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Sunday, June 7, 2009

Stay away from these craps

1)scripscan:Chartered Logistics Ltd

Story:Most of the companies that figure in this section are small, shady companies. Not Chartered Logistics. It claims to offer cost-effective road transportation services and special warehousing services to some big names like the Aditya Birla group, Hindustan Unilever, SAIL and Indian Oil Corporation. Over the past five quarters, the company managed to post 34% and 33% growth in sales and operating profits, respectively, over the corresponding year-ago period. But the March 2009 quarter was not so good. Though revenues were up 17%, profit was up just 1%. For some reason, between 26 December 2008 and 13 May 2009, the stock rallied an incredible 408% when the Sensex gained just 29%. Is it the company’s name that has triggered the speculative rally or is some operator at work?

2)scripscan:Choice International Ltd

Story:Choice International is from an era when finance companies made quick money by “loan syndication, corporate advisory services, merchant banking, placement of equity and debt.” With such an array of businesses, what is its size of operations? In the December 2008 quarter, income was just Rs24 lakh which jumped to Rs1.16 crore in March. There have been quarters during the boom when its income was just Rs6 lakh. We guess, there were not many clients for its financial services then but business is booming during the recession! Over the past 14 quarters, reported profit was around Rs2 lakh-Rs3 lakh on an average, interspersed with several quarters of losses. We fail to understand how such a company can remain listed. Probably because it is a great playground for speculators. The scrip zoomed 800% between 5 January 2009 and 5th june when the Sensex rose hardly 30 odd percent.

3)scripscan:Chandni Textiles Ltd

Story:Chandni Textiles claims to manufacture cotton curtains, silk curtains, nylon curtains, velvet curtains, designer curtains, floor cushions, bed cushions, sofa cushions, etc. But the fundamentals of this company simply make no sense. It reported an income of just Rs0.21 crore in the September 2008 quarter and an operating loss of Rs2.31 crore. For the December quarter, income jumped to Rs3.43 crore but it still made an operating loss of Rs3.14 crore. Nothing can keep the stock down though. Braving poor market conditions and poor prospects, it rallied wildly -- 343% between 31 October 2008 and 13 May 2009. During the same period, the Sensex gained 23%.

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