Tuesday, November 18, 2008

Bihar Caustic - Q2 Results Update

BSE Sensex - 8937
CMP - 31.7

I have written about Bihar caustic here and followed up with a update on the first quarter result here.

The second quarter result came in disappointing with both a sequential as well as YOY drop in net profit. The company had a blast at its boiler plant and hence resulted in lower production ad additional one time expense in repairing the plant. It also resulted in increase of fuel cost for production as the boiler plant was catering to the captive power plant.

So minus the one time impact the results would have been much better

But the stock has got hammered down post the results and closed today at Rs 31.7 down 57% from where I had originally looked at the stock. The stock is currently available at

Equity - Rs 23.3 crores
Reserves - Rs 193.8 crores
Book Value - Rs 93
Price/ Book Value - 0.33
H1 EPS - 8.89
Annualised P/E – 1.74

Negatives
Commodity prices have spiralled down worldwide so Q3 & Q4 operating and net profit margins will get affected. So we will see the downturn on that count.

Corporate Action
The Board has passed a resolution rechristening the company to Aditya Birla Chemicals Limited.


I continue to hold the stock and add more to my positions.

2 comments:

man4urheart said...

I liked your research but unfortunately I paid attention to this and avoided the stock

http://man4urheart.blogspot.com/2008/11/bihar-caustic-saga-of-price-it-pays-to.html

Ninad Kunder said...

Hi Man4urheart

The way I look at stocks is to look at the underlying business. If the underlying business fundamentals havent deteriorated substantially then I look at price correction as a opportunity to add more to my holdings.

I personally dont try to time the market technically. And I would presume last 3 months charts of most companies would show a similar pattern.

Cheers

Ninad