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Your Questions December 2018

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By IE&M Research

I am holding 800 shares of Kamat Hotels (India) Ltd., purchased @ Rs92. The company is making profit and has plans to upgrade their hotels but the profit has declined in H1FY19 as compared to H1FY18. Can you suggest me what is the future of this company and what shall I do? – Rohit Arya, Jhajjar & (Arvind, Nawashahar, Punjab also has similar question)

BSE Code/ NSE: 526668 / KAMATHOTEL -; Face Value: Rs10; CMP: Rs 43
52 Weeks H/L (Rs) 158.85 / 38.05; Market Cap Rs (crore): 104
SELL

There is no good reason to Hold on to Kamat Hotels. The Hotel’s major property is the one located in Mumbai. Company has limited means to grow and runs a very highly capital-intensive business where return ratios are poor. It has fundamentally a weak balance sheet. The Company has high debt north of Rs 500 crore and cash generated by the company is used in repaying that debt only. I have reservations on growth prospects of the company and it making any significant profit in the coming few years. So whenever there is a small rally, get out and invest somewhere else to recover your losses. There is enough opportunity these days.

I bought 3500 shares of Confidence Petroleum India Ltd., after reading an analysis in your magazine a year back. It proved a good buy as my buying rate was Rs 23 only. I’m a long term investor and I want to know why it is constantly hovering around Rs 36 since many months. – Utpal Chatterjee, Kolkata

BSE Code/ NSE: 526829 / CONFIPET; Face Value: Rs10; CMP: Rs 35
52 Weeks H/L (Rs) 57.00 / 27.50;n Market Cap Rs (crore): 984
HOLD

Confidence Petroleum’s Profit after Tax (PAT) for FY2018 was Rs 27 crore whereas in the first two quarters of FY2019 the Company has already done Rs 28 crore in profit. This tremendous growth shows the inherent strength in the Company’s business model. The Company is a major beneficiary of the government’s prestigious Ujjwala Yojna as they are the largest cylinder manufacturers in India and with the elections in May 2019 the Company should deliver better numbers. I would suggest you to hold on to the stock.

I have 300 shares of Inox Leisure Ltd., bought at an average price of Rs190. Please let me know in details about the company’s performance.– AG Subbarao, Secunderabad

BSE Code/ NSE:532706 / INOXLEISURFace; Value: Rs10; CMP: Rs 210
52 Weeks H/L (Rs) 326.00 / 189.65; Market CapRs (crore): 2295
HOLD

The Company’s business is a lot dependent on the kind of movies that are released at any given point of time. This year the release of movies has been very good and few good movies are lined up for the rest of the year which should give a boost to Inox’s numbers. Movies like Robot 2.0 and Zero can be big blockbusters. We assume the Q3 should be good for the company. We advise you to hold on to the stock.

I have some shares of Transport Corporation of India Ltd. and my buying price is Rs 255. I want to sell this stock as nothing is happening although it’s always up Rs 20-30 from my buying price. Please suggest if my decision is correct, and also where should I put that money? – Arvind, Jaipur

BSE Code/ NSE: 532349 / TCI; Face Value: Rs 2; CMP: Rs 280
52 Weeks H/L (Rs) 375.70 / 232.20; Market Cap Rs (crore): 2147
HOLD

TCI is a leading logistics company in India and has a greatfuture. GST has been a big kicker for all logistics players. This is anInvestment category stock where you have to take a view of 3 to 5 years to reapbenefits. If you are a long term investor you should hold on to this stock.However, if you are very keen to switch over in the same sector then MahindraLogistics is also a good stock. 

I bought 200 shares of Century Plyboards (India) Ltd. at Rs 264. I need to know the company’s future? – Janardan Reddy, Hyderabad

BSE Code/ NSE: 532548 / CENTURYPLY; Face Value: Rs 1; CMP: Rs173
52 Weeks H/L (Rs) 364.10 / 150.10; Market Cap Rs (crore): 3952
HOLD

With the fall in the rupee and rising crude prices, the raw material cost of the Century Plyboards had gone up, which in turn dented the sales and margins in the first two quarters of FY19. However, recent developments like the rupee recovering some of its lost ground, falling crude prices and the rise in the price of laminates and plywood are expected to boost the company’s fortunes. For the quarter ended September 30, Century Ply saw a 19% jump in revenues, year on year, to Rs564 crore. However, the net profit dipped 5% year on year to Rs 38 crore. Compared to the same period last fiscal, the company’s net profit margin and operating profit margins came down to 6.70% in Q2FY19 (8.46%) and to 10.58% (14.07%), respectively. Raw materials used in plywood making, such as phenol, are crude oil derivatives. So be invested for some more time.

I bought Cochin Shipyard Ltd. sometime back at Rs 512. Now it is trading very low. Should I average it or get out completely? – Rohitashva Bundelkhandi, Jhansi

BSE Code/ NSE: 540678 / COCHINSHIP; Face Value: Rs10; CMP: Rs 373
52 Weeks H/L (Rs) 569.75 / 356.00; Market Cap Rs (crore): 5103
HOLD

State-owned shipbuilder Cochin Shipyard has announced share buyback offer. Last month the Company’s board had approved buyback of equity shares worth up to Rs 200 crore. The way the company is going I would suggest you to buy more shares to reduce your average cost. The company has registered excellent Q2FY2019 results, with huge cash on books. At the present valuation the stock is very attractive and soon may see the previous high. The profit jumped handsomely and it has substantial orders on hand. All this ensures a bright future for the company. This is one of the most attractive value stocks right now. You should get more considering the steep fall in the stock price in the short term.

I am holding 350 shares of Equitas Holdings Ltd., purchased @ Rs167. I want to know whether the company will be impacted by ILFS problems. And also suggest me what is the future of this company and what shall I do? – Govind Lokhande, Nagpur

BSE Code/ NSE: 539844 / EQUITAS; Face Value: Rs10; CMP: Rs111
52 Weeks H/L (Rs) 173.40 / 78; Market Cap Rs (crore): 4238
HOLD

Equitas Holdings has nothing to do with ILFS problems. Please don’t get so easily distracted by newspaper reports. Before investing you must have given a thought to it that’s why you were investing in this particular company. So as long as the company is performing well, (maybe due to macro conditions and volatility the price comes down) you should keep your investment intact if you have no better opportunity. Equitas Holding has a very bright future and at present trading at a fair valuation of around 1.6 times current year’s adjusted book value. Hold it.

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