Stock Idea: Allcargo

Looking at the financial performance of AllCargo, it would be difficult to imagine that the world is going through a slowdown. A company which moves goods is the first to feel the pinch but there seems to be no stopping this company.

Defying all logic, the company, for the third quarter ended 30th September 2008, on a YoY posted a 56% rise in consolidated net sales. Though operating expenses went up by 51%, its EBIDTA was up a whopping 153%. Net profit for the period was up by an unbelievable 145% at Rs.42.05 crore. The consolidated results includes financial results of the direct / indirect subsidiaries, viz: Allcargo Belgium N.V., Hindustan Cargo Ltd and Contech Transport Services Pvt. Ltd. The performance of the company also includes that of Project and equipment division of Transindia Freight Services, which was merged with company in this fiscal. The merger of this company to a large extent has been responsible for the phenomenal performance.

Multimodal Transport Operation (MTO) segment registered significant growth of 60% and this was mainly on account of the Project division. The Container Freight Station (CFS)& Inland Container Depots (ICD) revenue has increased by 90%. The equipment hiring unit was a new contributor and it added Rs.10.31 crore to the topline.

Allcargo now has a fleet of 333 trailers, 51 forklifts, 53 cranes and 18 Reach stackers. The company has stated that it is adequately funded and does not expect to feel any impact of the slowdown. Being diversified, with operations globally and in India, the company is better equipped to sail through this global meltdown. Infact it is taking this opportunity of the slowdown to scout around for acquisitons overseas and plans to finalise them if the pricing is good.
Currently at Rs.404 levels, it has bounced back sharply from the low of Rs.272. Buy if it goes below Rs.300 for long term.

Source: sptulsian.com

Stock Idea: BHEL

The effect of the slowdown cannot be seen in this PSU capital goods company. Infact it seems to be business as usual, with orders burgeoning as has always been the trend.

For the first half ended 30th September 2008, BHEL posted a 31% rise in net sales on a YoY. The value of production (net of excise duty) has also improved by 34.07%. Other operating income was at Rs.599 crore which included one time interest income of Rs.267 crore on IT refund of earlier years. PAT was at Rs.1000.20 crore as against Rs.976.60 crore (Rs.847.60 crore excluding interest on IT refund) in Q2FY08.

Orders worth Rs.14,350 crore were received during the current Q2 and order outstanding currently is at about Rs.1,04,000 crore. So the company continues to have the issues of a huge backlog and unless the expanded facility or new facility does come up soon, this burgeoning issue of order backlog will continue to dog the company.

Wage revision is also a big issue, infact the biggest bane of PSUs. For BHEL, the provision for wage revision was reassessed in the current year at Rs.1907 crore for the period from 01.01.07 to 31.03.09. Amount already provided upto 31.03.08 was Rs.594 crore. Balance Rs.1313 crore is being provided in the year 08-09. In the first 2 quarters of 08-09, Rs.547 crore has been provided. This wage revision is about 5% of the market share of the turnover and will continue to remain so for the next 2- 3 years, denting the margins.

The stock price has recovered strongly from the low of Rs.984. Stay invested and if it touches the same low levels again, best time to pick up the stock then.

Source: sptulsian.com