With Hindustan Zinc hiking its selling price for all grades by Rs 3000 per tonne with effect from August 14, the punters may long in to this counter. Since the scrip is trading at Rs 20.35, below its book value of Rs 22 (especially in a rising market), the counter should see a major rally, according to analysts.

The company will now be selling the high-grade zinc at Rs 71900 per tonne, special grade at Rs 72400 per tonne and will be charging Rs 72650 for a supply of super special grade. Marketmen expect this move will a substantial boost to the bottomline of the state run zinc producer. Analysts expect the company to end fiscal 2000 with a net of Rs 90 crore as against Rs 76.31-crore net reported in fiscal 1999. The company has reported a 12.5 per cent jump in net profit for the three-month period ended June 30, 1999.

Hindustan Zinc's zinc output in fiscal 1999 increased by 1.5 per cent to 138,271 tonnes, while its lead output increased by 9.1 per cent to 39,010tonnes during the same period. The company's fortunes are linked to the global zinc prices and the outlook for zinc prices globally, more or less, remains positive. A large section of analysts feel that a further improvement in LME zinc prices is expected from current levels. And that should augur well for Hindustan Zinc's operating profit margins. Although with a large equity base sustaining a upward movement for the stock will be difficult but investors can expect 20-30 per cent returns in next couple of months's from current levels.

CMC spurts on hopes of fresh equity issue

Buoyed by the expectation of a rights issue or preferential allotment, CMC has gained by 53 per cent in 15 trading sessions. The stock started its northward journey on July 27 from a level of Rs 331.55 and touched a peak of 507.3 on August 18.

CMC is now seeking the government nod to issue additional equity to the tune of Rs 10 crore through a rights issue or preferential allotment to its existing shareholders. The companyis expected to raise fresh equity by October this year.

The fresh issue of equity will result in a reduction in the government's stake from a high of 83.31 per cent to 51 per cent. This will also boost investor confidence in the company. The company is submitting a detailed report to the government which includes pricing of equity, lead managers for the issue and the timing of the programme. The company has a paid up capital of Rs 15.15 crore.

The company was established in 1976 and is a premier software solution provider. The company, which employees over 2,800 personnel, has about 18 offices and over 100 service locations in India and abroad. CMC had reported a turnover of over Rs 300 crore last year. CMC has a wholly owned subsidiary in the US, Baton Rouge International.

The company has recently set up a java competency centre in Hyderabad in collaboration with Sun Microsystems, Department of Electronics and National Association of Software and Service Companies.