The Hindu Business Line : Graphite India attracts interest

The stock posted a weekly gain of about two per cent at Friday's closing price of Rs 288.55. It scaled the day's peak at Rs 312.30 and logged a combined traded quantity of 66,492 shares on the BSE and NSE, substantially higher than the weekly average till the previous Friday.

Owing to a limited floating stock (public holding is 11 per cent), the counter's daily average volume does not go beyond five digits, traders said.

According to Mr Rajesh Agarwal of CD Equisearch, the recent cash flow of Rs 110 crore through surplus land sale, steady rise in electrode prices in the domestic and overseas markets in the last one year coupled with a possibility of further product price rise are working as positives for the stock.

"The 2005-06 results are likely to show a better net realisation and improvement in margins over the previous fiscal," Mr Agarwal said (CD Equifinance, an associate of CD Equisearch, holds three per cent stake in Graphite). In 2004-05, Graphite had posted a net profit of Rs 60.42 crore on a gross income of Rs 573.56 crore.

Mr K.K. Bangur, Chairman, told Business Line that there have been substantial improvements in the margin and realisation for Graphite India during 2005-06 and the outlook for the current fiscal continues to be bright.

"We are cautiously optimistic about upward electrode price movements in global and local markets. We have increased prices for our products last month. Higher demand has been instrumental in rise in the electrodes prices. We expect further room for increase in the next few quarters."

Cost reduction, technology upgradation, value addition, and higher efficiency have also helped the company to perform better. It is looking for capacity expansion in its German and domestic units.

"The German unit's capacity is being raised by 80 per cent to 18,000 tpa at a cost of 3.5 million euros." Local capacity may also be raised by 25 per cent to 75,000 tpa in 2006-07.