Asian Electronics: Turning Around?

The share price of Asian Electronics fell into the abyss last year. From highs of Rs 500+ it fell to a low of Rs. 17.2 on the NSE. But unlike most other companys' shares that took a beating, the Asian Electronics stock deserved that beating. The results were dismal, their "project" that they were talking about that could possibly double or more than double the company's topline actually halved it. Have a look at the results, if you haven't:

Sep 07 Quarter:................................... Sep 08 Quarter:
Sales: Rs. 96 cr..................................... Sales: Rs. 38 cr
Profit: Rs. 30 cr................................... Profit: Rs. -15 cr (loss)

Yearly Results:
Mar 06: ........................................Mar 07:
Sales: 166 cr................................. Sales: 395 cr
Profit: 25 cr................................. Profit: 66 cr

Mar 08:............................... Mar 09:
Sales: 238 cr .......................Sales: 213 cr
Profit: -154 cr.................... Profit: 5 cr

The fall had been consistent over the last year, and was painful for the investors. The book value has been bludgeoned from 245 last year to 71 this year. Nothing could be worse than this. The last quarter results were refreshingly positive:

Sales Turnover: Rs. 78 cr
Net Profit after extraordinary income: Rs. 16 cr
EPS: Rs. 5.66

The results of the company hint at a possible turnaround of the company. Suresh Shah has stepped down from the post of Chairman, and Arun Shah is now the chairman of the company. The company is planning a rights issue at Rs 20 a share (1 share for 2 held). There is also a preferrential allotment of equity shares to the bigger investors at Rs 40 a share. So, a lot of fund raising is going on at the moment- that signals a potential attempt of the company to get out of the quagmire that it had found in the last year.

So, if you're a believer in turn-arounds of companies- and are looking for a company that's totally down and out, and has a potential to swing back to glory, then Asian Electronics is the stock to have. Keep an eye on the announcements of this stock. Another potential long term investment can this be.