According to the market, being the parent company, M&M should get the benefit of a telecom-software stock, and the stock price should reflect it. On the latest earnings (Rs 23.25 annualised), the discounting for the stock works out to around 25. This is comparatively high for an automobile player, unless the telecom-software connection is factored in.

As for the financial performance, there has been an improvement in working. For the third quarter (October-December 1999), sales stood at Rs 993.32 crore, a jump of 16.6 per cent over Rs 851.88 crore in the corresponding period in the previous year. At the same time, OPM remained more or less same at 14.55 per cent. At Rs 77.76 crore net profit, a jump of 23 per cent.

Compared to the second quarter (July-September 1999), sales as well as OPM have shown a smart improvement. Sales during the second quarter stood at Rs 830.73 crore, whereas OPM stood at 12.99 per cent. This shows that in the third quarter, the quality of earnings has improved, along with a jump in sales growth.

A pick-up in demand for the LCV sector has helped the company to show good growth in the third quarter. A smart jump in tractor sales during the third quarter has also played a major role. The tractor division has performed very well during the third quarter.

Overall, for the full nine months, sales rose by 9.3 per cent to Rs 2696.73 crore. At the same time, OPM stood at Rs 13.51 per cent. At Rs 189.4 crore, net profit showed an increase of 29.67 per cent over Rs 146.06 crore in the corresponding period in the previous year.

For future, outlook for the company is positive. Demand for LCVs is likely to pick up further. Demand for tractors is als showing an improvement. As against a two-per cent growth last year, the tractor industry has grown by over 10 per cent during the first nine months of the current year.

While performance is likely to improve, from the stock market point of view, so long as the software sector fares well on the bourses, the stock will continue to get higher than the normal discounting due to its subsidiary.

As far as its technical position of the stock is concerned, the stock has done exceedingly well, and the outlook appears positive. The stock is mainly with the trend. After touching a peak of Rs 662, the stock has reacted to Rs 510. This fall is nothing but a technical correction. The stock has an immediate support at Rs 495. The support thereafter exits at Rs 475. Unless it dips below this level, medium-term players need not worry. The long term support for the stock is at Rs 375, below which one can liquidate the delivery position.

-- Deepak Singh Tanwar