Your Stock Queries

CHARTERED LOGISTICS

I am holding 2000 shares of Chartered Logistics purchased at Rs 22 per share. What should I do with these now?
Rajvir Padhy, Via email

EXIT

BSE/NSE Code	531977/N.A.
Face Value	Rs 1
CMP	Rs 15.40
52-Week High/Low	Rs 14/Rs 27.90
Current Profit/(Loss)	30 per cent

This is a problem that we come across every now and then. Investors buy low-priced stocks assuming that they would rise to provide superlative returns within a short span of time. In fact, many a time, your own broker would have asked you to buy into such counters stressing on the fact that there is nothing much to lose. But an investment, however small or big, is supposed to yield at least a normal, if not superlative, rate of return.

Chartered Logistics, the company which you have invested in, is engaged in the road transportation business in India. It provides door-to-door services, project work and options of customised carrier solutions as per customers’ needs. The company also offers special warehousing as well as cost and freight services. It has a fleet of approximately 650 vehicles, including 350 owned and 300 attached vehicles. Formerly known as Chartered Carriers, its clientele includes big names like the Aditya Birla Group, BPCL, HUL and IOC, to name a few. The question, though, is how well does all this reflect in its performance and fundamentals? 

Look at how abysmal the performance of the company has been. Its topline, which stood at Rs 136.35 crore for H1FY13, was up 23.35 per cent on a YoY basis. For the same period, the bottomline declined by a huge 62 per cent to Rs 2.71 crore as against the Rs 7.08 crore it had earned during the same period last year. In fact, the company reported a loss of Rs 1.29 crore in the September 2012 quarter. This reflects on how weak its fundamentals are. To top all these factors is its debt-to-equity ratio, which stands at 3.71x, and the fact that the stock is trading at a PE of 86.36x against the industry average of 14x. 

Also consider another factor in context of the current happenings. A bulk of the company’s fleet is sure to be diesel operated. Can you imagine what will happen to it now that the government has approved a hike in diesel prices? You have already lost 30 per cent of what you had invested in this counter. Why wait for your wealth to erode further. It would surely be a better idea to salvage the remaining and look for alternatives.
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HAVELLS INDIA

I am holding 185 shares of Havells India purchased at Rs 495 per share. Should I continue to hold these?
R Cherian, Via Email

BPP

BSE/NSE Code	517354/HAVELLS
Face Value	Rs 10
CMP	Rs 684.60
52-Week High/Low	Rs 708/Rs 421
Current Profit/(Loss)	38.30

A whole generation or probably even two have grown up thinking of either Bajaj or Anchor as the brands that count as far as electrical goods are concerned. There are very few companies that have the ability to enter an industry that has such established players, challenge them and go ahead to be among the frontrunners for the top spot. Havells is a classic example of a worthy challenger of this kind. From its humble beginnings as a power distribution equipment manufacturer, the company has done well to capture the mindshare of consumers at the retail level by diversifying into the household electrical goods category. Thus, your investment idea is a good one.

The company has not only been growing organically, but has also sought to develop well on the inorganic front. It acquired the very famous brand Sylvania in the year 2007, which propelled it into the big league of consumer electrical manufacturers and helped it become among the top five lighting companies in the world. Today, its brand portfolio has some very good names including Havells, Crabtree, Sylvania, Concord, Luminance and Standard. 14 state-of-the-art manufacturing plants in India and abroad speak volumes about how this company has gone so far.

What about its financials? Do they really reflect all that we have said about the company so far? Well, its topline, which stood at at Rs 1990 crore for H1FY13, has witnessed a growth of 20.64 per cent on a YoY basis. The bottomline grew at a robust 30.77 per cent to Rs 167.05 crore as against Rs 127.74 crore during the same period last year. Essentially, you are invested in a company that is growing at a scorching pace, so as to speak, even in the most difficult economic conditions. On the valuations front, the stock discounts its trailing 12-month earnings by 25.31x. The long-term growth figures for this company are also pretty impressive. Its sales and net profit have witnessed a three-year CAGR of 7.85 per cent and 29.26 per cent respectively.

