The Hindu Business Line : Infrastructure tag builds up Shrachi Securities

THE Shrachi Securities counter is marching ahead on the stock exchange following the company's announcement that it is adopting the `infrastructure' tag in line with new business opportunities.

The stock, which is increasingly seeing higher volumes, reached its 52-week peak of Rs 53 on the BSE before closing at Rs 48.80, marginally down from the opening mark of Rs 49.90.

Market men attribute investors' rising interest in the stock, especially evident since the past one month or so, to the management's decision to drop the `securities' label and hold on to `infrastructure' instead.

The move is said to have done wonders for a few other companies in the past.

A case in point is Srei Infrastructure, which was not long ago known as Srei International. This too an example of a stock moving northward.

Shrachi Securities, said Mr Ravi Todi, MD, plans to scale up its infrastructure financing business. "Funding of construction equipment, which already accounts for a small portion of our overall portfolio, is likely to throw open some serious prospects."

The company, which is principally involved in financing commercial vehicles, is also working towards a follow-on public issue. It currently has a capital of Rs 8.5 crore. "With our business enlarging, we would need a larger equity base," said Mr Todi.

Shrachi Securities also hopes to shore up non-fund based business, courtesy distribution of insurance.

The company posted a net profit of Rs 5.4 crore in 2004-05, an over 70 per cent rise from Rs 3.01 crore in the previous fiscal. Gross income grew to Rs 25.39 crore from Rs 19.66 crore during this period. Disbursements stood at Rs 540 crore, up from Rs 302 crore in 2003-04.

Investors point out that the stock has already become a multi-bagger, given the fact that it has moved up after declining to its 52-week low of Rs 4.33. Thanks to a 55-per cent jump, the last one month was particularly remarkable for those who had bought it earlier.

According to rating agency ICRA, Shrachi Securities has gained from joint financing schemes with Citicorp Finance and HDFC Bank. CV financing, steady collection performance, increased profitability and better liquidity profile have all helped the company.

ICRA recently upgraded its FDs from MA- to MA, indicating adequate safety.

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