Gujarat Heavy Chemicals (GHCL) (BSE Code 500171) with face ..a value ofRs 10 is currently trading at Rs 52.75 with a 52 week high/low
of Rs 59.55/24.50. GHCL is a part of the Dalmia Group and operates as a chemical and textile company. It is engaged in the manufacture and sale of soda ash, which is used for the production of detergents, soaps, glass, sodium salts and dyes. The company's textile business consists of the manufacture of yarn, fabric and home textile products such as bed linen, curtains and cotton yarn. Its products comprise flat sheets, fitted sheets, pillowcases etc. The company's chemical division contributes about three-fourth of the total business whereas the rest of it is from textiles.
For the quarter ending September 2009, the company has posted a bad set of numbers in both topline and bottomline.
Its topline declined by 14 per cent on a y-o-y basis and was Rs 290.3 crore for Q2FYI0. Its bottomline was hit harder and declined by 23 per cent to Rs 20 crore as against Rs 26.1 crore posted last year for the same period. This was mainly because of an increase in the interest burden and depreciation by 2 per cent and 10 per cent respectively. The trailing 12-month earning of the company discounts the current share price by 6 times which might look cheap but given the fact that the company has de-grown in the last two quarters continuously, we feel that the valuations are expensive.
Moreover, the company's promoters have been barred from dealing in securities for allegedly violating securities' market laws, including insider-trading rules. The SEBI has found the company guilty of filing false shareholding information of the promoters repeatedly over the four quarters of 2008. Therefore, our advice is to exit from the counter.
of Rs 59.55/24.50. GHCL is a part of the Dalmia Group and operates as a chemical and textile company. It is engaged in the manufacture and sale of soda ash, which is used for the production of detergents, soaps, glass, sodium salts and dyes. The company's textile business consists of the manufacture of yarn, fabric and home textile products such as bed linen, curtains and cotton yarn. Its products comprise flat sheets, fitted sheets, pillowcases etc. The company's chemical division contributes about three-fourth of the total business whereas the rest of it is from textiles.
For the quarter ending September 2009, the company has posted a bad set of numbers in both topline and bottomline.
Its topline declined by 14 per cent on a y-o-y basis and was Rs 290.3 crore for Q2FYI0. Its bottomline was hit harder and declined by 23 per cent to Rs 20 crore as against Rs 26.1 crore posted last year for the same period. This was mainly because of an increase in the interest burden and depreciation by 2 per cent and 10 per cent respectively. The trailing 12-month earning of the company discounts the current share price by 6 times which might look cheap but given the fact that the company has de-grown in the last two quarters continuously, we feel that the valuations are expensive.
Moreover, the company's promoters have been barred from dealing in securities for allegedly violating securities' market laws, including insider-trading rules. The SEBI has found the company guilty of filing false shareholding information of the promoters repeatedly over the four quarters of 2008. Therefore, our advice is to exit from the counter.
No comments:
Post a Comment