Mafatlal Finance Co

Current Price: Rs.12.70 (as on 12-5-97)

52 Wk H/L: Rs 37/12.70

Details: Mafatlal Finance Co (MFCL) is a part of the Arvind Mafatlal group. The company is engaged in leasing, hire purchase, consumer finance, merchant banking, broking and investment service and started its operations in Mumbai in 1991-92. The company has since expanded its reach by setting up a wide network of branches at Delhi, Chennai, Ahmedabad, Hyderabad, etc.

To fund the expansion of its activities, it made a public issue in October 1994 at a premium of Rs 40. Its wholly-owned subsidiary, Mafatlal Securities is a member of the Bombay Stock Exchange and the National Stock Exchange, and handles the broking and investment activities of the company. MFCL finances car and trucks and other selected consumer durables. It has pioneered the zero per cent loan scheme for Cielo and Maruti Esteem, whereby the customer gets an interest-free loan for one year for a sum up to 50 per cent of the cost of the car.

Analyst's remarks: MFCL's margins, like that of most other companies in the segment it is engaged in had been under pressure during 1996-97, primarily on account of higher burden of interest and depreciation. Though its total income shot up by 138 per cent, net profit declined by 29 per cent compared to the corresponding figures of the previous year.

The steep pricing of its public issue and tight money market conditions have further affected MFCL's share price. Hence, one could consider selling this scrip.

Recommendation: Sell

(Matrix Data Syndicate)

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