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Wednesday, Jul 02, 2003

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Indian Rayon stock hits 5-year high

Jayanta Mallick

KOLKATA, July 1

THE Indian Rayon stock today attracted substantial allround buying interest, particularly from institutions. The stock touched its five-year high on rerating jig.

According to dealers, the buy orders poured in from mutual funds, FIs and FIIs. Two well-known investors are also reported to have bought the stock today. "The textiles stocks in general are undergoing a revaluation process based on the growth prospects. The market also speculated about a possible sale of the company's stake in group's telecom business,'' said Mr V. K. Sharma of Anagram Stockbroking.

After touching the day's high of Rs 154.70, the stock closed at Rs 150.95 (Rs 128.95) on the Bombay Stock Exchange. The traded quantity in the counter shot up to 8.66 lakh (3.54 lakh) shares on the BSE. On the National Stock Exchange, the volume increased to 12.76 lakh (8.18 lakh) shares.

Analysts listed a number of triggers for rerating of the stock. The Rs 60- crore capacity expansion project for the carbon black plant of the company is expected to improve sales and export volumes as also realisation.

The recent tie-up with Atlas Medicon for leather accessories is expected to enlarge its readymade garments business (Madura Garments).

The market is also enthused by the company's recent acquisition in the ITES/BPO sector - TransWorks Information Services.

At today's closing price, the Indian Rayon stock is trading at 8.6 times its 2002-03 earnings per share of 17.6.

"The overall outlook of the company appears positive. However, the 2003-04 first quarter results may have been affected somewhat by the strikes in the powerloom sector and the truckers' strike in early part of the period'', analysts pointed out.

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