The Hindu Business Line : Jyoti hovers around 52-week high

The company, which has posted a net profit in the fourth quarter after a gap, is attracting attention from a section of investors over its growing order book position and possibility of debt restructuring easing its interest burden.

According to analysts, the engineering industry, including manufacturing ones like Jyoti, had a bad spell last year.

"However, in the second half of 2004-05, things began to look up as many a new heavy duty project got under way," said an industry insider.

The zero duty import of capital goods, 10 per cent price preference for PSU engineering players in Government-funded projects and a significant debt servicing costs proved to be a bane for the private players last fiscal.

"But there is a clear signal of a turnaround this fiscal. For Jyoti Ltd, revaluation of assets and restructuring its debt should be easier to handle in the current scenario. Moreover, price preference policy is in for a debate and may be called off. Increased pie also seems to be coming for the domestic engineering companies from the Gulf region, which is buzzing with infrastructure and industrial construction activity," said Mr N.K. Jagasia, Managing Director of Artson Engineering.

The stock market, taking a cue from the changing scenario, has been aggressively revaluing the Jyoti Ltd stock recently.

On Monday, the stock created its new peak at Rs 39.40. Today, the counter, after touching a day's high at Rs 38.30, closed at Rs 36.55. The stock's 52-week low was Rs 4.31. The traded volume was closed to the two-week average of around 40,000 shares on the BSE.

According to a fund manager, the business cycle for the company appears to have turned upwards and likely to continue in the quarters ahead.

"Reporting a net profit of around Rs 2.30 crore in the fourth quarter of 2004-05 on a small equity Rs 9.66 crore, the company has raised an expectation of reporting a profit of over Rs 9 crore this fiscal (if the profit trend is annualised)," he observed. The sales/income figure also suggested robust growth in order flows.

According to Mr Nandish Shah of Anagram Stockbroking, though pressure on margin and price continues, Jyoti Ltd has beaten them through streamlining operations, reducing costs and rationalising manpower.

"Sharp upward price movement in its stock price is due to excellent results and rise in earnings per share," he added.

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