The Hindu Business Line : Sterlite Optical attracts volumes

THE Sterlite Optical stock is back in action in terms of trading volumes, not so much in terms of price. The stock has moved up by 4.12 per cent in the last one month.

Last week, the counter witnessed a huge surge in the traded quantity, particularly on Thursday and Friday - NSE volumes were well over 10 lakh shares on both days.

Around 44 per cent public holding makes this stock's potential liquidity quite high.

According to analysts and market players, the stock is definitely a target of slow mopping up at lower levels after confirmation of a clear turnaround of the company.

According to a fund manager, the Rs 5 face-value stock provides a good opportunity appreciation in the near future in the context of the profitability and increasing inflow of orders.

The company reported a net profit of Rs 10.22 crore (after exceptional items) for 2004-05 against net loss of Rs 18.95 crore (after exceptional items) for 2003-04.

According to Ms Jyotsna Sawdekar of Anagram Stockbroking, optical fibre cable manufacturers such as Sterlite Optical and Aksh Optifibre have shown a dramatic turnaround in performance on the back of fresh orders inflows from BSNL.

"Sterlite Optical has also bagged some orders from ONGC Videsh. It is seriously attempting to make greater inroads into the overseas markets. It aims to capture over 10 per cent market share of the OFC market in China, up from its current share of around seven per cent," she added.

According to Mr Rajesh Agarwal of CD Equisearch, the company is the country's only integrated telecom cable manufacturer and enjoys a competitive cost advantage.

The rapid growth of cable networking in the country, as also in China, makes its growth potential more evident.

The stock appears undervalued considering its gross block of Rs 560 crore and debt of Rs 167 crore against a market capitalisation of little less than Rs 200 crore, said an analyst with an institutional brokerage.

"Even in comparison with Aksh Optifibre's current market valuation, the Sterlite Optical stock looks cheap," he added.

Today the stock closed at Rs 74, against its 52-week high of Rs 93.75, recorded on January 10, around the time when the company confirmed its turnaround after a long loss-making streak.

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