Dalal Street Investment Journal — July 10-23, 2017

DSIJ.in JULY 10 - 23, 2017 I DALAL STREET INVESTMENT JOURNAL (^63)
I purchased 1000 shares of Vascon Engineers Ltd at
`55.83. Currently, the share price is down. Should I
hold or sell?

• V R Chowdhary

I bought 999 shares of Sintex Industries in May

2016. The stock price has dropped to `24. Should I
      buy more shares to average out or exit the shares?

• Chetan KR

SINTEX INDUSTRIES VASCON ENGINEERS

V

ascon Engineers Ltd is a Pune-based engineering,

procurement and construction (EPC) company. The

company’s main operations include real estate

development, hospitality as well as manufacturing and building

management system (BMS). The EPC operations of Vascon

Engineers include construction of residential, commercial,

industrial and other constructions such as hotels and industrial

parks. The company has a strong presence in Bangalore,

Chennai, Ludhiana, Mumbai, Pune and some cities of Uttar

Pradesh and Goa.

On the financial front, the company posted decrease in its net

sales by 25.47 per cent to `57.48 crore in Q4FY17, as against

net sales of `77.12 in Q4FY16. However, the company’s profit

after tax increased by 228.38 per cent in the fourth quarter of

FY17 to `1.90 crore on a yearly basis. The operating profit of

the company also increased 15.18 per cent to `11.46 crore in

Q4FY17 from `9.95 crore in the same quarter of the previous

ye ar.

On an annual basis, the company’s net sales witnessed a

decrease of 14.78 per cent to `487.43 crore in fiscal 2017 as

compared with its net sales in the previous fiscal. The

company’s PAT also decreased substantially to `1.21 crore in

FY17, as against `9.21 crore in the previous fiscal. The

operating profit of the company also declined 23.14 per cent to

`6.21 crore in FY17, from an operating profit of `8.08 crore in

the previous year.

Despite lacklustre annual results, the stock displayed a recovery

mode in the fourth quarter results of fiscal 2017. Also, with the

introduction of GST and RERA, there is a build-up of positive

sentiments towards infrastructure industry. The company is

likely to perform well in the ongoing fiscal due to infrastructure

conducive business environment in the economy.

Therefore, we recommend investors to Hold the stock

S

intex Industries Ltd majorly manufactures textiles, which

includes spinning, weaving and finishing of textiles. The

company recently got demerged, splitting its operations

into textiles and plastics and infrastructure segments. The

textile business contributes a significant amount in the

company’s overall revenue. The company’s major focus is the

high-end jacquared fabric, with customers such as Hugo Boss,

Armani, Tommy Hilfiger, Van Heusen and Zara. The company

has operations in about nine countries, including France,

Germany and the US.

On the financial front, the company posted a substantial

increase in its net sales by 69.35 per cent to `437.53 crore in

Q4FY17, as against net sales of `258.36 crore in Q4FY16. The

company’s operating profit also rose 12.13 per cent in the fourth

quarter of FY17 to `112.38 crore on a yearly basis. However, its

profit after tax witnessed a slight decrease by 1.62 per cent to

50.42 crore in Q4FY17 from51.25 crore in the same quarter

of the previous year.

On an annual basis, the company’s net sales witnessed an

increase of 56.34 per cent to `1,430.45 crore in fiscal 2017, as

compared with the net sales of `914.96 crore in the previous

fiscal. The operating profit of the company increased 25.30 per

cent to `353.17 crore in FY17, from an operating profit of

`281.86 crore in the previous year. The company’s PAT also

increased 15.55 per cent to `127.48 crore in FY17, as against

`110.32 crore in the previous fiscal.

The company has shown strong financial growth. From the

industry perspective, despite the elimination of subsidies in the

textile industry, GST is likely to bring cheer to the textile

manufacturers. The tax reform will make the input credit chain

smoother and cut down manufacturing costs, thus providing

growth opportunities to Sintex Industries too.

We recommend our reader-investors to Hold the stock.

BSE/NSE Code 502742 / SINTEX

Face Value ` 1

CMP `25.60

52-Week High 37.85 / Low17.75

Your Current

Profit/(Loss)

--

BSE/NSE Code 533156 / VASCONEQ

Face Value ` 10

CMP `39.50

52-Week High 58.80 /Low26.15

Your Current

Profit/(Loss)

(41.46 per cent)

HOLD HOLD