The Hindu Business Line : Punjab Tractors steady

EXPECTATIONS that the buoyancy in tractor sales will continue have ensured that investors stay invested in the stock of Punjab Tractors Ltd which ended the day flat in a weak market today.

The forecast of normal monsoon by the Council of Scientific and Industrial Research (CSIR) has infused a feeling of optimism in the tractor industry. The perception being that faced with a good crop cycle, farmers are likely to continue to invest in tractors.

Analysts maintain that the tractor numbers for April have been good given that tractor companies had increased prices on April 1. However, any improvement in profitability will be visible only in the first quarter.

"The revival in the industry will continue if monsoon is regular. We expect May numbers also to be good. And if there is a further de-clogging of inventory levels, the working capital cycle will get better," said an analyst tracking the company. Punjab Tractors is expected to see a growth of 15-16 per cent in volumes annually.

There is a growing concern that a hike in fuel prices could probably soften demand. "If diesel prices were to be hiked, it could impact tractor demand as operating cost of tractors will go up," reasoned an analyst.

However, according to Mr Dilip Bhat, Director-Research, Prabhudas Liladher: "if the Government were to concentrate on the rural sector and provide more and cheap credit to the farmer, tractor demand could go up significantly. This will offset any fuel price hike. In any case, it is unlikely that diesel will bear the brunt of any hike in fuel prices. As such, it is not a big issue."

The stock ended the day at Rs 215.30 with around 2.15 lakh shares traded on the BSE. On the NSE, the stock ended at Rs 215.05 with around 15,033 shares traded.

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