NEW DELHI, April 7: A 400 per cent rise in less than a month is a dream come true for any investor. For HCL Office Automation shareholders, the phenomenal appreciation in the value of their investments is beyond their wildest imagination as the illiquid scrip had been languishing below par since 1996. The sudden spurt in HCL Office Automation's scrip price from Rs 3 in mid-March to Rs 15 on April 6, has taken both marketmen and analysts by surprise. The rise has been accompanied by good volumes and the counter has been attracting over 3000 shares daily compared with less around 100 earlier. Interestingly, the stock is also being regularly traded on the bourses ever since the rise began in mid-March.HCL Office Automation, which markets office equipment like photocopiers, fax machines, EPABX, switches and digital duplicators, has been in the losses since 1996 and the market does not expect a turnaround in the near future. The high-cost, low margin nature of its business also does not entail a gooddiscounting. Brokers attribute the sudden spurt in HCL Office Automation's scrip price to a possible sell-out by the promoters. ``Probably the promoters want to get out of this business, which is unrealted to their core area of information technology,'' says a Delhi-based broker. Although this could not be confirmed from the company, with the HCL Office Automation Board of Directors meeting on April 15 the market is rife with specualtion.
The HCL Office Automation scrip has seen a high of Rs 100 in December 1994. It went below par in mid-1996 when the company went into the red. As of October 1997, the company had a net loss of Rs 14 crore on net sales of Rs 46.52 crore. On an equity of Rs 14.65 crore, the company has a paltry reserve of Rs 4 crore. The fact that the promoters hold almost 70 per cent of the total paid-up capital of the company has also contributed to the rise as there is a paucity of HCL Automation's shares in the market.
Interestingly, group company HCL Infosystems has also been rising onthe bourses and has appreciated by over 200 per cent in less than two months. The scrip began its journey northwards from Rs 25 in end-February and touched a new 52-week high of Rs 82 in early April. Here too, the promoters hold approximately 70 per cent of the total paid-up capital of Rs 31.9 crore.
Although the HCL Office Automation scrip is still below the 1993 rights offer price of Rs 17 as well as the 1993 rights issue price of Rs 24, for investors the rise in scrip price is a good opportunity to book profit and exit.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
