The Hindu Business Line : Sujana Industries: A long-term bet?

GOING by the Street talk, the Sujana Industries stock could be a market favourite down the road. According to market sources, the company has been able to reduce its interest cost by half. The official confirmation to this effect, however, is expected along with the audited 2004-05 results, to be released soon. In the fourth quarter of 2004-05 alone, the net positive effect on the bottomline could be as high as Rs 5.17 crore on account of rate reduction over and above the operational PAT of Rs 2.26 crore, said a broker.

Also, the company is understood to have bagged substantial orders for telecom and power transmission towers from a few big players. The stock on Wednesday finished slightly lower at Rs 17.25, but the traded quantity was at 1.45 lakh shares on the BSE, higher than its two-week average.

According to an analyst, the stock, after factoring in the possible savings in interest cost, would have a very low P/E multiple of around 1.3 at the current price level and thus have a chance of strong price growth.

Strong undercurrent?

Despite odd signals regarding iron ore price trends in the global markets, Sesa Goa, an exporter of iron ore (containg 63.5 per cent iron in lumps and fines), appears to have negotiated supply contracts with a price mark up of around 15 per cent over the previous year's prices. The yearly contracts are said to have been signed this month with buyers in Europe and Asia. For Sesa Goa, a very small amount of the total sales is through spot market.

According to sources, a section of market players has started buying at lower levels, taking advantage of the favourable price trend for the company, when uncertainty over ore pricing was fetching discounts for stocks of such companies on the bourses. The Sesa Goa stock closed down 2 per cent, but the traded volume of around 1.56 lakh shares suggests strong undercurrent of activity.

Slow accumulation seen

Aegis Logistics has drawn a big-ticket player Fidelity to invest in the stock. According to sources close to the development, Fidelity has begun its exercise in accumulating the stock from Wednesday , which is likely to continue for some time.

The stock finished the trading session with a mild gain. Since it is designed to be a low-key but sustained buying drive, the impact on the stock's price movement and volume would be felt only over a period of time, feel dealers. The long-term investment call is presumably because of its intrinsic worth.

Jayanta Mallick

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