CHENNAI, July 10: Murugappa group flagship EID Parry Ltd has suddenly grabbed the attention of investors and speculators alike. Within 10 days, the scrip has shot up from Rs 93 to Rs 131, a gain of about 41 per cent. Expectations of a good performance in fiscal 1997-98 and speculation on account of the non-delivery period are being cited as the two main reasons for the sudden rise in scrip price. However, analysts expect a major selling pressure at Rs 140 to 145 levels.

In June-end, EID Parry was trading at Rs 93, which was almost half its book value of Rs 173.00. According to an analyst, the market capitalisation of the company was, at one time, less than its sales. The fact that sugar and fertiliser are under government control has weighed heavily against the company on the bourses. During 1996-97, sales rose by 6.5 per cent, while PAT went up by 12.5 per cent. Dividend paid was higher at Rs 4 per share compared with Rs 3.60 per share paid in fiscal 1995-96.

Analysts expect the company to improve its performance this year. The new ammonia terminal together with a submarine pipeline and multipoint mooring system is likely to substantially boost the company's bottomline. The resultant savings in the form of storage charges, transportation charges and wastages may be in the region of Rs 1,200 per tonne of fertiliser produced. The sugar division is also expected to do well. The free market price of sugar has firmed up in view of the likely demand-supply gap. Moreover, the commissioning of the co-generation plant is likely to add to the realisation from baggasse.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.