Your Stock Queries

ICSA India

I am holding 700 shares of ICSA India purchased at Rs 22 per share that I can hold for two years more. Please guide me as to what I should do with these.

- Narinder Pal Singh, Via Email

ICSA India, BSE/NSE Code 531524/ICSA, with a face value of Rs 2, is currently trading at Rs 13, which is at a 41 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 79 and Rs 13 respectively.

ICSA is engaged in the design and development of customised infrastructure solutions, embedded technologies and software applications for the power, oil & gas and water sectors in India. It provides a versatile data acquisition system using communication media such as GSM, GPRS, CDMA, PLCC, optical fibres and RF. In addition, the company also offers energy audit services.

On the financial front, the company’s results for Q1FY13 have not been very encouraging. For Q1FY13, the topline stood at Rs 101.32 crore as against Rs 348.53 crore for Q1FY12, witnessing de-growth of 70 per cent. It reported a loss of Rs 32.21 crore as against a profit of Rs 24.28 crore during the same period last year. This quarter is the third consecutive one in which the bottomline of the company has ended in the red. For the past five quarters, there has been a consistent decline in its topline too. The company had a debt of Rs 837 crore as of FY11, taking its debt-to-equity ratio to 1.02x.

On the valuations front, the stock trades at an EV/EBITDA of 2.80x. The only positive factor is that the dividend yield stands at 13.68 per cent. However, we doubt the consistency of the dividend payout going forward. Therefore, we suggest that you exit the counter even if you have to book losses.

Multi Commodity Exchange of India

I have been allotted 12 shares (two lots) of MCX during the IPO, and am holding these since then. What should my next step be with respect to these?

- Vivek Iyer, Kochi, Kerala

Multi Commodity Exchange of India (MCX), BSE/NSE Code 534091/MCX, with a face value of Rs 10, is currently trading at Rs 1167 with a 52-week high/low of Rs 1429 and Rs 838 respectively. It is at a 13 per cent premium to your acquisition cost, keeping in mind the issue price of Rs 1032.

In terms of the number of contracts traded in CY2011, MCX has become the third largest commodity futures exchange in the world in a very short span of time since it started. As of 31st March, 2012, the company has a market share of 86 per cent of the Indian commodity futures market. It also offers its members a trading platform in currency futures. The SEBI recently cleared the exchange’s plans to launch an equity trading platform in India.

For Q1Y13, its topline witnessed a growth of 5.67 per cent, and stood at Rs 146.23 crore as against Rs 138 crore for Q1FY12. The bottomline witnessed a growth of 4.37 per cent for Q1Y13, and stood at Rs 64.74 crore as against Rs 62.03 crore for Q1FY12. On the valuations front, the stock discounts its trailing 12-month earnings by 22.90x and the EV/EBITDA stands at 13.41x. It is almost debt-free, with a debt of merely Rs 28 crore on its balance sheet for FY12.

Having received the permission to launch a trading platform for equities, we believe that MCX has a very long way to go. Therefore, at this juncture, we suggest that you hold on to the stock if you are not in a hurry to liquidate your position.[PAGE BREAK]

National Buildings Construction Corporation

I am holding 270 shares of National Buildings Construction Corporation purchased at Rs 100 per share. Kindly advise me as to whether I should hold on to the stock or exit the counter.

- Sarin Paul, Hyderabad, Andhra Pradesh

National Buildings Construction Company (NBCC), BSE/NSE Code 534309/NBCC, with a face value of Rs 10, is currently trading at Rs 93, which is at a seven per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 108 and Rs 73 respectively.

National Buildings Construction Corporation is into project management consultancy services for civil construction projects. The company is a wholly-owned Government of India undertaking, with 90 per cent of the stake held by the President of India. It also provides civil infrastructure for the power sector and real estate development in India. Its real estate development segment has land reserves of approximately 125.245 acres across Delhi, Khekhra, Patna, Gurgaon, Kolkata, Kochi, Alwar and Lucknow.

On the financial front, its performance for FY12 has been quite reasonable. The topline witnessed a growth of 10.26 per cent, and stood at Rs 3477.69 crore as against Rs 3126.77 crore for FY11. The bottomline witnessed a growth of 35.38 per cent for FY12, and stood at Rs 190.17 crore as against Rs 140.47 crore for FY11. On the valuations front, the stock discounts its FY12 earnings by 5.92x and the EV/EBITDA stands at 0.01x. The dividend yield stands at a healthy 3.74 per cent. The debt-to-equity ratio is also at a comfortable level of 0.25x. We suggest that you hold on to the counter at present.

