Kolkata, March 17
THE OCL India stock today touched its 52-week high at Rs 703. In the past fortnight, the stock had been seeing a strong run-up from the level at Rs 440. The stock, however, saw a slide later during the session to close at Rs 668.
According to analysts, the current valuation appears somewhat stretched after considering positives such as growth in sales and margins, but for lack of liquidity the counter tends to fetch additional premium.
OCL, a relatively small cement player, has been enjoying the current buoyancy in the steel sector too through its sponge iron and refractory businesses.
"It has taken up a modernisation-cum-expansion plan for 1.2 tonne cement plant, which would bring down the cost and increase the efficiency. In terms of theoretical capacity valuation, its cement business works out to be $85 per tonne, much cheaper than the valuation fetched by others in the country," observed Mr Deepak Jain of Anagram Stock broking. It is also reasonably placed, even in terms of replacement and consolidation benchmarks in the industry (at $75 plus a tonne), he added.
The capacity addition in sponge iron business in 2003-04 has borne fruit this fiscal as improved demand has resulted in higher margins. According to a fund manager, OCL's plan to set up a mini integrated steel complex at an estimated cost of Rs 204 crore at Sundargarh district in Orissa is considered positive in view of continuing upswing in the steel cycle world over.
"The refractory business has also fuelled acceleration in profitability as the consuming steel units are virtually on a roll," said Mr Rajesh Agarwal of CD Equisearch.
According to Mr Ajit Day of Dayco Securities, though fundamentally strong, the supply of stock has always been limited in the closely held company (Dalmias, the promoters hold 75 per cent).