Your Stock Queries

HCL Infosystems

I am holding 3000 shares of HCL Infosystems purchased at Rs 128 per share. Should I continue to hold them or exit from this counter?

- Manisha Kothari, Via Email

HCL Infosystems, BSE/NSE Code 500179/HCL-INSYS, with a face value of Rs 2, is currently trading at Rs 41.55. Its 52-week high/low stand at Rs 68 and Rs 36 respectively. The stock is currently trading at a 67 per cent discount to your acquisition cost.

HCL Infosystems operates as a hardware, services and information & communication technology (ICT) system integration company. It offers a range of ICT products, including computing, storage, networking, security, telecom, imaging and retail. The company also offers office automation, imaging and printing products comprising projectors, plasma/LCD and interactive presentation systems, to name a few. Additionally, it provides a range of services including systems integration, strategic outsourcing, information technology-audit security and risk management.

On the financial front, the company has not witnessed any encouraging results for the recently-concluded June 2012 (it follows the June calendar) fiscal results. The topline for FY12 stood at Rs 10787 crore as against Rs 11460 crore for FY11, witnessing de-growth of 5.87 per cent. The bottomline witnessed a severe drop to of 58 per cent for the year, and stood at Rs 72 crore as against Rs 168 crore during FY11. This is the third consecutive year in which the bottomline has witnessed a decline. The company has a debt of Rs 632 crore as of FY11, taking its debt-to-equity ratio to 0.33x. On the valuations front, the stock trades at a P/E of 12.85x and the EV/EBITDA stands at 3.51x. At this juncture, we suggest that you exit the counter even if you have to book losses.

BASF India

I am holding 50 shares of BASF India since the last two years. What should my next step be with regard to these?

- Prabhat Singh, Patna, Bihar

BASF India, BSE/NSE Code 500042/BASF, with a face value of Rs 10, is currently trading at Rs 654. Its 52-week high/low stand at Rs 692 and Rs 422 respectively.

BASF India engages in the manufacture and sale of agrochemicals, performance products, plastics, inorganic chemicals and functional solutions globally. It also provides plastic products comprising expandable polystyrene, engineering plastics and polyurethanes for packaging and insulation materials used for consumer electronics, white goods, fruits and vegetables and home appliances. In addition, the company offers chemicals used in coating. These include automotive OEM and automotive refinish coatings, as well as industrial coatings such as coil, foil and panel pre-coatings for the automotive industry.

On the financial front, the company’s results for Q1FY13 were quite good. The topline stood at Rs 1292 crore as against Rs 1016 crore for Q1FY12, witnessing a growth of 27.11 per cent. The bottomline witnessed a growth of 36 per cent, and stood at Rs 71.68 crore for Q1FY13 as against Rs 52.66 crore during Q1FY12. With a debt of just Rs 90 crore as of FY12, the company is virtually debt free. Going forward, it has a capex plan of Rs 1000 crore over the next two years. Also, its increased focus on niche chemicals is likely to act as a trigger for the stock prices going forward. On the valuations front, the stock discounts its trailing 12-month earnings by 23.61x and the EV/EBITDA stands at 13.66x. The dividend yield stands at 0.61 per cent.

You have not mentioned the price at which you bought the shares. Still, we suggest that you hold on to the counter from a longer-term perspective to garner better returns.[PAGE BREAK]

Dishman Pharmaceuticals & Chemicals

I am holding 250 shares of Dishman Pharmaceuticals & Chemicals purchased at Rs 45 per share. Kindly advise me as to whether I should hold on to the stock or make an exit?

- Saunak Chatterjee, Kolkata, West Bengal

Dishman Pharmaceuticals & Chemicals, BSE/NSE Code 532526/DISHMAN, with a face value of Rs 2, is currently trading at Rs 99.35. Its 52-week high/low stand at Rs 107 and Rs 34 respectively. It is currently trading at a hefty premium of 120 per cent to your acquisition cost.

Dishman Pharmaceuticals & Chemicals provides contract research and manufacturing services. The company also engages in the manufacture and marketing of bulk drugs, intermediates, quaternary ammonium compounds (quats) and specialty chemicals. Its products include vitamins and chemical products such as Vitamin D2, D3 and Vitamin D analogues. The company also offers a range of antiseptics and disinfectants including disinfectants for surgical instrumentation, hand and body wash sanitisers and antiseptics.

On the financial front, its results for the Q1FY13 were quite good. Its topline stood at Rs 316.33 crore, a growth of 30.29 per cent from the figure of Rs 242.78 crore for Q1FY12. The bottomline witnessed stellar growth on a YoY basis, and stood at Rs 38.71 crore as against Rs 22.79 crore. The company has a debt of Rs 619 crore on its books, taking its debt-to-equity ratio to 0.66x, which is quite a comfortable one. On the valuations front, the stock discounts its trailing 12-month earnings by 9.97x and the EV/EBITDA stands at 5.77x. The dividend yield stands at 1.25 per cent. The company has shown consistent growth in its bottomline for the past three quarters after having slipped into the red during Q2FY12.

Looking at the profit that you are sitting on, we suggest that you book partial profits of at least 75 per cent of your holding and remain invested in the rest.

Dish TV India

I am holding 220 shares of Dish TV India purchased around one year ago at Rs 80 per share. Should I hold these or sell?

- N D Laxman, Via Email

Dish TV India, BSE/NSE Code 532839/DISHTV, with a face value of Rs 1, is currently trading at Rs 77.85 with a 52-week high/low of Rs 84 and Rs 52 respectively. It is currently trading at a 2.68 per cent discount to your acquisition cost.

Dish TV, together with its subsidiaries, operates as a direct to home (DTH) entertainment services company in India. It provides DTH and teleport services. The company’s product portfolio includes DISHTV Standard STB (Set-Top Box). It also has DISH truHD Plus that offers hi-definition television entertainment along with advanced recorder capabilities. As of March 31, 2012, the company served approximately 12.7 million subscribers.

On the financial front, it reported a mixed performance for the recently-concluded Q1FY13. Its topline stood at Rs 520 crore as against Rs 460 crore for Q1FY12, witnessing a growth of 13 per cent. It reported a loss of Rs 32 crore as against a loss of Rs 18.32 crore for Q1FY12. The company has a debt of Rs 1210 crore on its books. On the valuations front, EV/EBITDA stands at 16.79x. The company has witnessed a decent performance at the operating level, with the EBIDTA standing at Rs 155 crore for Q1FY13 as against Rs 112.15 crore for Q1FY12. However, the bottomline remains under pressure due to the higher interest costs and depreciation, which have increased by 41.56 per cent and 36.54 per cent respectively for Q1FY13 on a YoY basis.

We suggest that you hold on to this counter for at least another couple of quarters, as the digitisation of cable TV is being sought to be completed very rapidly beginning with the metro cities.