Dai Ichi

Last week, the stock had breached the upper circuit, hit a new high and volumes had shown major spike up. All this build up by speculators was in anticipation of the Q2 numbers and once that came in, the stock is status quo, with only 200 shares being traded yesterday. With a market cap of just Rs.37 crore, the activity on the counter last week seemed more like some trap.

The company did end Q2FY14 on a very high note, with net profit coming at Rs.8 crore, , which is double the net profit for entire FY13 of Rs4 crore and up over 7 times, both QoQ as well as YoY. Such exceptional jump in profits is almost always thanks to exceptional gains only. Here too, the company reported a profit of Rs.6 crore on sale of investments while no details of these have been provided, neither in the Notes to accounts nor in company announcements to stock exchanges during Q2. But for this profit, net profit was nothing exceptional at Rs.2 crore, similar to Q1. There remains no Japanese equity holding and entire stake of 63.74% is held by Indian promoters. The only good part of this company is that it is debt free, has a small equity and reserves is over 9 times the equity at Rs.69 crore as at 30th Sept 2013. On the other hand, cash balance has halved YoY to Rs.5 crore. It would not be prudent to get lured by small cap stocks in this market and at this juncture.