Over 99 per cent State-owned sedate MMTC counter, this week made a wave in terms of volumes and prices, thanks to the management statement that the company is likely to report a 50 per cent rise in 2010-11 topline.

On Monday, the Re 1 stock jumped to Rs 1,110 from its previous close of Rs 961.40 and 2.73 lakh shares changed hands on BSE alone against 5,878 in the previous session.

According to analysts, it was a freak movement and by Thursday prices and volume have dropped almost to their normal levels.

According to Mr Rajesh Agarwal, Head of Research at Eastern Financiers Ltd, MMTC works on a very low margin because of competition. In the first nine months of financial year 2010-11, MMTC reported a bottomline of Rs 97.42 crore on a topline of Rs 47,351 crore.

“The company, which could be a divestment (10 per cent) candidate some time this year, but its Rs 1-lakh crore market capitalisation does not justify its Rs 150 crore of profit,” Mr Agarwal said.

Dismal show

Mr Kishan Gupta, analyst at CD Equisearch said that the country's trading house sports a wafer thin margin of 0.5 per cent.

“MMTC has posted dismal results in first nine months of the current fiscal as earnings have dipped by 19 per cent despite 71 per cent growth in sales. EBITDA grew by just five per cent in nine months of FY-11 compared to same period last year. EPS for the nine months of FY-11 stood at Rs 0.97,” Mr Gupta added.

Despite surge in prices of precious metals in last few months, the company would at best report an EPS of Rs 2 for 2010-11. “The stock, which is currently trading at 500 x FY-11E earnings, appears to be very expensive,” Mr Gupta felt.

MMTC, in a statement, said that it was “confident of achieving a turnover in excess of Rs 67,500 crore.”

The metals division turnover estimated at Rs 50,200 crore as against Rs 32 crore in 2009-10. It is also getting in jewellery retail.

The stock was down 1.6 per cent at Rs 1,015 on Thursday.

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