My View On Assam Company

About The Company

Assam Company is in the business of cultivation, manufacture and sale of tea. It is also engaged in the business of oil and gas exploration.

The stock has been in lime light during the boom period in the capital market and was most fancied stock among the traders.

About The Results

The company has posted results for the year ended 31^st Dec 2008, the limited review shows exactly why the stock market had valued this stock in the “speculative” category. Understating its depreciation and employee costs, while overstating its segmental profits by plantation and oil and gas sectors, the company has only got deeper into the red. Its MTM forex loss for the year stood at Rs.45.33 crore, arising on account of outstanding FCCB Loan of US$ 44.70 million.

The seasonal cycle indicates that the fourth quarter is usually its best but this time, it posted a net loss during the fourth quarter. A purely “penny” trading stock and that too in the range of Rs.3-5.

About the Stock

The stock, on the bourses is considered mainly as a low priced speculative stock, allowing the investors to trade in a stock which is quoted even below its face value of Rs.10 per share. Currently quoted at levels of Rs.6, it is unbelievable that during the boom time, it had managed to touch a new high at Rs.40. Either today the 52-week highs have no relevance or today we are seeing a more realistic valuation of the stock.

Disclaimer : I do not have any personal holding in this stock.