The general bullishness for JFTC manufacturers is in keeping with the fact that this group has outperformed the market indices from late 1998. Stocks such as Finolex Cables has gone up by 130 per cent from its mid-October price of Rs 117. Usha Beltron has also been an early starter having risen by 60 per cent from early November. While others such as Uniflex Cables and Vindhya Telelinks have risen by 50 per cent, with Vindhya Telelinks being a late starter. Vindhya Telelinks rise began only by end December. Sterlite Industries has also seen a lot of demand thanks to its JFTC business. The Sterlite stock has risen by 30 per cent in the same period. This is a relatively muted rise considering the company's strength in the industry and sentiment has obviously been affected by the unsolved problems over the smooth running of its Tuticorin copper smelter.

These companies have benefitted from large orders from the Department of Telecom (DoT) and the Indian railways for telephone cables. Sterlite was a huge beneficiary last year as orders also came in from the eight new telecom circles that were being made operational. This had resulted in a five fold increase in Sterlite's fibre optic cables business and a 75 per cent increase in its JFTC business and more than offset the setback to its copper smelter.

It is being widely anticipated that atleast another four to six new telecom circles will become operational this year. Bids are also likely to be opened for additional telecom circles probably after the new telecom policy is announced on February 19, which will also yield substantial business for these companies. Vindhya Telelinks reported an annualised EPS of Rs 25 for the first half which has since been revised to Rs 30, which means that the stock is trading at a forward price earning multiple of just 2 times.

Revathi CP: Rising demand

The results announced by Revathi CP for the third quarter confirm the anticipated growth for the full year. The impact of the performance was such that trading in the stock was frozen at the circuit filter on Thursday. For the full year the anticipated growth in revenue is roughly Rs 70 crore which should be comfortably achieved, considering that as of the nine months ended December, 1998, the company has already done around Rs 50 crore. The last quarter sales are expected to exceed that of the third quarters sales of Rs 15 crore. In terms of profitability as well, the company is on target for reaching Rs 15-16 crore which should yield an EPS of Rs 50 per share. For the third quarter the profit earned was Rs 4.22 crore, while the cumulative profit until the end of December is around Rs 11 crore.

Industry watchers have repeatedly pointed out that the company is doing very well, both in its domestic as well as export markets. The payment cycles from its debtors which are the main coal mining companies of Coal India and its subsidiaries has also improved. More importantly, it is widely expected that despite the large accretion to networth from its internal accruals the company will exceed its last years return on capital employed of 42 per cent. Revathi is virtually a debt free company and given its rapid growth in reserves it is being talked of as a likely bonus candidate once again.

Esab India: Against the trend

The Esab India stock was dormant for a long time after its annual results were announced last year, and the movement was very much in line with the market. Ever since the market began to rally the stock has responded positively and could be termed as an outperformer. Reports are that in the current year despite the slowdown in its main business of welding equipment and consumables there has been some respite in the export market. At the last annual general meeting the management had announced that the company has become a sourcing base for its parent company.

So though there has been only some improvement in the company's short-term fortunes there seems to have been a major rerating of the stock, thanks to the persistent buying by one big operator. A positive sign is the fact that on a day that saw all pivotals fall as funds and operators unwound positions Esab increased by 2-3 per cent. The stock that was trading at just Rs 70 a couple of weeks ago is now available at Rs 105.