Carrier Aircon
Aaron Chaze
January 9: Carrier Aircon's stock has managed to climb back in a week from the unjustifiable depths that it had plunged into.The stock's fall was a result of selling by a number of foreign institutional investors seeking to liquidate their more profitable investments in order to ferret cash out to meet their obligations back home. But at the same time it was not as if the fundamentals of the company were being ignored, for the FIIs, after all, were the first to pounce on the stock, and have made huge profits in the stock. Even now, the recovery has occurred on very small volumes, and according to brokers, the selling dried up at the counter a long time ago, which means that even small purchases have the potential to send the stock sky high. And even as the market as such turned bearish none of that negative sentiment seemed to be rubbing off on Carrier Aircon's stock. And the earnings numbers more than justify being bullish on Carrier. The company reported a jump in revenue for the first half by
around 15 per cent but the increase in profits was much higher. This was achieved despite reduction in selling prices of some of its models during the peak summer months. Net profit for the period was up by 67 per cent and the company also reported the highest margins in the industry. Obviously, seeing the stock available at its pre-budget price despite a superb performance during the first half seemed to offer a very good opportunity to bargain hunters. Even at the current price the stock trades at a substantial discount to its peak prices, seen earlier in the year. Tiring of mining sector stocks Eimco Elecon, catering to the mining sector, may be fast succumbing to the fate that all companies which cater almost exclusively to the public sector face, non-payment of dues. The company carries a very heavy burden of current assets, mainly receivables, which will only increase in the current year. Though Widia India, which is also in the same position as far as supplies to the public sector
are concerned, dominated the mining sector and has an exposure to the automobile companies (to which it supplies machine tools) as well, there seems to be very little pessimism attached to its stock, unlike the pessimism that engulfs Eimco Elecon's stock. In fact, Eimco Elecon has one major strength that seems to have been totally ignored, and that is the fact that it is the subsidiary of Tamrock of Finland, a global giant that dominates equipment supplies to mining companies worldwide. With the mining sector being given top priority as far as opening it to foreign investment is concerned, it is quite likely that a number of foreign companies will step in and utilise the services of its global supplier in India as well; in this case through its subsidiary.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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