The Hindu Business Line : Sustained buying seen in Suven Life Sciences stock

THE Suven Life Sciences stock on Monday attracted substantial traded volumes and price rise. On the NSE, it shot up by 3.65 per cent. The traded quantity in the counter was of 1.40 lakh shares, up from Friday's volume of 46,467 shares. On the BSE, the counter witnessed a volume rise of around 50 per cent.

According to dealers, the interest in the counter was mainly from a set of broking firms, which are seen to be warehousing for their overseas clients. The current FII interest is expected to increase in view of proposed buy back and stock option initiatives, which are likely to limit opportunity jack up their stake.

Mr Rajesh Agarwal of CD Equisearch said that the company has been making efforts in moving up the value chain. "Thrust on drug discovery, development support services for other drug manufacturers and intellectual property management services are expected to drive the growth for the company in the coming quarters," he added.

FII interest in the stock has been there for quite some time. As a matter of fact, FIIs are the largest stakeholders after the promoters. As on June 30, 2004, the combined FII holding was placed at 21.8 per cent. Merrill Lynch Capital Markets Espana SA Svb had 4.95 per cent stake in the company, while Commonwealth Equity Fund and Aeneas Portfolio held 3.99 and 3.75 per cent stake respectively.

A small equity base of Rs 5 crore and a relatively low public holding of 14.47 per cent have made the stock highly sensitive to demand.

Dealers said that the strategy to mop up shares thus was not through block deals but sustained buying within a given price range.

According to Ms Sharmila Ponakala of Anagram Stockbroking, the stock at today's closing price of Rs 78.30 (face value Rs 2) traded at 33 times its trailing 12-month EPS of Rs 2.5.

Suven, a contract research and manufacturing outfit of APIs and intermediates as also bulk drugs, had customers such as Du Pont, Hoechst, Borregaard, Degussa, Kodak, Imation and 3M.

According to an analyst, the company was neither deny nor confirm its expected research tie-up with an international major.