Monday, November 26, 2012

Hemant K Gupta
COMPACT DISC INDIA LTD (now CDI International Ltd) 
Sell advice on this scrip being given by this writer since 3 years. Company used to make grandiose announcements (which were fake) about foray in Hollywood and what not. Company even announced delisting plans which enabled vested interests to offload their huge quantities at fabulous price. Figures being reported by Compact Disc have always been bogus. Provision for depreciation is always NIL. Have you ever heard such a thing? Employee cost for full year just 41 lacs which is just 0.2% of sales. Either company has been operating without any employees or employees have been working for Compact Disc for free! General and Administrative Expenses again are negligible. Wonder how income tax department not smelling any scam? SELL. Scrip can be Rs 1 or Rs 2 in coming years.
Several brokerage houses were coming out with Buy recommendation on this scrip with fancy price targets only because company belongs to Ajay Piramal and company went for aggressive expansion. However, this writer always advised not to buy this scrip as firstly, promoter is investor-enemy. Secondly, aggressive expansion of capacity does not necessarily mean higher profits. Rather, many times expansion becomes big burden and particularly in glass industry where energy costs are massive. And this writer has proved right. Pat for Q2 has plunged to 2.17 cr as against Pat of 22 cr in corresponding quarter of previous year despite the fact that turnover rose 40%. Company may report better nos in coming quarter but still fundamentally, scrip is grossly overpriced. Sell. Investors should not be buy scrip belonging to promoters who are not trustworthy.

