Stock prices of Rossell Tea and Coromondel Engineering, listed on the Bombay Stock Exchange (BSE) last week, have more than doubled due to low liquidity of these shares and good fundamentals of these companies.
Kolkata-based Rossell Tea closed at Rs 104 on BSE on Monday against the listing price of Rs 50 on March 16, while Coromondel Engineering closed the day at Rs 188.15. Its listing price was Rs 90 on March 15.
Market players said the rise was due to low availability of these shares. The public holding in these companies is 25 per cent.
An official of Coromondel Engineering said the shares of the company had been listed on BSE to provide liquidity. “The shares of the company have been listed on the Madras Stock Exchange since 1975.”
Similarly, Rossell Tea shares are listed on both Calcutta and Guwahati stock exchanges. In the absence of trading on regional stock exchanges, these companies opted to list on the BSE.
“Coromondel Engineering has good financials. Its sales to market cap is also low and this is attracting some of the investors,” said an analyst with a domestic broking firm. He said the company was also attracting interest as it was part of the Murugguppa group. “Since the group is strong, I expect some big developments in the company in the future.”
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Coromondel Engineering is into construction and real estate business with an order book of Rs 79.16 crore. Its real estate division is working on projects valued at Rs 382.32 crore, both directly and through joint ventures. For the financial year ended March 2009, it reported a net profit of Rs 4.67 crore on income of Rs 100.6 crore.
The interest in Rossell Tea shares was due to its good financials and plans to expand in the aviation business, especially the defence sector, said experts. “Our plan is to expand in aviation in a big way following the government’s decision to allow 30 per cent defence orders for local companies,” said HM Gupta, executive chairman of Rossell Tea.
Rossell Tea’s aviation division makes parts for helicopters, wiring for defence aircraft and black boxes. This division contributed Rs 2.28 crore to revenues for the nine months ended December 2009, out of a total revenue of Rs 55.38 crore. Its net profit for the period was Rs 25.25 crore.