Originally posted by basant Originally posted by BubbleVision NELCO -   20-March-1992 -- Rs 93.00 04-Apr-2007 --     Rs  83.00   Long Live holding forever!!!!   This is shocking. I was speaking from what I recollect.Companies which could do nothing for 15 years would take more then an operator to get going. I wish people applied more logic and less conviction (stubborness).

Edited by basant - 07/Apr/2007 at 7:50pm

Though I just had a very quick glance on the company's financials the major boast to earnings has come from a steady increase in other income which has grown from almost 34 lacs in 2002 to Rs 4.16 crores in 2006. Once you eliminate the effect of other income the growth does not look that compelling. That is why the operating margin has not expanded as much as the net profit margin.

Edited by basant - 07/Apr/2007 at 11:32pm

Sharekhan recommended this at 114 and recommended to sell at 84.

This is the reason for sell recommendation:-

Nelco''s recent performance has been much below our expectations due to the delay in the orders from the Indian armed forces and the little progress in the proposed additional development at its existing property in Mumbai.

The long-term re-rating triggers, though delayed and uncertain, were still intact at that time. We were hopeful that an important re-rating trigger (such as a move to strengthen its relations with the key foreign collaborator like Thales through a joint venture or the sale of a strategic stake) would eventually play out. The French major Thales is aggressively looking at expanding its footprint in India with a focus on catering to the needs of the Indian defence and security forces. And Nelco could have been an ideal partner given its strong parentage with an established presence as a supplier to the Indian armed forces. 

However, the recent announcement of a joint venture between Rolta India and Thales would considerably limit the extent of the latter''s engagement with Nelco. Though the joint venture would initially focus on the development of information systems and solutions, Rolta''s management indicated that the relationship could grow and also encompass implementation, customisation and integration of Thales'' products (and solutions) in India. 

In the absence of any meaningful re-rating triggers, we advise booking out of the stock. We had recommended the stock on January 31, 2006 at the price of Rs144.

I am aware of another Defense stock. It is Zen tech. Like Marksans pharma, this was also darling of FIIs. Our own RD is/was bullish on this. Zen has fallen alot ever since May crash. Now in-people are talking about excellent dividend yield. Once I picked small quantity but sold it quite quickly.