The Hindu Business Line : PSL steals limelight on growth hopes

According to Mr Ritesh Nair of Anagram Stockbroking, the stock, at today's closing price of Rs 151, traded at 15.8 times its trailing four quarter EPS of Rs 9.60. It touched its all-time high of Rs 157.25 on November 18.

The growth story for the stock hinges on a number of positive developments. Mr Ashok Punj, Managing Director of PSL, told Business Line that the company planned an expansion plan, estimated to be around Rs 90 crore in 2005. "The 3.5 lakh tpa project at the Kandla plant is projected to be complete by September 2005. The company is preparing for an equity issue of Rs 100 crore in 2005 to finance the expansion project," Mr Punj said.

According to Mr Rajesh Agarwal of CD Equaisearch, PSL's expected EPS for 2004-05 is Rs 12. The expansion plan and the burgeoning order book for the company would improve the earning prospects further for the company in the next fiscal.

The inclusion of spiral-welded pipes in the GAIL's tender for Dahej-Uran pipeline project, floated early this month, in the prescribed specification, is seen by the industry insider as a positive for the company.

Mr Punj confirmed that PSL would bid for the gas pipe tender. Mr Nair mentioned that PSL received orders worth Rs 1,600 crore during the first half of the current fiscal.

In the opinion of Mr Agarwal, fresh equity issue would not only improve the liquidity of the stock, but also help arrest the rising interest cost. "The first half of the current fiscal saw interest cost of the company rise by 25.48 per cent against that in the corresponding period of 2003-04," Mr Agarwal observed.

The stock of late has been attracting enhanced institutional interest. In October, Tata Mutual Fund picked up 1.86 lakh shares of PSL, while Birla Sun Life increased its holding. The total institutional holding has gone up to over 6 per cent in October from 5.33 per cent at the end of September 2004.