Fii Purchases Drive Up Telco

Brisk buying by foreign institutional investors and rumours of a bonus issue saw the Telco scrip hogging the limelight at the major bourses this week.

On the BSE, the scrip ended the week at Rs 451, up by Rs 28.50 over the previous weeks close. On the NSE, the scrip gained Rs 28.05 over the previous week to close at Rs 452.85.

On the last trading day of the week, rumours of a bonus issue by the company saw the scrip touching an intra-day 52-week high of Rs 463 on the BSE.

However, the scrip price receded after company officials

denied any plans of a bonus in the media.

At the GDR markets, the scrip ruled steady at $15.25, a premium of 25.87 per cent to the domestic price and at a discount of 7.02 per cent to the issue price.

According to marketmen, the main reason for the spurt in prices was hectic buying by foreign institutional investors coupled with easing of selling pressure by Unit Trust of India at this counter.

The scrip had been witnessing hectic activity for the past two weeks but the price was held in check by Unit Trust of India, which had been selling heavily at the Telco counter in order to meet its redemption demands.

Despite the petro price hike around the corner, analysts and brokers are bullish on the scrip. This, due to the fact that despite a slowdown in the industrial growth in fiscal 1996-97, Telco had an exceptional year with gross sales moving up 28.4 per cent to touch Rs 101 billion, making it the first Indian private sector company to report a turnover of over Rs 100 billion.

Analysts feel that Telcos operating expenses during fiscal 1997-98 will grow in line with increase in sales revenue and hence the operating margins should be maintained.

This would be largely due to the buoyant demand for Tata Sumo. They have also predicted a 8 per cent growth in net profit during the current fiscal as a result of lower corporate tax rates.

Though the valuations look attractive, the scrip is likely to witness a marginal downward pressure once the oil price is effected.

For financial year 1997-98, the company is planning to launch Safari - an utility vehicle in the premium end of the market. It would also be introducing new models with the Cummins engines.

fitted on the vehicles.