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| LML scrip shifts into overdrive | | | / BSCAL October 20,1997 | | | |
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| Lml Scrip Shifts Into Overdrive |
| / BSCAL Oct 20, 1997, 00:00 IST |
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The last two days of the trading week saw the LML scrip zooming to new 52-week highs on the back of frenzied buying.
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| The scrip closed on the Bombay Stock Exchange (BSE) at Rs 84.25, posting a gain of Rs 9.50 over the previous close. On the National Stock Exchange (NSE), the scrip gained Rs 9.60 last week to close at Rs 85.95.
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Marketmen said there was lot of institutional interest at the counter in anticipation of some favourable announcement for the auto sector in the forthcoming monetary policy.
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On Thursday, 6.25 lakh shares worth Rs 5.22 crore changed hands on NSE. Significant volumes were witnessed on the last day of the week, too.
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Marketmen feel the growth in sales for the company, at a time when the market, is shrinking is an indicator of its long term growth prospects.
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In fact, LML scooters cost nearly 20 per cent more than the industry leader Bajaj Auto as the latter benefited from a significant cost advantage due to its older set up, economies of scale and a virtual debt free capital structure.
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Despite the cost disadvantage, LML gains strength from its more contemporary and better styled scooters, say analysts tracking this sector.
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Said an auto analyst at an institutional broking house: "As LML's products are more expensive, we do not expect any substantial price hikes. This will not make much of a difference to the bottomline."
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Since October 1994, LML has embarked upon a four-year Rs 400 crore programme to take up capacity to 9 lakh vehicles.
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Also LML intends to launch a plethora of new models.
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The company plans to unveil a scooterette in 1998, while it is fine-tuning a motorcycle that is slated to hit the market early in 1999.
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Analysts feel the new models should do reasonably well given Piaggo's technology and LML's marketing skills.
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There are apprehensions that LML will be at a competitive disadvantage vis-a-vis other established competitors, who also have collaborations with leading global motorcycle manufacturers.
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Says Rajesh Prabhudesai, analyst, Meghraj Financial Services: "In case LML decides to go in for a public issue, it will affect the sentiment of the stock.
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The 15 per cent growth in earnings, the improved quality of earnings, an improving balance sheet will be the key drivers in LML's valuation."
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