Despite showing positive financial performance by the company, the stock has failed to show an impressive move. At present, the stock is available at its 8-month low of around Rs 10. The only factor which has improved in the recent past is the trading volume. The average trading volume on this counter has increased from 50,000 shares to over 1.5 lakh shares. On financial front, the company has been able to do well. For the third quarter (October-December 1999), the company has posted a sales of Rs 367.1 crore, and the operating profit stood at Rs 50.68 crore, showing an OPM of 13.8 per cent. The same figure stood at 12.15 per cent in the corresponding period in the last year. At the same time, net profit stood at Rs 14.83 crore.

Overall, for the first nine months, while sales showed a jump of 21.42 per cent to Rs 1122.22 crore, net profit improved by 14.3 per cent to Rs 68.19 crore. This was mainly on account of lower realisations. In 1998-99, zinc prices in the international market showed an expected move up to a level of $1730 per tonne. If one were to consider this fact, then the fall in operating profit is not very alarming, which declined from 15.32 per cent to 14.58 per cent during the first nine months of the current year.

While the recent performance has been decent, the future outlook too appears positive. Zinc prices on the London Metal Exchange (LME) have remained in a narrow band, and are unlikely to show a decline.

The discovery of new mines in Udaipur which has higher metal content also augur well for the company. With prices remaining firm coupled with positive volume growth, the company is likely to maintain the sales growth in the near future.

But more than this, what might help the stock price is the disinvestment step. The company is on the disinvestment list, and if that comes along, it will be good for the stock. At present, the gets a discounting of around 6 which should improve on disinvestment.

The company also has plans to expand besides setting up a greenfield project. For its diversification, the company has a joint venture with BMRG of France, and Vietnam Rare & Precious Minerals Corporation (VMC) to explore and develop gold mines in Vietnam. The company is also setting up a joint venture with Rashtriya Chemicals & Fertilisers (RCF) and Rajasthan State Mining Corporation to make di-ammonium phosphate.

While fundamentals may favour the company, the technical position of the stock is far from impressive. The stock has been posting lower tops, and appears very weak. On the downside, it has a support at Rs 7. On the upperside, unless it crosses Rs 16, and Rs 20, the long term outlook will not improve.