According to market sources, quite a few private mutual funds and foreign funds have already started accumulating the stock in anticipation of a liberal bonus. Although buying has been low-key, volumes at the counter is building up. The fact that the stock has fallen by over 20 per cent from its recent all-time high of Rs 888 is an added incentive. The Vikas WSP stock is currently quoting at a bond of Rs 754.

The company has a low equity base of Rs 9.97 crore and strong reserves of Rs 61.9 crore, yielding an attractive book-value of Rs 72. Recapitalising its reserves to issue a liberal bonus (market expects a 1:1 ratio) will not be a problem for Vikas WSP. Firstly, even post-bonus, the equity capital will be within manageable limits. Second, with the kind of growth Vikas WSP has been witnessing, service the enhanced equity will not pose a problem. The company has consistently recorded an impressive growth since 1995-96. At the end of the first-half of fiscal 2000, the company had export orders worth Rs 36.70 crore in hand.

A 100 per cent export unit, Vikas WSP manufactures guar gum polymers as well as water soluble polymers, which find extensive use in the food-processing, pharmaceuticals and textiles industry. With world guar gum market expected to grow at over 12-15 per cent per annum and given the fact that the polymer has no substitute (either natural or artificial), Vikas WSP is poised for a good time ahead. In the first-half of the current fiscal, the company's net sales has grown by 35 per cent, while net profit has jumped by over 67 per cent compared with the corresponding period in the last financial year. The falling interest burden, which is part of the company's strategy to acquire a zero-debt status, is another plus.

Based on the first-half net profit of Rs 30.95 crore, the annualised EPS works out to an impressive Rs 61.9. The current market price of Rs 754 discounts the annualised earnings by a multiple of 12. Analysts say this price-earning multiple is compelling and investment at this juncture could yield decent returns - bonus or no bonus.