Investment outlook for some cos

S. Muralidhar

Punjab Tractors: Hold/buy on declines

Mahindra & Mahindra: Hold/sell on highs

Escorts: Hold

ALMOST all tractor industry stocks have been consistently losing ground in the market since the first quarter of 2001.

However, there has been a short rally in these stocks in the last two weeks.

The only company in the sector whose shares have moved within a fairly narrow range is PTL. The scrip has been a consistent performer and closed at Rs 193 on November 23. Compared to its peers, PTL has not witnessed a large erosion in tractor volumes and consequently its performance has been maintained at near previous year levels.

The PTL scrip saw a 52-week high of Rs 237 and a low of Rs 125. Shareholders can continue to hold the stock at current levels and buy on declines.

Based on its prospects for the rest of this fiscal, the Escorts scrip could also be retained. The company's performance in the last ten weeks has been affected by a strike at its manufacturing facilities in Faridabad, near Delhi.

Escorts' management claims that it has reached a historic accord with its employees and that production has been normalised. Given this scenario, the company's scrip may notch up gains in the second half of this year in line with improved sales.

M&M has been among the worst hit by the tractor industry slowdown. Volumes fell 35 per cent in the first half of this year. Though the company is initiating a massive cost-cutting exercise, it is unlikely to make a substantial impact on its bottomline.

M&M shareholders may hold the stock in the medium-term and sell on highs.