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Loss making companies even rise in bull market
You do not invest in loss-making companies, do you? Yet, investors do take risky calls and bet on them hoping for turnarounds to deliver big gains.
In the BSE500 universe, six companies have been reporting net losses quarter on quarter since March 2015. Five of them have surged up to 295 per cent in last two years. The sixth, Den Networks, lost 25 per cent.
Among the gainers, Future Consumer have surged 295 per cent to Rs 63.85 as of September 21, 2017 from Rs 16.15 on the same day in 2015. The company has been trying to narrow consolidated losses for the past few quarters. In June quarter of 2017, the company pared losses to Rs 8.85 crore from Rs 20.73 crore in the year-ago quarter.
Shares of debt-laden Jindal Steel and Power (JSPL) have surged 133 per cent in last two years, as the company cut losses to Rs 420 crore in Q1 of FY18 from Rs 1,238 crore in the year-ago quarter. The company has not seen any profit for several quarters now. The scrip traded at Rs 151.75 on September 21, 2017, against Rs 65.15 on September 21, 2015. JSPL plans to increase steel capacity by 50 per cent this financial year and turn profitable by 2018-19, the chief executive said.
Two others - HCL Infosystems (up 40 per cent) and GMR Infra (up 34 per cent) - have delivered good returns to investors over the past two years despite having reported losses for 10 consecutive quarters now.
HCL Infosystems posted a net loss of Rs 55.12 crore in Q1 of FY18 against Rs 124.11 crore in the sequential quarter ended March 31, 2017. The company has recently become India distributor for Apple products, including the iPhone.
GMR Infra narrowed losses to Rs 136 crore in Q1FY18 from Rs 235.06 crore in the same quarter last year. Last heard, the company would be raising up to Rs 2,500 crore through issuance of bonds, equity shares and equity-linked instruments later this month. It will seek shareholders’ nod at its September 29 annual general meeting.
GMR Group is a leading global infrastructure conglomerate with interests across sectors such as airports, energy and transportation. Of the 15 power projects that the group has, 10 are in operation and five are under development
Crisis-hit Unitech has been trying hard to post profit. It reported losses of Rs 38.40 crore, Rs 290.20 crore, Rs 33.49 crore and Rs 13.01 crore in last four quarters that showed no hope. But the losses have dropped from Rs 500 core in Q4FY16 and Rs 279 crore in Q2FY16. The stock is up 17 per cent in last two years.
The realtor has faltered on completion and timely delivery of many of its projects, drawing a slew of litigations. Unitech on September 19 promised that buyers will be compensated for delays as per the agreement.
Den Networks, too, has managed to narrow down losses to Rs 10.11 crore in Q1FY18 from Rs 45.51 crore in Q1FY 17 and Rs 51.89 crore in Q1FY16. But the scrip has plunged 25 per cent since September 2015. On Wednesday, it surged some 12 per cent on reports of possible buyout by RIL