Your stock queries

UFLEX

I have 100 shares of Uflex purchased at Rs 218 per share. Please advise what my future course of action should be.
- Satyajit Majumdar, Navi Mumbai, Maharashtra

Uflex, BSE/NSE Code 500148/UFLEX, with a face value of Rs 10, is currently trading at Rs 128. This is at a 41 per cent discount to your acquisition cost. Its 52-week high/low are Rs 226 and Rs 98 respectively.

Uflex provides flexible packaging solutions, primarily in India. It manufactures polyester chips, BOPET/BOPP/coated/metallised/CPP films, packaging machines, converting equipment, inks, adhesives, flexible laminates and pouches. The company also offers rotogravure cylinders and laminates in roll form. Uflex exports its products primarily to the US, Europe, Asia and Africa. The company was formerly known as Flex Industries, and changed its name to Uflex in March 2007.

On the financial front, its topline witnessed a growth of 45.16 per cent on a YoY basis for H1 FY12, and stood at Rs 2243 crore as against Rs 1545 crore for H1 FY11. The bottomline witnessed de-growth of 41 per cent on a YoY basis for H1 FY12, and stood at Rs 153 crore as against Rs 263 crore for H1 FY11. The bottomline has witnessed a drop for the third consecutive quarter. There has been a steep rise in the raw material costs and the interest, which went up by 86 per cent and 27 per cent respectively on a YoY basis for H1 FY12, and this played spoilsport for the company. On the valuations front, the stock trades at a P/E of 1.59x and the EV/EBITDA stands at 1.83x. The company has a good dividend yield of 5.67 per cent. We suggest that you hold the stock for this fiscal and take a decision accordingly.

UNITECH

I have 3000 shares of Unitech purchased at an average price of Rs 65 per share. Please suggest what I should do with these.
- Sachin R Todhar, Karad, Maharashtra

Unitech, BSE/NSE Code 507878/UNITECH, with a face value of Rs 2, is currently trading at Rs 27. This is at a 58 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 59 and Rs 17 respectively.[PAGE BREAK]

Unitech develops real estate properties, primarily in India. It engages in residential, commercial and retail space development; integrated township development; in-house project management; and the development of hospitality projects, amusement parks, logistics parks, special economic zones and industrial parks. While land-banking drove the net gearing to 186 per cent by March 2008, most of this debt seemed to have bullet interest payments. Despite external funding in CY09-10 that helped slash the net gearing to 43 per cent by March 2011, interest payments have spiked with Unitech facing a liquidity crunch. This is expected to continue for another two years. While attractive offering drove 22 million square feet (msf ) of launches since March 2009, the lack of focus and funding constraints led to weak execution (delivery of only around 13 msf of the 44 msf launched in the last four years). In the current era of high inflation, it is believed that this will constrain cash flows, profitability and brand equity.

On the financial front, the company has witnessed muted performance for H1 FY12. The topline witnessed de-growth of 17 per cent for H1 FY12 on a YoY basis, and stood at Rs 1221 crore as against Rs 1473 crore for H1 FY11. The bottomline witnessed de-growth of 46 per cent YoY for H1 FY12, and stood at Rs 190 crore as against Rs 353 crore for H1 FY11. On the valuations front, the stock trades at a TTM P/E of 17.65x and the EV/EBITDA stands at 13.60x. Going forward too, there is no clear picture emerging for the ongoing projects. Therefore, we suggest that you exit the counter even if you have to book losses.

TAJ GVK HOTELS & RESORTS

I have 1800 shares of Taj GVK Hotels & Resorts purchased at average price of Rs 130 per share, and have been holding these for more than a year now. Should I hold them or book a loss?
- Sandeep Verma, Via Email

Taj GVK Hotels & Resorts, BSE/NSE Code 532390/TAJGVK, with a face value of Rs 2, is currently trading at Rs 74.35, which is at a 42 per cent discount to your acquisition cost. Its 52-week high/low stand at Rs 129 and Rs 62 respectively.

Taj GVK Hotels & Resorts operates in the hospitality industry in India. The company’s hotel properties include Taj Krishna, Taj Deccan and Taj Banjara in Hyderabad; Taj Chandigarh in Chandigarh; and Taj Mount Road in Chennai. The company is a joint venture between Indian Hotels and the GVK Group. As per its website, it has a total room inventory of 753 rooms. The civil works and interiors for the new five star hotel project site at Begumpet, Hyderabad, are in advanced stages. The project would consist of around 181 rooms, with the cost of interiors estimated to be around Rs 100 crore. It was expected to be operational in CY 2011. However, details of this are not available in the public domain.

On the financial front, the company has witnessed muted performance for H1 FY12. The topline witnessed de-growth of 2.16 per cent on a YoY basis, and stood at Rs 118 crore for H1 FY12 as against Rs 120 crore for H1 FY11. The bottomline witnessed de-growth of seven per cent on a YoY basis for H1 FY12, and stood at Rs 16.34 crore as against Rs 17.54 crore for H1 FY11. On the valuations front, the stock trades at a TTM P/E of 11.44x and the EV/EBITDA stands at 6.18x. The dividend yield stands at 2.68 per cent. The hospitality sector has been facing some headwinds in recent times, and therefore, we suggest that you exit the counter even if you have to book losses.

BGR ENERGY SYSTEMS

I have invested in BGR Energy Systems in December 2010 and purchased shares at Rs 713 per share. What should my next course of action be?
- Rahul Agrawal, Via Email

BGR Energy Systems, BSE/NSE Code 532930/BGRENERGY, with a face value of Rs 10, is currently trading at Rs231, which is at a 67 per cent discount to your acquisition cost. Its 52-week high/low are Rs 660 and Rs 172 respectively.[PAGE BREAK]

BGR Energy Systems engages in the design, manufacture and sale of systems and equipment for the power and oil & gas industries in India and internationally. The company’s Power Projects division undertakes engineering, procurement and construction of thermal/gas-based power plants and balance of plants. The present order book position as on 30th September, 2011, stands at around Rs 16000 crore. The order backlog is Rs 7266 crore as on 30th September, 2011. Power projects constitute 84 per cent of the order backlogs, followed by electrical (eight per cent), oil & gas equipment (five per cent), air fin cooling (two per cent) and environmental engineering projects (one per cent).

On the financial front, the company has witnessed a muted performance for H1 FY12. The topline witnessed de-growth of 26 per cent on a YoY basis, and stood at Rs 1505 crore for H1 FY12 as against Rs 2042 crore for H1 FY11. The bottomline witnessed de-growth of 27 per cent on a YoY basis for H1 FY12, and stood at Rs 102 crore as against Rs 138 crore for H1 FY11. On the valuations front, the stock trades at a TTM P/E of 5.79x and the EV/EBITDA stands at 3.20x. The dividend yield stands at 4.36 per cent and the debt-to-equity ratio stands at 1.46x. We suggest that you hold the stock for one more quarter and take a decision accordingly.