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| 1/10/2013 9:00 PM Thursday

Bombay Dyeing & Manufacturing Company

I am holding 200 shares of Bombay Dyeing & Manufacturing Company purchased at an average price of Rs 110 per share. What should my next course of action be with respect to these? 

Akshay Gothi
Via Email

Hold

BSE/NSE Code 500020/BOMDYEING
Face Value Rs 2
CMP Rs 137
52-Week High/Low Rs 139/Rs 67
Current Profit/(Loss) 27 per cent

This group would probably be among the topmost industrial houses in India, given its pedigree and the experience that it has of doing business here. However, somewhere down the line, it lost its edge and lagged in the race to the top. Nevertheless, the brand is still so strong that when it comes to textiles, Bombay Dyeing & Manufacturing Company is among the first few names that strike you. Apart from the textiles sector, where it has a stronghold, the group is also has an interest in the real estate business.

In its core business, the company sells its products through approximately 350 Bombay Dyeing stores and around 2000 multi-brand stores. This strategy of having its own stores has paid off well for the company in terms of maintaining high recall among customers. However, as we said earlier, the company has lost its niche in the Indian textile industry, losing out to competitors.

On the financial front, its recent performance has not been very encouraging. For H1FY13, its topline witnessed a growth of a mere 7.04 per cent to stand at Rs 991.45 crore as against Rs 926.22 crore during the same period last year. The company continued to be in losses, which stood at Rs 55.24 crore for H1FY13 as against Rs 73.72 crore year till date.

With a debt burden of Rs 1304 crore on its balance sheet, its debt-to-equity ratio at the end of FY12 stands at 0.73x. The interest outgo has seen an upswing of 16.78 per cent on a YoY basis for H1FY13, and stands at Rs 89.86 crore.

To answer your specific query, no matter what the fundamentals of the company, to benefit from a stock what really matters is a perfect entry and timely exit. This may sound too theoretical but is apt in your case. Currently, you are sitting on a considerable profit of 27 per cent from where you had invested in this counter. At present, we suggest that you book some profit, which will at least cover your original investment in the scrip. For the rest, we advise you to stay invested till the end of the March 2013 quarter. A good set of numbers in the March quarter may bolster your returns further. If not, you still have nothing to lose.

 

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