The Hindu Business Line : Firm CD-R price keeps Moser-Baer in action

THE Moser-Baer stock ended the day at Rs 228.55 on the BSE down 3.77 per cent with around 2.56 lakh shares traded. On the NSE, the stock closed at Rs 230.30, down 3.24 per cent with around 6.60 lakh shares traded.

According to market sources, CD-R prices had been moving southwards in the recent past and fears of this impacting the company's profit margins had resulted in the market taking a bearish view on the counter.

However, reports of the company being days away from inking the deal on acquiring a sizable order for its CD-Rs from the US-based Imation Corp have enthused interest in the counter. "The US company has reportedly committed to purchase 25-30 per cent of Moser-Baer output with the possibility of extending the contract to cover DVDs as well," a broker said.

The favourable decision received by the company on the dumping front from the EU is also expected to be a positive influence on the stock momentum. In November 2001, the Committee of European Disk Manufacturers had filed a case alleging that Indian disk manufacturers benefited form Government subsidies.

When contacted senior company officials refused to comment on the order. They, however, confirmed that the company has benefited from the increase in CD-R prices in the Taiwanese market."Given that we operate in the same market place and supply to similar OEMs, it is a positive factor. Currently, we have an order book of 90 days average which is an indication of demand having stepped up," a senior company official said. The low installed base of CD drives is reportedly the prime growth driver for the company.

Commenting on the dumping issue, the official said that the EU has proposed to let go of the enquiry. "On the subsidy front the investigation is still on. We are yet to hear form the EU on this," he said.

The company, however, is bullish on business outlook and has projected guidance of 10 per cent growth in earnings. Officials predict that demand, globally would grow by a compound annual growth rate (CAGR) of 20 per cent over the next three years.

Equity analysts were, however, reluctant to take a call on the stock and said the trigger at this counter would be the price rather than the order book of the company. "The company's fortunes are irrevocably connected to the CD-R prices. And unless you have a fix on the price it is very difficult to have a meaningful view on the stock," a leading analyst said.

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