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| 5/16/2013 9:00 PM Thursday

HINDUSTAN ORGANIC CHEMICALS 

I am holding 150 shares of Hindustan Organic Chemicals, purchased at Rs 11 per share. Should I book profits?
Yogesh Kadam, Via Email

BSE/NSE Code500449/HOCLATFL
Face Value Rs 10
CMP Rs 14.25
52-Week high/low Rs 23/Rs 10
Current Profit/(Loss) 29.55 per cent

The chemicals industry in India contributes to about three per cent of India's GDP. It is highly diverse with major sectors like Petrochemicals, Inorganic Chemicals, Organic Chemicals, Fine and specialties, Bulk Drugs, Agrochemicals, Paints and Dyes, etc. Hindustan Organic Chemicals, in which you have invested, manufactures and sells basic chemical products in India. Its primary products include phenol, acetone, nitrobenzene, aniline, nitrotoluenes, chlorobenzenes, and nitrochlorobenzenes. The company provides products to resins and laminates, dyes and dyes intermediates, drugs and pharmaceuticals, rubber chemicals, paints, and pesticides industries.

Looking at the CMP of its stock, this looks like the right time for you to have raised this question. You are sitting on a handsome profit of around 30 per cent. But before we get to a conclusion, it is better to take a look at how the company has fared on the financial front.

Hindustan Organic Chemicals was set up by the Government of India in 1960 with the objective of attaining self-reliance in basic organic chemical needs. Started as a small chemical unit, has today acquired the status of a multi-unit company with two fast growing units and one subsidiary unit.

There has been some disappointment on the earnings front though. The topline remained flat for the quarter ended December 2012 witnessing a mere growth of 2.29 per cent on a YoY basis. It had stood at Rs 137.63 crore for Q3FY13 as against Rs 134.55 crore for Q3FY12. There are concerns on the bottomline too. The December 2012 quarter is the sixth consecutive quarter where the company has ended in red. The loss has mounted to Rs 34.41 crore for Q3FY13 as against a loss of Rs 23.65 crore for Q3FY12. In the last six quarters, the company has failed to remain in green even at the operating levels. At this juncture, you are lucky enough to be sitting on a sizeable profit. We therefore suggest that you book profits in the stock.

 

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