Query Trends : House of Pearl Fashions

Query : I am having 51 House of Pearl Fashions @265 since one year, it is going down and down, what should I do? hold or sell? Nirav

Thebullishtrends : House of Pearl Fashions shares today closed at Rs.237. House of Pearl promoted by Seth family having 65% of share in the company. HOPF a ready to wear apparel company operating in 3 segments like manufacturing, marketing and distribution. It is having 10 manufacturing facilities six are in North India one in South India two in Bangladesh and one in Indonesia. But manufacturing contributes only about 30% of its revenues with the rest comes from third-party outsourcing. It manufactures knits,woven sweaters and bottom in basic as well as classic designs. It is having marketing offices in UK, US, and Hongkong.

HOPF expanding its manufacturing capacities from present level of 20mn pieces per annum to 40mn pieces per annum by 2010. The total cost of the expansion is around Rs.111.7 crore. The company came to IPO market in last year. It raised Rs.290 cr from the market. The new manufacturing capacities are likely to come on stream in a staggered manner, beginning Sept'08 and stretching to March'2010. The full benefits of the expansion are likely to be realised only from FY-2011.

HOPF posted for the 2nd quarter, net profit of Rs.14.62 cr versus Rs.13.44 cr up 9% on YoY basis. During the same period its net sales were up at Rs.264.19 cr vs Rs.236.12 cr up 12%. After considering all the parameters you have to wait another 6-12 months to get the benefits from this stock.