In this edition, we have reviewed Dredging Corporation of India and Sun Pharmaceutical Industries. We suggest our reader-investors to BOOK PROFIT in Dredging Corporation of India and EXIT in Sun Pharmaceutical Industries
We had recommended Dredging Corporation of India in volume 32, issue no. 17 dated July 24 - August 6, 2017, under the ‘Choice Scrip’ section when the scrip was trading at
₹609. Our recommendation was based on the prospects of establishment of new ports and development of existing ports, increasing demand from Indian Navy and government programmes promoting coastal activities, such as the Sagarmala programme.
Dredging Corporation of India is engaged in the business of maintenance dredging, capital dredging, beach nourishment, land reclamation, shallow water dredging, project management consultancy and marine construction. The company owns about three cutter suction dredgers and 10 trailer suction dredgers. The company operates only in India and its projects include maintenance dredging of Naval Channel at Ernakulam; capital dredging to deepen the CICTPS, CB 1 and 2 berths, its approaches at Kamarajar Port, and dredging in the Vanakbara creek Daman Diu.
On the financial front, Dredging Corporation of India posted 10.81 per cent increase in its revenue to ₹157.94 crore in Q1FY18 on a yearly basis. The company’s PBIDT grew 26.67 per cent to ₹37.33 crore in Q1FY18 as against
₹29.47 crore in the same quarter of the previous fiscal. However, the company’s net profit inched lower by 0.75 per cent to ₹3.97 crore in Q1FY18 as against ₹4 crore in Q1FY17.
On an annual basis, the company’s revenue decreased by 12.01 per cent to ₹585.87 crore in FY17. The company’s PBIDT fell by 9.76 per cent to ₹116.99 crore in FY17, as against ₹129.64 crore in FY16. The company’s profit after tax got reduced by 82.34 per cent to ₹7.40 crore in FY17 from ₹41.91 crore in the previous fiscal.
After our recommendation, the share price of Dredging Corporation of India went up by about 20.36 per cent. The company has reached its optimum level at the moment and the growth momentum is likely to take a back seat as the government prepares for its stake sale in the company. Hence, we recommended the investors to Book Profit.