Your Stock Queries

ARSHIYA INTERNATIONAL

Is it the right time to enter in Arshiya International?
- Siddhesh Ghatol, Via email

AVOID

BSE/NSE Code	506074/ARSHIYA
Face Value	Rs 2
CMP	Rs 18
52-Week high/low	Rs 163/Rs 19
Current Profit/(Loss)	NA

Before investing in the stocks of any company, it is advisable to go through the company’s financials, especially its latest quarter results, its history, controversies surrounding the company (if any) while also studying the amount of value it has created for investors over the years.

Let us help you take a decision on Arshiya International. The company provides integrated supply chain and logistics infrastructure solutions in India and internationally. It operates free trade and warehousing zones that allow importers, exporters, and value adders to export, import, and re-export products without the burden of taxes, duties, and levies. It offers pan-India dedicated rail freight services and sidings and provides industrial and distribution hubs comprising of domestic hubs that allow for consolidation and deconsolidation, and accelerate movement of goods through rail and road.

There has been some negative development in the company for which the Q3FY13 results have not been declared as yet (till the time of going to press). In the recent past, the company has stated that there has been some delay in the employees’ salary and vendors’ payments, which is a part of the usual business and is not alarming in nature. At the same time, AIL has fired 290 people out of its 1700 people workforce mainly on the grounds of performance. Most of these employees are at supervisory level with some senior managers from their 3PL business and sales team.

The company’s cash-flow condition is stressed, thanks to an increase in the working capital cycle and rejection of financial closure of Khurja FTWZ’s phase two, leading to blockage of capital. Debtors’ days have increased from two months to three months mainly owing to a slowdown in the logistics sector. Also, the company has blocked a capex of Rs 1.6 billion towards phase two of Khurja FTWZ which it had intended to release through financial closure. Apart from this, promoters and key management people have decided to forego 50 per cent of their remuneration to release the pressure.

We would therefore suggest you and other investors to stay away from the counter till these concerns are addressed.
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NOVARTIS INDIA

I am holding 500 shares of Novartis India purchased at Rs 675 per share. Should I continue to hold these? Please advise.
Raj Shah, Via Email

EXIT

BSE/NSE Code	500672
Face Value	Rs 5
CMP	Rs 574
52-Week high/low	Rs 934/Rs 565
Current Profit/(Loss)	(14.96 per cent)

While taking a call regarding holding or selling off these stocks, you need to look at the current position of Novartis. But before that, let us get to its basics.

Novartis has been operational in India since 1947. The group operates here through four entities namely Novartis India which is listed on the BSE, Novartis Healthcare, Sandoz and Chiron-Behring Vaccine. In India, Novartis has a presence in pharmaceuticals, generics (pharmaceutical products that are off-patent), vaccines, OTC (over-the-counter medicines), eye care and animal health.

On the financial front, the company has witnessed a flat performance for Q3FY13. Its topline witnessed a growth of 11.43 per cent on a YoY basis to stand at Rs 233.54 crore for Q3FY13 as against Rs 209.59 crore for Q3FY12. The bottomline, however, declined by 24.38 per cent to stand at Rs 29 crore for Q3FY13 as against Rs 38.35 crore for Q3FY12. On the valuations front, the stock discounts its trailing twelve-month earnings by 14.35x and the EV/EBITDA stands at 8.13x.

One good thing about the company is that it is virtually debt free with a meagre Rs 22 crore debt in its balance sheet as of FY12. In a recent development, the Supreme Court of India denied one of its patent requests by the Swiss drug giant Novartis for its cancer drug Glivec in a landmark decision. During the hearing, the apex court had questioned the pharma company on the high price of the cancer drug. A month's dose is around Rs. 1.2 lakh, much higher than Rs. 8000 which is the price of the generic drug. This will surely have a negative impact on the stock. Considering these factors, we would suggest you to exit the stock for the time being even if that means booking losses.
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GMR INFRASTRUCTURE

I am holding 100 shares of GMR Infrastructure purchased at Rs 64.40 per share long ago. Should I hold or exit?
Pawan Kumar, Via Email

EXIT

BSE/NSE Code	532754/GMRINFRA
Face Value	Re 1
CMP	Rs 21.65
52-Week high/low	Rs 32/Rs 17
Current Profit/(Loss)	(66.38 per cent)

Considering the fact that you had bought the shares long ago, you would rather have asked for advice earlier. This is quite late for seeking advice. Anyway, here’s a look at the company profile.

GMR Infrastructure is an infrastructure company that operates in sectors like energy, airport, highways, and urban infrastructure sectors in India and internationally. It is involved in the generation and sale of power using hydro energy, natural gas, coal, fuel, solar power, and wind energy; mining and exploration activities. It also engages in the development and operation of airport infrastructure and the modernisation and operation of special economic zones and international airports on build, own, operate, and transfer basis.

On the financial front, on the company has witnessed muted results on a consolidated basis for Q3FY13. The topline witnessed a growth of 17.86 per cent on a YoY basis to stand at Rs 2356.30 crore for Q3FY13 as against Rs 1999.30 crore for Q3FY12. The bottomline, however, remained in red to post a loss of Rs 217.45 crore for Q3FY13 as against a loss of Rs 107.95 crore for Q3FY12. This is the sixth consecutive quarter where the company has remained in red. The hit in the bottomline can be attributed to higher interest cost which stood at Rs 525 crore for Q3FY13 witnessing a jump of 24 per cent on a YoY basis. Its debt on the books stands at a whopping Rs 37161 crore for FY12 taking the debt to equity ratio to 3.90x. At present, we would rather suggest you to exit the stock.
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ABB

I have bought 350 shares of this company. It is trading below my purchase price. Please suggest what to do next?
Madhura Rane, Via Email

EXIT

BSE/NSE Code	500002/ABB
Face Value	Rs 2
CMP	Rs 510
52-Week high/low	Rs 894/Rs 483
Current Profit/(Loss)	NA

We do not know the price at which you have bought the stock and are therefore unable to estimate the amount that is at stake, but the following details will help you take a call.

ABB, a power and automated engineering company, provides engineering, products, solutions, and services in the areas of automation and power technology in India and internationally. ABB operations in India include 12 manufacturing facilities with over 10355 employees. Customers are served through an extensive countrywide presence with more than 23 marketing offices, eight service centres, three logistics warehouses, two Power and Automation Engineering centres and a network of over 550 channel partners.

The company’s Q4CY12 results were not encouraging enough (it follows the calendar year). Its topline declined by 5.39 per cent on a YoY basis to stand at Rs 2052.76 crore for Q4CY12 as against Rs 2169.64 crore for Q4CY11. The bottomline too declined by a massive 73.84 per cent on a YoY basis to stand at Rs 16.77 crore for Q4CY12 as against Rs 64.11 crore for Q4CY11. On the valuation front, the stock trades at a PE of 78.68x and the EV/EBITDA stands at 25.64x. In the last three years, the topline has gained by a mere 2.53 per cent on a CAGR basis, while the bottomline has declined by 30 per cent in the same period.

While we are not aware of the quantum of loss that you are currently facing, we would still suggest you to exit the stock at the moment.