The Hindu Business Line : Eimco Elecon: Promoters mining its wealth?

THE Eimco Elecon (India) Ltd stock created its 52-week high and finished at Rs 126.40 on the NSE on sustained buying. The stock moved up 5.03 per cent at close. The stock has steadily been gaining since August 4, primarily because of market operation by the domestic promoters, dealers said.

"Having a fairly limited floating stock, the counter is price-elastic to even small buying", a dealer at a large broking house pointed out.

From a closing level of Rs 82 on August 4, it has gained by about 54 per cent.

Emtici Engineering Ltd, one of the promoters, has, of late been mopping up Eimco shares from the market. It has already upped its stake to over 14.01 per cent from 13.73 per cent as on June 30, 2004.

According to market sources, the purchases are being made in small doses but with a steady regularity. Emtici picked up 16,453 shares from the market during a period between July 27 and August 4, 2004.

The domestic promoters' holdings in the company are mainly through six entities. At the end of the second quarter of 2004-05, the joint domestic promoter holding was placed at 47.34 per cent, while the foreign promoters, Tamrock Great Britain Holding Ltd, held 25.10 per cent in Eimco. Taj Performance Funds (Mauritius) of Heritage Asset Management Inc had 8.09 per cent stake.

The company has recommended maintaining a dividend of 33 per cent for 2003-04 and the book closure for this purpose began from August 25 and will continue till September 3, the day of the AGM.

The company in February received approval from the Central Government for enhancement of licensed capacity of its product - tunnelling loaders with attachments - to 400 from 300 units.

For the first quarter ended June 2004, the company's sales jumped 78 per cent to Rs 21.43 crore and net profit rose 64 per cent to Rs 2.51 crore. At today's closing price, the stock traded at 8.5 times its trailing twelve-month earnings of Rs 15 per share.

According to Mr Devarsh Vakil of Anagram Stockbroking, as the company depends on Government controlled coal mining companies, which are known for delays and fluctuating policies, this infuses volatility in quarterly performances.

Some 3,056 shares were traded on the BSE in the counter, out of which 2,530 shares (82%) were marked for delivery. The stock has appreciated by 113 per cent in a year and by around 8 per cent this week.

Eimco Elecon (India) was incorporated in 1974 and is a joint venture between Tamrock OY, Finland and Elecon Engineering Company, India.