Tata Elxsi

I am holding 300 shares of Tata Elxsi purchased a year ago. Should I hold or sell these?

- Ravi M, Via Email

Tata Elxsi, BSE/NSE Code 500408/TATAELXSI, with a face value of Rs 10, is currently trading at Rs 225.85. Its 52-week high/low stand at Rs 205 and Rs 68 respectively.

Tata Elxsi provides product design and engineering as well as systems integration and support services globally. The company’s Embedded Product Design division provides technology consulting, new product development, system integration and testing services for product companies. It serves a host of industries including aerospace, automotive, broadcast, communications, consumer electronics, media and entertainment, FMCG, semiconductors, defence and homeland security and healthcare. The company sells its products in India, Dubai, France, Germany, Japan, the United Kingdom and the United States.

Its performance for Q1Y13 has been quite mixed, with the topline registering a growth of 35.18 per cent to touch Rs 143.52 crore as against Rs 106.17 crore for Q1FY12. The bottomline witnessed de-growth of 35.45 per cent, and stood at Rs 2.44 crore as against Rs 3.78 crore for Q1FY12. On the valuations front, the stock discounts its trailing 12-month earnings by 21.56x and the EV/EBITDA stands at 8.69x. There are no clear indications of the growth prospects of the company going forward. We suggest that you exit the counter at present even if you have to book losses, and park your funds in other attractive options in the IT space.[PAGE BREAK]

Zee Entertainment Enterprises

I am holding 750 shares of Zee Entertainment Enterprises purchased at Rs 126 per share. Should I hold or sell these?

- Sanika Gohad, Via Email

Zee Entertainment Enterprises, BSE/NSE Code 505537/ZEEL, with a face value of Rs 1, is currently trading at Rs 171.85. This is at a 36 per cent premium to your acquisition cost. Its 52-week high/low stand at Rs 182 and Rs 106 respectively.

Zee Entertainment Enterprises, together with its subsidiaries, operates as a vertically integrated media and entertainment company in India and internationally. It develops, produces, and procures television programming and movie content and delivers this through satellites, cable and internet. The company broadcasts Hindi entertainment channels including Zee TV, Zee Smile and 9X; Hindi movies channels such as Zee Cinema, Zee Premier, Zee Action and Zee Classic; English entertainment, movies, and life style channels including Zee Studio, Zee Café and Zee Trendz; as well as sports channels such as TEN Cricket, TEN Action, TEN Sports and TEN Golf. It also airs regional language entertainment channels.

For Q1Y13, the company has witnessed better performance as far as its financials are concerned. The topline witnessed a growth of 20.72 per cent, and stood at Rs 842.96 crore as against Rs 797.97 crore for Q1FY12. The bottomline witnessed a decent growth of 21.50 per cent, and stood at Rs 158.15 crore as against Rs 130.16 crore for Q1FY12. On the valuations front, the stock discounts its trailing 12-month earnings by 27.80x and the EV/EBITDA stands at 18.33s.

With the digitisation of satellite television in India, the company is likely to benefit going forward and be value accretive for your portfolio. We suggest that you to hold on to the counter for the long term.

Rural Electrification Corporation

I am holding 100 shares of Rural Electrification Corporation purchased a year ago. Please tell me whether I should hold or sell.

- Abhishek Nandi, Via Email

Rural Electrification Corporation, BSE/NSE Code 532955/RECLTD, with a face value of Rs 10, is currently trading at Rs 219.85. Its 52-week high/low stand at Rs 252 and Rs 144 respectively.

Rural Electrification Corporation provides financial and loan assistance to state electricity boards, state government departments, state power utilities and rural electric cooperatives for rural electrification projects in India. It also provides short-term loans for working capital requirements such as the purchase of fuel for power plants, purchase of power and material and minor equipment, and system and network maintenance. It also offers debt refinancing, short-term/medium-term loans to manufacturers of power/electrical material for power projects.

The company has witnessed an improvement in performance as far as its financials are concerned. The topline witnessed a growth of 31.44 per cent for Q1Y13, and stood at Rs 3068 crore as against Rs 2334.59 crore for Q1FY12. The bottomline witnessed a growth of 32.44 per cent, and stood at Rs 876.73 crore as against Rs 661.96 crore for Q1FY12. On the valuations front, the stock trades at a price to book value of 1.47x. The EV/EBITDA stands at 9x and the dividend yield stands at 3.60 per cent.

At present, we suggest that you exit the counter even if you have to hold the counter from the longer-term perspective to garner better returns.