Stock watch: Hyderabad Inds

Hyderabad Industries Ltd (HIL) , a C K Birla group company could be a good scrip to keep an eye on. The stock closed at Rs 595.95 on Tuesday, 1.28 per cent up as compared with its previous close of Rs 588.40 with around 29500 shares traded on the Bombay Stock Exchange.

HIL is a key player in domestic asbestos cement roofing sheet segment which finds major application in roofing. The company is all set for a robust growth in both turnover as well as earnings due to an above average expected growth in the roofing industry over the next 2-3 years and the sale of loss making heavy engineering division.

Last week, the company announced a scheme of amalgamations where by Malabar Building Products Ltd will be amalgamated with the company.

Every equity share holder of Malabar Building Products Ltd holding 100 shares shall be issued 29 equity shares of HIL. For the quarter ended June 2005, the company reported a net profit of Rs 15 crore on sales of Rs 132 crore which translates into an EPS of Rs 21 on an equity of Rs 7.17 crore.

According to a senior analyst said, " For the year ended March 31 2006, HIL should report a net profit of over Rs 60 crore which gives an EPS of Rs 85 ."

The stock is discounted less than 8 times its 2005-06 earnings. Considering that other players in the sector are enjoying the PE multiple of 14-18 times the earning, the share of Hyderabad Industries has the potential to cross the four figure mark over the next 4-6 months, he added.