Aggregate market capitalisation of 84 firms rises Rs 7,131 crore
Stocks of companies which managed a turnaround in the last quarter of FY03 have appreciated by an average 51 per cent each during the first quarter of the current fiscal.
Though results of 215 such firms are available with the BS Research Bureau, only 84 scrips are actively traded.
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The market price of these stocks increased between 3 per cent and 535 per cent during April 1, 2003, to June 9, 2003.
The market capitalisation of the 84 firms went up by Rs 7,131 crore from Rs 14,068 crore on April 1 to Rs 21,199 crore on June 9.
These firms posted an aggregate net profit of Rs 776.65 crore during the quarter ended March 2003 compared with a net loss of Rs 922.92 crore in the same quarter last year.
A clear indication that the markets have handsomely rewarded these companies for managing a turnaround.
The ratio of the rise in net profit to the jump in market capitalisation of the 84 companies favours the latter 1:10. This means for every Re 1 rise in net profit, the market value of the scrip increased by Rs 10, on an average.
The markets rewarded these companies not only for their bounce-back to the black, but also for a 32 per cent growth in sales income.
The aggregate sales of the 84 firms jumped from Rs 9,558.94 crore in the quarter ended March 2002 to Rs 12,636.48 crore in the quarter ended March 2003.
Pharmaceuticals and steel firms are the major gainers, with seven firms from each sector making it to the turnaround list.
Private sector telecom major Bharti Tele-Ventures, steel major Steel Authority of India (SAIL), Gillette (India), Jindal Vijaynagar Steel, Jindal Iron, Bongaigaon Refineries, Torrent Pharmaceuticals, Orchid Chemicals & Pharmaceuticals, Hexaware Technologies and Birla Corporation are among the winners.
In fact, Jindal Vijaynagar Steel and SAIL from the steel sector, Elder Pharmaceuticals and Vimta Laboratories from the pharmaceutical sector have soared to 52-week highs after the announcement of their quarterly performance.
Bharti Tele-Ventures scrip has almost doubled from a low of Rs 21 three months ago to the current Rs 42. The stock appreciated by around 50 per cent after it reported a standalone quarterly profit of Rs 1.06 crore in the March 2003 quarter against a loss of Rs 2.45 crore during the corresponding quarter of the previous year.
SAIL scrip appreciated 59 per cent to Rs 14.39 from Rs 9.05, after the company posted a net profit of Rs 241.65 crore against a net loss of Rs 417.07 crore in March 2002.
After its quarterly net profit of Rs 66.16 crore in March 2003 (compared with a net loss of Rs 22.85 in the same quarter last year), the Jindal Iron scrip appreciated 42 per cent.
The Jindal Vijaynagar Steel scrip rose 87 per cent to Rs 7.46 (Rs 4) and Lloyds Metals increased 197 per cent to Rs 4.90 (Rs 1.65).
Vimta Labs scrip surged 124 per cent to Rs 93.50 from Rs 41.75 on the Bombay Stock Exchange (BSE), while the share price of Orchid Chemicals increased 98 per cent to Rs 117.95 against Rs 59.50 on April 1 after the company reported a net profit of Rs 10.02 crore against a net loss of Rs 4.12 crore.
Elder Pharmaceuticals