by 7.67x and its EV/EBITDA stands at 6.50x. The debt-to-equity ratio stands at a mere 0.34x, which is a positive sign. It also has an impressive dividend yield of 2.32 per cent.

At present, we suggest that you hold on to the stock from a longer-term perspective if you are not in a hurry to sell it off.

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LYKA LABS

Q: I am holding 2000 shares of Lyka Labs bought at Rs 10.50 per share. Kindly guide me as to whether I should hold or exit the counter.

- Sagaar Mehta, Via Email

A: Lyka Labs, BSE/NSE Code 500259/LYKALABS, with a face value of Rs 10, is currently trading at Rs 13.20. Its 52-week high/low are Rs 21 and Rs 8 respectively, and the stock is 21 per cent up from the level at which you had bought it.

Lyka Labs engages in contract manufacturing and supplying freeze-dried drugs in India. It undertakes the manufacturing of lyophilised products in various formulations, such as Caphalesporin combination in the form of injections, tablets, ointments and syrups. The company also markets various products to hospitals and institutions, including anti-infectives such as systemic anti-malarials, anti-fungals and anti-bacterials for serious infections, as well as anesthetics, anti-ulcerants, and steroids in parenteral dosage forms. Further, the company also markets branded generic products in all forms. It exports its products to Sri Lanka, Congo, Sudan, Kenya, Peru, Nigeria, Uganda and the Francophonic African countries.

On the financial front, its performance has not been good. During the trailing four quarters, the topline witnessed degrowth of 25 per cent on a YoY basis, and stood at Rs 101.34 crore as against Rs 134.99 crore during the corresponding period last year. During the same period, it reported a loss of Rs 4.33 crore as against a loss of Rs 1.65 crore last year. Its debt-to-equity ratio stands at 1.20x, which is a cause of concern, and the EV/EBITDA stands at 4.53x. At present, we suggest that you book full profits in the counter and be safe rather than sorry.

ADITYA BIRLA NUVO

Q: I have purchased 50 shares of Aditya Birla Nuvo at Rs 850 per unit. Please advise as to what my next step should be.

- Raj M Bansode, Navi Mumbai, Maharashtra

A: Aditya Birla Nuvo, BSE/NSE Code 500303/ABIRLANUVO, with a face value of Rs 10, is currently trading at Rs 826, which is at a three per cent discount to your cost of acquisition. Its 52-week high/low stand at Rs 1029 and Rs 708 respectively.

Aditya Birla Nuvo is a largely diversified conglomerate that is into the garments, financial services, insurance, telecom and IT-ITes businesses in India and internationally. In garments, the company sells products under various brands including Louis Philippe, Van Heusen, Allen Solly, Peter England and The Collective. On the agri-business front, it manufactures and markets urea, agricultural seeds, agrochemicals, fertilisers, etc., primarily through wholesalers and retailers. The company also offers business process outsourcing services. In addition, it provides a range of financial services including insurance. On the new technology front, it offers wireless telecommunication and GPRS services.

On the financial front, the company has performed well, with its topline growing by 20 per cent in FY12 to Rs 21592 crore as against Rs 17999 crore for FY11. The bottomline witnessed a growth of 8.28 per cent on a YoY basis, and stood at Rs 890 crore as against Rs 822 crore for FY11. The stock discounts its trading 12-month earnings by 10.54x and the EV/EBITDA stands at 6.97x. We suggest that you to hold on to the stock from a longer-term perspective to garner better returns.