Kemrock Industries and Exports @77 looks a Multibagger
I feel Promoters shares selling stoped shares came down from 500+ level to 70 level in 4-5 months.
Only issue is June 2012 qtrly results are bad and we need to watch /analyse reason of that bad results, Is it a one time phenomenon or going to be repeated?
Higher Leverage and Higher Interest payout is an issue but its part and partial of expansion plans.
Company remain in good period for longer time and that gives the impression that its a genuine company with genuine business.
No FCCB in Company, which is a geberal phenomenon driving stocks down these days.
Happy Investing.
Rgds.
I will appreciate views, analysis, active comments from viewers to benefit from network.
To be a strictly avoid category of stock. These type of stocks doesn’t have any solid bottom, and can go down to any level. Guess what would happen to the stock when they declare Sep’12 qtr and the interest expense > the EBIDTA (possible theoretical scenario)
Zylog System is yet another recent example of what can happen to a good stock with high promoter pledging.
KEMROCK)- High D/E ratio + High promoter share pledging + poor quarter
Kemrock Industry is involved in manufacturing of fibre reinforced composite materials. The stock used to quote in and around 500 in last 2 year. Then came July’12 and the stock started falling like a rock. Within a month it is now quoting at 110, with lower circuit hitting almost everyday.
**Why did the rock fell:-If you see theratio page of kemrock at edelweiss, you can see the exceptional growth ratio (all exceeding 30%+).**If you look closely there are few issues with it. It has a high D/E ratio of 1.69, a low promoter holding of 25%, of which around 50% of it is pledged. So it was a bomb waiting to explode.
If you see thequaterly result page, the PBT is almost flat, and the interest is slowy eating it, come Jul’12 the pizza is fully eaten by the interest. Share fell, the lender asked for more pledging, the promoter pledged another 20% of share (total share pledging is now 70%), share fell more, everyone panicked, so everyone ordered sell, and the stock slide.**
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Lesson to be learned:
Be wary of companies with high debt, always check how much percentage of PBT being eaten by Interest.
Be very very fearful of companies where promoter have pledged good amount of share, as it can cause share price to fell like anything
I appreciate the views given by you…these are all given facts…does any one have the June 2012 quarterly results analysis…why the sales are down and profits decimal…except higher interest payout…
Pls if anyone know the reason of lower sales, lower PBIDT margin post here…
Mr.Donald pls see if u have any recent 2012 analysis…report on company…
I appreciate your views…i had looked into it as since 13 sept 2012 stock is consolidating…between 69-100…promoters sale against pledge invoking is stopped instead promoters started buying…no FCCB Redemption was at corner (this is major concern now these trigering meltdown in stocks). Comapny`s last few years track record is extremely good. Carbon Fibre is Sunrise and knowlwdge based Industry which after slow down in 2009-2010 likely to pick up globally.
But yes there is no parameter which can gauge the Intentions of Promoters.
Just see the case of Glodyne Techno, Sterling Group etc…
Thanx anyway…Kemrock posted very ugly results in Sept 12 qtrly and i am now feeling one should remain away from it…as promoters are also not coming forward with any proper press release in explanation of bad results. Only positive is RPM International holding 23% equity now and over 10% stake more through FCCB company floated in April 2012.
