The Hindu Business Line : Maharaja Shree Umaid makes waves in market

A LITTLE-known until recently and scarcely researched stock of Maharaja Shree Umaid Mills has been making waves in the market currently. Between March 22 and September 22, the stock appreciated by more than 273 per cent.

According to dealers and analysts, apart from strong fundamentals, the textiles stock is in the buzz because of the market talk that the company is planning to sell off its substantially large real estate at Jaipur.

"The registered office of the company is located there. The estimated market value of the property is around Rs 35 crore. If the company opts for such a step, the valuation of the stock would shoot up manifold as the equity base of the company is just Rs 4.32 crore," said a dealer at a stock brokerage firm. Though Business Line's attempts at reaching the company Chairman and Managing Director, Mr L.N. Bangur, here, and Mr A.L. Maheshwari, Managing Director, in Jaipur, did not succeed, sources close to the management confirmed that such a possibility was being explored seriously.

The stock at today's closing of Rs 105.15 on the BSE, traded at around four times its 2004-04 earnings per share of Rs 26.08, Mr Ritesh Nair of Anagram Stockbroking pointed out. Incidentally, the 2002-04 EPS was Rs 20.84.

Mr Mathew Easow of matheweasow.com, however, felt that on the basis of forward earnings per share, the stock was under-priced. "Going by the projected earnings for 2004-05, the stock is trading at around a P/E of 3," he commented.

"Technically, the counter has a strong support level at around Rs 90 and if it moves beyond the Rs 112 mark, there could be strong further upside," Mr Easow commented. During mid-90s, the stock price had crossed Rs 400.

The cotton yarn and fabric making company posted PAT growth of 25.2 per cent in 2003-04 over 2002-03. The net profit for the quarter ended on June 30, 2004, saw a rise of 26 per cent. The book value as on March 31, 2004 stood at Rs 124.81. The company has undertaken a capital expenditure plan of Rs 36.68 crore for technology upgradation in weaving and processing equipment as also yarn value addition and capacity augmentation using its own resources.

The present problem with the counter, according to market persons, was lack of liquidity. The promoters hold 85 per cent stake; only 8.42 per cent is with the public.