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Thursday, Sep 19, 2002

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Naik talk lends steam to EIL

Virendra Verma

MUMBAI, Sept. 18

AT a time when most PSU stocks were being hammered, the stock of Engineers India Ltd (EIL) closed higher today on reports that the Government will privatise the company in the current fiscal itself.

The EIL stock ended 3.70 per cent higher on the BSE at Rs 307.90 with volumes of 4.32 lakh shares. On the NSE, the stock closed at Rs 302.25, up 2.54 per cent with volumes of 10.97 lakh shares.

Brokers said reports about the Petroleum Minister, Mr Ram Naik, stating he had no objection to the strategic sale of EIL led to increased interest in the counter.

However, there was no change in the market sentiment towards other PSUs stocks as they continued to slide further.

The Government is planning to sell its 51 per cent stake in the company to a strategic partner. Some prominent Indian companies such as Larsen & Tourbo, BHEL, GAIL and ONGC seem to have shown interest in the sale. Besides the domestic companies, some foreign consultancy firms are also believed to be interested in the Government stake in EIL.

EIL is the country's largest engineering services company with a market share of around 80 per cent in its core area of operations.

"This should make it a very attractive buy for a strategic investor," said an analyst with a domestic broking firm. He said the net asset value of EIL works out to Rs 386 per share and with its richest asset `human resource', the Government was likely to get at least 25 per cent premium over the NAV.

Besides, the current backlog order worth around Rs 1,800 crore was also an attraction for the strategic investors.

But Mr Arun Kejriwal of KRIS Research says the market is losing faith in disinvestment reports and it is true with EIL also. "There would not be any major movement in the share price of EIL until the Government actually takes some action on the disinvestment of the company," he says.

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