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Friday, September 25, 2009

United Credit Ltd and Panoramic Universal Ltd:Future growth prospects and outlook,buy or sell?

1)Scripscan:United Credit Ltd
Bse code:531091

Story:United Credit Ltd (UCL) is involved in leasing, hire purchase, consumer financing, investment and capital market operations. It was formerly known as United India Credit & Development Company Ltd. UCL was formed in the year 1970 upon nationalization of the then "United Bank of India Ltd.UCL has thought of venturing into the manufacture of high performance battery electrode business. But, the commercial production of the same is yet to start.Borrowings have reduced in the current recession time, affecting UCL's main line of business. To make matters worse, UCL faces tough competition from a long list of banks, NBFCs, small unorganised credit institutions and even money-lenders.As reported by UCL for FY09, as high as 16% of the unsecured loans lent to subsidiaries and 29.11% of secured loans are doubtful.United Nanotechnologies Pvt Ltd and United Credit & Development Company Ltd, the subsidaries of UCL, have faced losses in FY09. The former is yet to start commercial production.The management has accepted in its FY09 annual report that "In the present uncertain situation it is difficult future performance of the Company".Finally, UCL's shares have lost steam in trading activity. In trading jargon, it is a "dry counter".Keeping all the above factors in mind, I recommend an "avoid" on this stock.Move on to better growth orinted stocks penned in the blog itself.

2)Scripscan:Panoramic Universal Ltd
Bse code:531816

Story:Panoramic Universal Ltd (PUL), formerly known as IT Microsystems (India) Ltd, operates four business divisions - hospitaliy, travel and tourism, herbal products and information technology. The company's hotels are located in India, USA, UK and New Zealand. The company is registered in Mumbai.From FY06 to FY08, Total Income and PAT have increased by a CAGR of 26.48% and 60.07% respectively. The Return on Capital Employed has gone down in FY08 because of 2.3% y-o-y rise in EBIT compared to a greater y-o-y rise of 38.23% and 43.28% in Net Fixed Assets and Net Current Assets respectively. Although the current ratio has reduced in FY08, it is healthy throughout. The Net Working Capital Ratio is over acceptable levels, indicating good ability to meet current obligations.The ongoing recession as well as the recent spurt in terrorism in Asian countries have taken their toll on the entire hospitality industry.PUL plans to increase the number of rooms it operates to 1967 by 2010, from the present 943 in India.The occupancy rate of PUL's properties have surely come down. excessive dependence on hospitality as a source of revenue would cause a reduction in profits for FY09. So, the immediate prospects of the company dont appear to be attractive.Exit and move on to better growth oriented sectorial bets.

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