Sales: Rs.40 Cr (Rs.904 Cr)
Loss: Rs.104Cr (profit Rs.15.40)
Equity--29.11 Cr
There is not printing mistake and above figures are correct. Yes, turnover is mere 40 cr as against 904 cr turnover in corresponding quarter of previous year. And yes, Varun has reported LOSS of 104 cr as against Pat of 15.40 crores. This writer had advised to sell Varun when price was hovering above Rs 200/. Despite such bad results, some times dirty operator may play the trick of upper circuit on the counter. Such tricks to trap gullible investors. Investors are advised not to buy this scrip at any price. Readers may remember that when company used to make the MOST GRANDIOSE announcement about procurement of mines in Madagascar for Uranium, Rare Earth, Diamond etc, we had written that such announcements are fake.Actually, population of Kalmadis and A Rajas is much more in share market.
When scrip was being operated a big investor-cum-operator and was being aggressively bought by big investors, this writer had been repeatedly advising SELL advice when share price was above Rs 400/. Figures being cooked by the company with aggressive growth in topline as well as bottomline quarter after quarter were simply unbelievable. It is impossible for a novice like Glodyne which was allegedly in IT Infrastructure (more glamorous name being given for maintenance of hardware) to report stupendous growth and huge nos. Till share price was at high levels (which enables vested interests to off-load thier shares to make clean sweep), company reported huge profits each quarter. When cookie started crumbling, so did the bottomline. What has gone wrong with India story or with IT industry that Glodyne suddenly plunges in loss of 67 cr as against Pat of 53 crores? In between, dirty operators may try to jack up the price to offload thier remaining holding (if any), but in long run, scrip should continue its downside journey. DONT BUY.
KSL Industries Ltd Rs 4 FV
Belonging to erstwhile Bank of Rajasthan fame, investors can expect anything from Tayal family. KSL is supposed to be in business of textiles and real estate. All textile companies have reported huge improvement in their bottomline for Q2. However, KSL has reported HUGE LOSS of 141 for Q2 alone and LOSS of 165 cr for H1. Investors may remember that there were strong rumours that Bank of Rajasthan was being grossly misused by promoters and bank's Balance Sheet had huge loopholes. Had it not been merged with ICICI, some insiders say that scam would have come out in the open.
Another listed entity belonging to Tayal family and again in textile and real estate has also reported Loss of 12.70 cr for Q2 alone. Need we elaborate further! And like Yash Birla, stock-split in various denominations seems to be favourite tool for misguiding the investors.
This is 3rd listed entity belonging to Tayal family. In order to maintain consistent track record of the Group, this company has also reported Loss for Q2. Tayals are amongst some industrial houses whose STYLE to report losses is commendable. In 2013, investors are bound to come across news that all Tayal group companies have been granted huge relief by various banks under the garb of CDR.
This scrip was being recommended to sell when share price was above Rs 220/. Many Marketmen were claiming that company has HUGE oil-wells overseas and has grand future. Once share price started plunging, financial figures also plunged. If share price is high, company goes great guns and Sales/Margins continue to soar. What is co-relation between share price and financial nos?
Its Mumbai-Nasik highway become fully operational which has led to improvement in its topline as well as bottomline. For Q2, Sales have risen by 50% to 148 cr and company has made Pat of 5.66 cr as against Loss of 8.85 crores. However, considering huge equity of 147 crores, fundamentally scrip is overpriced. Don’t buy. Even otherwise, Gammon group has always been lackluster in rewarding its shareholders.
When education sector was being touted as new sunrise sector which will give huge return to equity investor, this writer had advised caution and had been constantly putting sell advice on Educomp when share price was 300% higher than Cmp. Company has reported Pat of 8.64 cr in H1 as against Pat of 53 cr in corresponding H1 of previous year. Again another case where profits plunge once share price starts crumbling. Educomp has debt of 2018 crores. Shocking for a small company which has no big factories and no expensive plant and machinery. In coming quarters, share price should come down further. Avoid.
Although company is in business of shipbuilding and has grandiose plans for defense and what not, but its profit margins are much less than even companies engaged in commodity manufacturing. Q2 Pat is just 8.40 crores on sales of 666 crores. Although sales have gone up by nearly 50%, Pat is down to 8.40 cr from 9.41 cr. fundamentally, scrip is grossly overpriced.
Note: The problem with Mr.H K Gupta is that, he always tries to project himself as, "Holier than Thou", among the market analysts; while in reality many of  his recommended scrips are no where to be spoken about, eg. Galada Power and Telecom Ltd, VBC Industries Ltd,  VBC Ferro Alloys Ltd, Agro Dutch Industries Ltd (Recommended at Rs.26), SSPDL (formerly Srinivasa Shipping & Property Development Ltd. Recommended at Rs.106 against the CMP of Rs.15.), NCL Industries Ltd (it came out with a net profit of Rs.1.22 Cr against Rs.11.09, in Q2FY13), UT Ltd (the stock is making repeated losses, quarter after quarter), Andhra Petro Ltd, Simplex Infrastructure Ltd, Electrotherm Ltd (would you believe he recommended at Rs.340 against the CMP of Rs.49.30), Cubex Tubings Ltd (Recommended at Rs.57, against the CMP of Rs.7.47), Vinay Cement Ltd (no one knows when this scrip will start trading again), and so on.
Therefore, though his above arguments carry merit but he also does not have too much chance, to take high moral ground. Moreover, there are instances that, some of the scrips which he did say to avoid gave good and steady returns over a period, like Reliance Industrial Infrastructure Ltd, Sunil High Tech Ltd, etc. Also, whatever he says, the scrip of Glodyna Technoserve Ltd was recommended by a number of brokerage houses, due to its steady performance and revenue visibility. He and Debashish Basu (Money Life), therefore, suddenly cannot suddenly spin stories of its not having fundamentals. The bigger question is where were they when the brokerage  houses were repeatedly recommending this scrip? Why didn't they question the authenticity of the reports at that time, if they were so sure that the company did not have fundamentals and it was simply cooking its books? Even few months back, Mr.Aashish Tater who regularly comes on Business Channels to advice the small investors, recommended the scrip with hefty targets. His mouth is now shut on the developments in the stock which he recommended on Jul 10, 2012 at 13:22, for a price target of Rs.450. This is what he said:
"I am going long on Glodyne Technoserve for a target of close to Rs 450 odd mark with a closing stop of around Rs 380. DecisionOne, its subsidiary has won USD 42 million contract into IMS service in US and we feel going further the company is going to get qualified for higher tenders which would be highly beneficial for the company. At current levels the stock looks almost priced in. Thus there is a limited downside of say around Rs 380 odd mark and limited upside to that Rs 450-460 levels under current situation. But the stock has been performing well right from our recommendation levels of Rs 230-240 and we still hold a positive view on the stock".
Now, who is to be held accountable for so much depletion of the wealth of the investors.......
? It seems some of these marketmen, all of a sudden starts to understand that a company does not have fundamentals---this is ridiculous. Mr.H K Gupta, like Mr.Shankar Sharma, has extreme views. Mr.Gupta's comment, "It is impossible for a novice like Glodyne which was allegedly in IT Infrastructure (more glamorous name being given for maintenance of hardware) to report stupendous growth and huge nos", proves that he does not understand A, B, C, D of the company's business. CLICK HERE.

Therefore, the issue here is even a crow says my child is so beautiful. Hence, please place you judgements based on the above factors. In stock market it is very very difficult (or you can say nearly impossible) to get 100% accuracy on stock recommendations.