Significantly, the price spurt in most cases seems to have occurred on a combination of information already available with the marketmen, as well as certain new developments. The Bangalore-based Birla 3M Ltd (B3M), promoted by the US multinational Minnesota Mining and Manufacturing Co (3M) along with the Ashok Birla group, aptly typifies this phenomenon.

Even as early as in September 1998, the US multinational had signalled its intention to hike its holding in B3M by acquiring 25 per cent of the nearly 33 per cent stake held by its Indian partner, the Birla group. Nonetheless, this major development was largely ignored by the market at that time.

Consequently, the stock continued to exhibit only sideways movement well into 1999. But, theannouncement of B3M's fiscal 1999 results on May 22, which portrayed a quantum jump in the last quarter bottomline to Rs 4.54 crore, from just Rs 87 lakh in the previous quarter, has now completely changed the sentiment for the scrip.

Ignoring budding trouble just brewing at the border, B3M took off from about Rs 250 level on May 21, the date on which the financial results were taken on record by its Board. On NSE, B3M's price line posted a gain of about 57 per cent in just 6 trading sessions to end the month at Rs 394. Though the volume initially remained frugal, it picked up significantly towards the end of the month. Interestingly, BSE did not participate in the beginning of the mini bull run in B3M but joined the fray a few days later.

In June, unmindful of the ongoing military conflict, the scrip witnessed a marked pick-up in cumulative volume, which more than doubled to 96,210 shares, for an average of 4,373 shares per day. And, riding on the increased volume, the price line too moved upconsistently to net a gain of 20 per cent for the month.

If June was good for the scrip, July has been still better. In just 10 trading sessions so far, the cumulative volume in the counter, at 1,28,590 shares, has eclipsed the number of shares traded on a monthly basis in the last one year. Not surprisingly, the price gains have also been significant.

The scrip recently posted its 52-week high of Rs 605, before marginally retreating to the present Rs 578 apiece. The high pitch of the present action in the B3M counter is discernible from the fact that the first fortnight of the current month witnessed a trading volume in excess of 10,000 shares per day on 6 occasions, as compared to 3 in June, 1 each in May and March and none whatsoever in the other months of the latest 52- week period.

In a way, the scrip's bull run on the bourses only reaffirms the marketmen's well-known preference for multinational stocks. The US giant 3M, which had earlier held 51 per cent in B3M, recently completed the acquisitionof 25 per cent more equity in the company from Scimitar Investments and Shearson Investments, holding companies belonging to the Ashok Birla group.

Consequently, the Birla group's holding in B3M has whittled down to just 7.66 per cent, reducing it to a minor partner. Public shareholding in the company is put at 16.34 per cent. As 3M's acquisition of equity stake represented an inter-se transaction between the promoters, the takeover code was not triggered.

As per the terms of acquisition, Yashovardhan Birla, the current Chairman of the Indian venture, is expected to continue in the capacity as long as his group's stake in B3M remained above 5 per cent. However, this move seems to be more of a good will gesture by 3M to its erstwhile equal stake partner.

Looking back on the genesis of 3M's entry, the multinational entered India in 1987, when the Indian market permitted the entry of multinationals only in tandem with Indian partners. Thus, necessity was the cornerstone of the US multinational's ropingin the Ashok Birla group as an equal partner in the joint venture. Later, taking advantage of Indian economic liberalisation of the nineties, 3M hiked its stake from the initial 40 per cent to 51 per cent through a preferential offer.

Even in the mid-nineties, 3M, which had an international stock pile of 60,000 patented products, had begun to feel dissatisfied with its inadequate Indian operations. The grouse was not misplaced as, over the last few years, B3M did not acquit itself in a manner befitting its international parentage. The bottom line, which stood at Rs 2.96 crore in fiscal 1996, actually declined to Rs 2.84 crore in the next year. Though profit witnessed an improvement in fiscal 1998 to Rs 4.05 crore, still, it represented an EPS of only Rs 3.60.

In fiscal 1999 too, the first 9-month profit of Rs 3.34 crore was far from impressive. Only an inspiring last quarter performance, with the bottomline spurting by over 400 per cent, shored up the annual show. If B3M can sustain the recent performancein the current fiscal, the company could witness a growth of 130 per cent in its bottomline, which may result in an EPS of about Rs 16. The current market price of around Rs 570 discounts this projected EPS 36 times. However, financials apart, there are a couple of other factors that have recently caught market fancy.

Strong rumours, apparently with profound reason, circulate in the market that the `Birla' adage will be jettisoned from the Indian company's name any time now. Once done, it will reinforce the commitment of the US major to the Indian operations. US multinational at a very high price in excess of Rs 1000 a share for acquiring the residual holding! If carried to fruition, it will facilitate the scrip's eventual delisting from the bourses.

However, the company sources preferred to remain tight-lipped on such market speculation. Whether the scrip ultimately gets delisted or not, the recent developments at B3M pave the way for introduction of many new products from 3M's international stable. Asit is, the shift in 3M's Indian operations in favour of trading activities has, of late, been visible. Therefore, in the changed scheme of things, the Indian outfit could, in the long run, evolve into a marketing platform rather than a manufacturing base for the US major.