Sunday, March 26, 2006

For just a penny more, or maybe a penny less

1. Abbott India is range bound. There is support for the scrip at 625 rupees and has a resistance at 700 rupees (level 1) and 725 rupees (level 2). The scrip is current available at 640 rupees. Advise punters to buy with a stop-loss at 620 rupees. The Q1 results of the company are due on 31st March 2006. There will be some traction in the stock then.











Fundamentally, profits have been lower than LY and at a CMP of 640, fwdPE comes at 16.12. The NCAV of the stock is 101.94 rupees. The company has declared a dividend of 17.5 rupees only (it was 35 rupees last year; the announcement came early this month .. and hence the rapid fall in value from 700 to 640. Yet the dividend yield stays at 2.76%). Sales are growing at 12% p.a., all quarters have been profitable (at over 10 crs a qtr) and management is good.

2. Helios & Matheson's stock value has been on a down trend due to a news item. Infact 13th Feb was a rather volatile day for the scrip. It opened at 220; reached a high of 254.90; fell to a low of 200 for the day and closed at 249.15. The news was w.r.t. to some arbitration proceedings over one of it's subsidaries vMoksha.











The company has a marginally negative NCAV. What's remarkable is the rising revenues and profits of the company which went up 90% and 140% respectively. My calculations of the fwdP/E come to about 10.58. Traders can look at an exposure in this scrip with a stop loss at 170 rupees.

There are a number of stocks which have seen a reduction in prices over the last one month or so, however you and I'll be comfortable with the one where fundamentally the stock is sound, while external events which can be controlled are responsible for the lowering in value.

5 Comments:

Blogger Rakesh said...

Shankar,

Your blog seems to be in action all the time. I see that our Amtek investment is paying dividends.

Any take on Agro Dutch Industries. The company is number 2 in Mushroom business. Also It manufature high quality CANs. ICICI direct also had done some positive analysis on this stock.It is available at below Rs. 32. I already have some stake in. Do you find it worthy of putting more money at this level.
-Rakesh

1:21 PM  
Blogger Shankar said...

Hi Rakesh,

Yeah, the Amtek India thing went on well. I would advise a hold.

On AgroDutch, you've found a stock which is at a P/E of 4. But still not comfortable with the stock for the foll. reasons -
a) the company has de-grown in sales and profits over last year.
b) the company has not given any dividend over the last five yrs
c) the profit per qtr comes to only 2.5 crs which is rather low. (its a small cap to the core)

Truly understand that the stock is at it's lowest in an yr, but the margin of safety is just not there.

Warm Rgds,
Shankar

2:07 PM  
Blogger Rakesh said...

Shankar,

Thanks for your reply. I got the following data about ADI results from BSE site. profit for OND 05 quarter was approx Rs. 64 Million i.e. Rs. 6.4 Crores. If you exclude Apr-Jun 05 quarter it had profit in the range of 3.7 crore to 7.6 crore every quarter. Now with increase capacity for both Mushrooms and CAN, I guess profit should improve. Please let me know whether I am on right track.

I agree with on Margin of safety front.

5:54 PM  
Blogger Shankar said...

Still not comfortable Rakesh. The profit is just too low. Nothing before it atleast reaches 30 crs of profits with atleast 8 quarters of positive profits.

Warm Rgds
Shankar

9:59 PM  
Blogger Shankar said...

BTW, Helios & Matheson is up 12% in 3 trading days. Abbott is still constant.

10:00 PM  

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