The Hindu Business Line : Value buying seen in Flex Engg

The stock has been coming off its 52-week high price of Rs 65, but the trading volumes suggest strong buying interest at lower levels. The counter today declined 6.40 per cent to Rs 51.90 on the NSE with a traded quantity of 1.37 lakh shares.

According to market sources, the sustained interest appears to stem from the company's growing business, related to the oil and gas sector.

The company in recent years has made inroads into fabrication and engineering contracts for oil storage tanks and cross-country pipelines in the country and in the West Asia and Africa.

Before the recent diversification, the company's core business area was of manufacturing machineries for packaging, printing and allied jobs.

"The rising demand for packaging machinery and oil & gas related engineering services augurs well for the company.

The company has also been successful in remaining competitive in Iraq. Its consortium approach has paid off in clinching engineering contracts abroad," said a fund manager.

"The new focus on oil and gas sector is good for the company in terms of improving its margins. Growth opportunities, of course, are more in this area, both at local and global levels," Mr Rajesh Agarwal, Chief Analyst of C D Equisearch, added.

The company's subsidiary, Flex Securities, has substantial investments in other group companies such as Flex Food (12 lakh shares), Flex Industries (21.43 lakh shares) and Flex Technologies (28.66 lakh shares).

The market valuation of these stocks has seen appreciation over their book value attracting attention of some investors.

Flex Engineering's 2004-05 book value was Rs 36.41. On an equity capital of Rs 17.17 crore, it reported a profit before interest, depreciation and tax of Rs 10.95 crore and a net profit of Rs 6.17 crore.

The results for the first quarter of the current fiscal, according to a market analyst, indicated continuation of the trend of improvement in profitability.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Flextronics fixes Rs 725 to delist shares

No cheques, only ECS for systematic investment plan, say mutual funds

Gains not held

SEBI approves demutualisation of Cochin Stock Exchange

Sensex touches new intra-day high on FII, mutual fund buying

Value buying seen in Flex Engg

IDFC rises on fresh buying

Clarification

Sector-oriented indices gain