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Your Questions October 2018

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By IE&M Research

I have 600 shares of APM Industries Limited which I have purchased at an average price of Rs 63. I want to know whether it’s advisable to stay invested in this or sell in loss and shift to some other counter. – SwapnilPai, Bangalore

BSE Code/ NSE: 523537/ -; Face Value: Rs 2; CMP: Rs 42
52 Weeks H/L (Rs) 84.40/ 41.25; Market Cap Rs (crore): 94
EXIT

 

APM Industries Limited manufactures Synthetic Blended Spun Yarns. It is having 55584 spindles capacity to produce approximately 18 million kg of yarn per annum. As we know textile stocks are always available at a low PE because of its uncertain profit capacity. Yarn companies depend on cotton prices and cotton is a highly volatile commodity. Now coming on its fundamental, it has equity of just Rs 4.32 crore and reserve of around Rs 185.9 crore. Its book value per share stood at Rs 88 and current price to book value ratio stood at just 0.48.In the last five years the company has not shown any growth in sales and profit. Its sales remain between Rs 249.8 crore to Rs 308.44 crore in last five years and PAT remains between Rs 21.42 crore to Rs 12.54 crore in this period. It has reported very poor numbers for Q1FY19. Its PAT declined from Rs 5.02 crore to Rs 0.87 crore and sales declined from Rs 79.33 crore to Rs 70.71 crore. Stock is available at low PE but it is in the nature of textile stocks. We recommend you to exit from this stock on highs and shift to other high growth stocks. These days it is not difficult to get good shares at a very reasonable valuation.

 

I bought 200 shares of Oriental Veneer Products Ltd. at Rs 510. I’m very much confused with this investment as nothing is really happening although I’m making a bit profit. I bought it after reading a Broker’s report and feel cheated. It was supposed to be a money spinner but I find nothing is exciting about it. Please guide me. – Sarvadanand, Chennai

BSE Code/ NSE: 531859/ -; Face Value: Rs10; CMP: Rs 548
52 Weeks H/L (Rs) 728/ 370; Market Cap Rs (crore): 295
BOOK PROFIT

 

Oriental Veneer Products Ltd. is a public limited company promoted by the Mithiborwala group. The group is actively involved and engaged in the manufacture of Wood Based Resin Impregnated Densified Laminated Boards (Compreg) for over 30 years now. It has an equity base of just Rs 5.39 crore and reserve of around Rs 36.84 crore. Company has reported strong growth in last four years. The company’s revenue in FY15 was at Rs 77.15 crore which has grown to Rs 132.69 crore with steady improvement in profitability. Its net profit has increased from Rs 3.13 crore in FY15 to Rs 11.65 crore in FY18. In Q1FY19, its PAT zoomed 46% to Rs 2.83 crore from Rs 1.94 crore on 42.55% higher sales of Rs 30.08 crore. At CMP it is trading at PE ratio of 25 on TTM basis. We are in the market era where this kind of PE ratio is very high for small cap companies. It is a high growth company but looking at its current valuation one can book at least 70% profit here and switch that fund in other stocks or re-enter in same stock again at lower levels when PE ratio goes below 20.

 

I bought 100 shares of JTL Infra Ltd. at the price of Rs 160/- per share. Can you please suggest me what is the future of this company. Can I buy some more? – AmritpalRathi, Jhansi

BSE Code/ NSE: 534600/ -; Face Value: Rs10; CMP: Rs105
52 Weeks H/L (Rs) 208/ 63.75; Market Cap Rs (crore): 116
HOLD

 

JTL produces Black & Galvanized ERW Steel Pipes & Tubes, hollow sections and structural steel that are extensively used in major engineering and construction projects. It is also into development of infrastructural activities. It also offers scaffolding fittings and systems, mild steels angles/channels, logistics services, and packaging and loading services. It designs and supplies steel pipes for water, air, agriculture, public health, irrigation, engineering sectors and for gas transport applications. It also manufactures fencing tubes and pre-galvanized tubes for use in steel fencings, road barriers, gates, parking barriers, fencings, steel gates and windows. It manufactures steel tubes for a range of applications, like Mild Steel tubes for structural purpose and mechanical and general engineering purpose.

Company is reporting strong growth since last two years. At the current market price the company is available at PE ratio of 11. Stock has already corrected 47% from its 52 week high. Lets closely watch its September quarter numbers. If it is good, one can hold this stock for sharp bounce back up to Rs135-140. Still I find it difficult if you can get your invested amount back in full.

 

I bought 300 shares of Sanco Industries Ltd., long back at Rs 134/- but immediately after that it took a nosedive and still not recovered. I’ve lost huge amount. Please suggest if I should average and keep it for a longer period. – RK Singh, Gwalior

BSE Code/ NSE: – / SANCO; Face Value: Rs10; CMP: Rs14
52 Weeks H/L (Rs) 97.80/ 13
BOOK LOSS

 

Sanco Industries Ltd. is a Delhi based company, listed only at NSE and offers a range of PVC Conduit Pipes, widest range of Wires and Cables, PVC Resin from domestic as well as imported, and Calcium Carbonate imported from various Asian countries to its clients. Unfortunately something wrong is cooking at this counter since long. You seems to be one of its victim – must have been a result of your enthusiasm to make a fast buck. We have seen huge speculation in this counter in last one and half year. First the stock zoomed from Rs 30 to Rs 145 in just five months and corrected from Rs 145 to Rs 14 in last 12-14 months. Financials of the company are undervalued but its price action clearly suggests that someone has played huge dirty game in this counter. You’re advised to Book loss once it shows some bounce and shift to some other stocks. These days wonderful opportunities are available to you. Please don’t try to average out in this counter. Even promoters are holding only 44.16% of the shares.

About the author: IE&M Team

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