The company has shown a marginal growth in sales, as compared with the previous year, for the first six months of the current financial year. Thereafter, the growth in sales has slowed further for October and November. Since the beginning of the second half, the monthly sales, as compared with the previous month's, have recorded a fall. The average sales for the first five months was 1,09,317 scooters; for six months, this monthly average rose to 1,10,475 units,but the seven-month average fell to 1,08,159, yielding a fall in average sales of just 2 per cent.

Now, the general expectation is that BAL's sales performance for December will be lower by 7 per cent, thus triggering a major fall in the stock.

According to the Centre for Monitoring Indian Economy (CMIE), for the seven months ending October 1998, average growth in the scooter segment has been 3.5 per cent (mainly owing to a 40.7 per cent growth in TVS Suzuki's scooter sales), while BAL's growth has been below average at just 3.3 per cent, as compared with its six-month growth figure of 8.5 per cent (even for the first six months, BAL's scooter growth has been below average, given that the average growth in the scooter segment has been 9.63 per cent). LML, on its part, has increased sales by 7 per cent in the seven-month period, while its six-month growth figure has been 10 per cent.

Pidilite:

The rally in Pidilite Industries during September has not fizzled out. After showing an appreciationof close to 70 per cent within two months, the correction has not exceeded 30 per cent from the peak. Expectations of a better performance in the first half was the prime reason for the September rally, and these expectations were exceeded. The impact was greater since it followed a not-so-impressive performance during the second half (October-March) of 1997-98.

As compared to a 7.76 per cent operating profit margin in the second half of 1997-98, the company has managed to report an OPM of 17.15 per cent during the first half of 1998-98. Higher value-addition, better cost control, and lower raw-material prices have helped. The price of vinyl acetate momomer (VAM), the key raw material, has been lower.

Further, compared with the corresponding period's figures, the jump has been impressive. The company maintained the sales growth at 11.94 per cent to Rs 203.40 crore, and operating margins have also been higher.

The outlook for the company continues to be bright. Raw-material prices continue to bedepressed, and should benefit the company in the second half. A decline in borrowings will continue to reduce the interest burden. During the past two years, a fall in the quantum of debt has reduced, bringing down the interest burden from Rs 16.16 crore in 1996-97 to Rs 4.42 crore in the first half of 1998-99.

While the fundamentals continue to favour the company, the stock is yet to get full marks from the stock market. On the latest earnings, the stock gets a P/E multiple of around 7, which, given the strength of Fevicol, the main product, is comparatively low. The only reason for the low discounting could well be the low liquidity of the stock. Of a total equity of Rs 12.24 crore, a major chunk of around 73 per cent is with the promoters, leaving only a miniscule float of 2.4 million shares with the public. The average trading volume is roughly about 2,500 shares. At present, the daily trading volume is below the average figure. The stock is available close to its 52-week high at Rs 242.