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Your Stock Queries

| 9/20/2012 9:00 PM Thursday

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.

 

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