The Hindu Business Line : Parekh Aluminex flares up on export orders

THE stock price of Parekh Aluminex Ltd (PAL), a company manufacturing aluminium foil containers, has been on an upward move in the last one month on the back of export orders from multinational companies such as Danone group and Alcan.

The stock price has gained 40 per cent in the last one month. In Friday's trading, the stock gained 2.26 per cent at Rs 149.20 on the BSE with a volume of 1.67 lakh shares.

"It (PAL) exports to the quality-conscious European markets such as the UK and Germany and others such as Singapore, Australia, Yemen and Nigeria. It has secured orders from trans-national companies such as Danone group (Rs 21.5 crore) and Alcan (Rs 50 crore annually for three years)," said Mr Nikhil Thacker, Assistant Vice- President (Research) at Asit C Mehta Investment Intermediates.

Bulk of Danone group order is to be executed during the current fiscal. The Alcan order is to sell products in the German market for three years and shipments are expected to start from April next.

"These tie-ups will help PAL establish itself in the quality-conscious European market and also open up new market for the company," said Mr Thacker.

In order to cater to the growing demand, maintain its stronghold in the domestic market and expand its overseas market, the company is expanding its capacity by four times with an outlay of Rs 40 crore, which is expected to be completed by December this year.

Mr Thacker said the expansion would result in higher sales growth and economies of scale and increase profitability. However, the full impact of expansion will be seen in 2007 and 2008, he added.

For the nine-month period ended December 2004, PAL reported net profit of Rs 3.87 crore (growth of 47.7 per cent over the corresponding period in previous year) on revenues of Rs 51.4 crore (a growth of 33.3 per cent). It's EPS for nine month was Rs 9.8.

Other than the export market, its stronghold in domestic market is also seen as positive for future growth. Its domestic client list includes Indian Railways (all major zones), Indian Airlines, Air India, Jet Airways, Taj, Oberoi, Chef Air and others.

The company has also entered into agreement with Hindalco for processing foil for the retail market and in turn get preferential rates for raw materials.

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