Can you afford to buy/hold Ruchi Infrastructure just because the FII's have a stake in the company?

Ruchi Infrastructure Limited is primarily engaged in the businesses of storage and transportation of edible oils, petroleum, liquid bulk chemicals, agricultural products etc., in refining of edible oils and manufacturing of vanaspati. Ruchi Infrastructure Limited is having storage terminals at major ports ( Jamnagar, Haldia, Mangalore, Chennai, Cochin, Karwar etc) and at railway side terminals (Kanpur, Doraha, Jaipur, Hyderabad & Cuttack).

Ruchi Infrastructure Limited is forayed into the field of agricultural warehousing which would be guided by principles of direct sourcing from farmers, cleaning, grading, packing, processing, scientific storage through capacity building and infrastructure creation.

In FY10, the company generated Total Income of Rs.1469 croes and PAT of Rs. 32.60 crores as compared to FY09 total income of Rs.1173 crs and a Net Loss of Rs.11.94 crores..Five year top line and PAT CARG was 18.67 per cent and 8.79 per cent respectively.

During Q2FY10, total Sales and PAT stood at Rs.317 crs and Rs.1.49 crores as compared to Q2FY09 Sales of Rs.315 crores and PAT of Rs.8.06 crores. Thus, bottom line of the company is down by a whopping 81.5 per cent!

Net Profit margins are extremely low and hover around 2.22 to 3.73 per cent and its Debt Equity Ratio is 1.92 per cent and Interest Cover is 2.42 plus. The company's MCap is 554 crores.

Even if we consider the fact that Ruche Infrastructure has a good business model which is backed by decent Promoters holding of 53.86 per cent as on 30 September 2010 and FII’s holding of 13.99 per cent, the recent dismal Q2FY10 results is something which obviously is very disturbing to shareholders. No wonder the share price has come sliding down from a high of Rs.67 and rested peacefully at Rs.27/= on the BSE.

Conclusion : If you can find out the reason why the FII’s are still hanging on merrily to the shares of Ruchi Infrastructure despite the overall performance of the company not being something that will make one merrily sing a song, then go for it, else live without it! That’s it. The FII’s may be the smartest guys in the world but can you not at least attempt to be a tad smarter than them?