Shetron - Result update

Consolidated sales increases from Rs 34 Crs to Rs 42 Crs for Q2 Sep on YoY basis. A growth of more than 24%. Similarly, profit of Rs 42 lakhs in Q2 FY 15 as compared to loss of Rs 26 lakhs in Q2 FY 14 (even after Rs 38 Lakhs of other income in Q2 FY 14).

Good part is that company has been able to bring down the long term debt from Rs ~ 74 Crs to Rs 68 Crs from March 2014 to Sep 2014. Company’s only concern is the huge debt on its books and if this trend is any indication, good days are ahead. Company already has good operating margins of ~16%, PAT margin is suffering only because of high interest cost. If sales were to remain stagnant in worst case, even then with debt coming down, company’s value will automatically increase. So, everything here is right for the company be it product demand, company’s vintage, quality of customers, market share except for huge debt, which will come down over a period of time. I feel its worth staying invested here. 

Recommending to hold.