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Tuesday, Mar 16, 2004

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Bombay Dyeing beats the street

Jayanta Mallick

Kolkata , March 15

IN a day of an all round decline of the Sensex stocks, the Bombay Dyeing counter posted a gain of over 20 per cent on renewed speculation over the benefits to the shareholder for its property sale in Mumbai.

The so-called market news suggested that the earnings per share could go up by as much as of Rs 30 owing to a proposed development of the real estate. The company, in fact, has decided to close down its Wadala unit, and develop the 40-acre land there. It also announced a VRS to 1,700 employees. It is also modernising and rationalising its Prabhadevi unit.

Today, the counter witnessed four block deals (involving a total of 87,403 shares) on the BSE and 12 block deals on the NSE (by which 2.04 lakh shares changed hands).

According to Ms Priya Madani of Anagram Stockbroking, Bombay Dyeing, through its own volition, is not a pure DMT textiles play any more. It is now planning to enter a new business sector - ports. It is holding talks with Port of Singapore Authority (PSA) to acquire a stake in the two-member consortium led by PSA, which is bidding for the Rs 900-crore third container terminal at Jawaharlal Nehru Port.

PSA holds 95 per cent stake in the consortium, while its Indian partner, ABG Heavy Industries Ltd, holds the remaining 5 per cent. "Bombay Dyeing entry into the uncharted sector may not be smooth sailing. The proposed VRS in the textiles business is likely to cut costs. At today's closing price of Rs 171.05, the stock traded at 17.3 times its annualised 9-month 2003-04 earnings per share of Rs 9.9," she added. In the textiles business, with dismantling of quota system, it is expected that Bombay Dyeing along with a few other domestic players would benefit.

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