The Hindu Business Line : MICO: Some spark still left

INVESTMENTS can be contemplated in the MICO stock at Rs 4,890 as scope for gains exist despite the run-up in the stock price. The stock has appreciated by about 15 per cent since the earlier Business Line recommendation to book profits at price levels of about Rs 4,250 in May 2003. The stock had earlier been recommended at levels of Rs 3,380 in early 2003.

The revised view to buy the stock now follows the sharp growth in volumes in the cars segment in April and, especially, May. As a result, the revenues and earnings in the April-June quarter could get scaled up significantly as MICO derives 45 per cent of its revenues from supplies to OEM segment.

The steady increase in automobile production (this business contributes 94 per cent of MICO's turnover) and the increasing use of MICO used as a sourcing base by the German parent are positive factors that could ensure continuance of the impressive performance in the last one year.

The growth in export earnings reduces the dependence on the highly cyclical original equipment market.

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