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Wednesday, May 12, 2004

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Bharat Forge scrip falls 5.3 pc on `poor Q4 nos'

Our Bureau

Kolkata , May 11

THE Bharat Forge stock on Tuesday declined 5.3 per cent to Rs 741 on low volumes even as the company board has proposed a dividend of 100 per cent for 2003-04 against 60 per cent in 2002-03.

On the NSE, there was a large-size deal of 27,329 shares out of the total traded quantity of 40,200 shares. Some 60.41 per cent of the total volume was presented for delivery on the NSE.

According to dealers, the weakness was mainly due to lower than expected net profit for the fourth quarter. "Today's trading reflected a bit of bargain hunting and limited exits," a dealer at an institutional brokerage house commented.

According to analysts, the stock does not show much change in terms of fundamentals. But as the market sentiment has turned distinctly weak, the counter may not avoid a selling pressure.

The modest growth of 20.7 per cent in the net profit in the fourth quarter of 2003-04 was because of increase in expenses, Mr Ketan Thacker of Anagram Stockbroking pointed out. At today's closing price, the stock traded at 22.4 times 2003-04 earning per share of Rs 33 per share.

Bharat Forge's forthcoming rights issue has set a price band of Rs 550 to Rs 660. The warrants, which are to be issued along with the rights, could be converted later (within two years from rights) subject to a higher floor price of Rs 1,200.

"The relatively higher floor price assumes escalated market valuation. After acquisition of the German forging company Carl Dan Peddinhgus GmbH with effect from January 2004, and the long-term orders from Ford Motors and DaimlerChrysler for heavy duty crankshaft has boosted the earning growth potential in 2004-05," a foreign fund manager said.

The company is to begin shipping of crankshafts next month. The Rs 300-crore expansion plan (to be funded by the rights and the warrant conversion) also appears to be achievable.

The FII interest over the stock, according to market players, is likely to increase in the near future. As on December 31, 2003, the total foreign holding, including that in GDR and by FIIs (9.62 per cent), stood at 10.54 per cent.

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