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Our Bureau

Mumbai, Nov. 6 Neyveli Lignite Corporation, a public sector lignite mining and lignite-based power generation company based in Tamil Nadu, has been hitting new highs with each passing day in recent times.

Despite rains in the area flooding the mines recently and a strike by the contract labourers of Neyveli Lignite Corporation that affected the production, , the stock price has been on the rise. The stock gained 10.22 per cent; it opened at Rs 147.7 and closed at Rs 162.8 on Tuesday. However, the labourers called off their strike following an agreement with the management.

The company expects to increase its capacity in power generation in both Tamil Nadu and Rajasthan by 1000 MW, by 2009. The company has spent Rs 1,000 crore of its Rs 2,000-crore capex plan for FY-08 and analysts presume this could be a reason for the upswing in the stock price. Some research analysts believe that there is a shortage of supply in the mining industry pushing up the prices of these stocks.

“Neyveli Lignite seems to have good capacity in comparison to the others in the industry. And also they are priced much cheaper than the other mining companies competing with them,” said an analyst with a brokerage firm.

“The quarterly results of Neyveli Lignite have been quiet good and this has brought about an increase in interest in the company by investors. People want to make money before Diwali and they are putting their money in a company that looks the most lucrative to them,” said a sub-broker.

The company’s net profit increased by 40.98 per cent to Rs 231.04 crore for the quarter ended September 30. Total income rose 20.19 per cent at Rs 882.08 crore over the corresponding quarter of the previous year.

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