The Hindu Business Line : Sterling Biotech clocks 52-week high

THE Sterling Biotech stock on Thursday touched its 52-week high at Rs 139.50 on the Bombay Stock Exchange, but closed slightly lower at Rs 134. According to dealers, the stock largely withstood the general selling onslaught in the market and closed 5.6 per cent up. The stock clocked substantial traded volumes on the BSE (16.03 lakh shares) and NSE (12.12 lakh shares).

On the BSE, the counter attracted 52 block deals involving 9.53 lakh shares, while on the NSE, the bulk transactions saw 2.85 lakh shares. Of the traded quantity on the NSE, shares marked for delivery accounted for 18.56 per cent. This suggested large-scale trading activity.

According to market sources, Thursday's trading reflected both institutional as well as trading interest. HSBC Financial Services picked up 6.18 lakh shares on February 9. "This has generated interest among the retail investors and traders in the counter," commented Mr Ketan Tachker of Anagram Stockbroking. Two other factors — Sterling's recent acquisition of gelatin business form Rallis and improved results posted during the quarter ended on December 31, 2003 — are also reportedly behind increasing interest in the stock.

In an all-cash deal, Sterling has bought over the Rallis gelatin business at a cost of Rs 47 crore last month. This acquisition will lend an additional capacity of 2,200 tpa from the plant at Udhagamandalam in Tamil Nadu, taking the Sterling's total capacity to 10,400 tpa. Sterling's own plant at Dadodara is also increasing its capacity by 6,000 tpa. This is supposed to be achieved within the next 18 months at a capital expenditure of Rs 240 crore.

Sterling already enjoys a 3 per cent share of the international and 60 per cent in the domestic gelatin market. Shaw Wallace Gelatines is the only other major gelatin player in the domestic market.

Apart from gelatin, Sterling is in the business of processing and trading of tea. The company's net grew by 190 per cent during the quarter ended on December 31, 2003.

At today's close, the stock traded at 28.8 times its trailing fourth quarter earnings per share of Rs 4.56.