You have invested pretty early in this stock and are presently sitting on a sizeable profit. It would be better for you to take your basic investment out and wait for some more time so that you earn a good amount of profit from this investment.
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PARSVNATH DEVELOPERS

Is this the right time to invest in Parsvnath Developers at the current market price?
Pravin Khushwaha, Via Email

AVOID

BSE/NSE Code	532780/PARSVNATH
Face Value	Rs 5
CMP	Rs 37.45
52-Week High/Low	Rs 65/Rs 35
Current Profit/(Loss)	N.A.

We are sure your query is a result of the clamour that you are hearing around real estate stocks of late. Before we answer your query, let’s just ask you, when was the last time you invested in the stock of a real estate company? More importantly, did it fetch you the returns that you expected from it? The sector has been in trouble for quite some time now, and your logic of trying to invest in these stocks would most likely rest on the incredibly low valuations that they are presently trading at. Before we tell you whether to invest in the stock, let’s take a look at what this company is all about.

Parsvnath is involved in the promotion, construction, development and sale of integrated townships, residential and commercial complexes, multi-storied buildings, flats, houses, apartments, shopping malls, IT parks, hotels and special economic zones. The company also undertakes build-operate-transfer (BOT) projects, and provides third-party contracting services. In fact, there is nothing in the real estate development space that is left out of the purview of what this company does.

It reportedly has 45 projects with a total area of 15.8 million square feet and another 50 projects with a total area of 77 million square feet under development or construction. Of the projects under development, 36.5 million square feet has been sold as of September 30, 2011 and 23.2 million square feet is currently held as empty plots.

On the financial front, the company has witnessed a muted performance. Its topline declined by 30.60 per cent on a YoY basis for H1FY13, and stood at Rs 309.11 crore as against Rs 445.41 crore during the same period last year. The bottomline declined by 30.57 per cent on a YoY basis to Rs 38.09 crore as against Rs 54.86 crore during the corresponding period. On the valuations front, the stock discounts its trailing 12-month earnings by 50.46x, which is much higher than its other listed peers.

Why would want to invest in such a company in a beaten down sector, especially now that other better opportunities are emerging in the market? We suggest that you stay away from this counter and look for some better investing opportunities. Once the sector picks up, you would surely find some good opportunities here.
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ADANI PORTS & SEZ

I am looking at making some investment in Adani Ports & SEZ. Please guide me.
Arwa Batliwala, Via Email

AVOID

BSE/NSE Code	532921/ADANIPORTS
Face Value	Rs 2
CMP	Rs 135.60
52-Week High/Low	Rs 158/Rs 106
Current Profit/(Loss)	N.A.

Infrastructure has always been a key sector in any economic framework, and is even more important in the context of developing countries like India. The sector has been facing a lot of headwinds over the past couple of years. The government’s laxity in pushing forth key reforms has led to many projects remaining stalled for a long time. Land acquisition has been a key concern for many of these, and unless the government addresses these concerns in right earnest, it will be difficult for the sector to bounce back. However, the scenario has been changing over the past couple of months. Hope springs from the government’s recent actions, as it has steered its course towards some serious reforms. This is likely to improve the scenario for infrastructure development very soon.

Coming to your choice of Adani Ports & SEZ, this company engages in the development, operation and maintenance of multi-product special economic zones (SEZs) and related infrastructure in India. Through its Mundra Port located in the Gulf of Kutch, it provides cargo handling and other value-added port services. It operates port infrastructure facilities of bulk cargo at Dahej, Gujarat. It also engages in the provision of multi-modal cargo storage-cum-logistics services. On the financial front, the company has been doing quite well. Its topline witnessed a growth of 33.30 per cent on a YoY basis for H1FY13, and stood at Rs 1471.40 crore as against Rs 1103.84 crore for H1FY12. The bottomline witnessed a growth of 60.67 per cent on a YoY basis for H1FY13, and was at Rs 847.98 crore as against Rs 527.79 crore for H1FY12. On the valuations front, the stock discounts its trailing 12-month earnings by 18.14x and the EV/EBITDA stands at 20.96x. Its revenues and net profit have seen a three-year CAGR of 39.88 per cent and 40.49 per cent. However, being in a capital intensive industry, the company has a high level of debt on its books, which is 3.81x its equity. We suggest that you wait till the December 2012 quarter results are out and then decide on making an investment accordingly.