Date:02/02/2005 URL: http://www.thehindubusinessline.com/2005/02/02/stories/2005020202321500.htm

Back Ennore Foundries at 52-week high

Our Bureau

Kolkata , Feb. 1

THE Ennore Foundries stock, which had been spotted by some market players as a future multi-bagger, sometime in the middle of last year, today reached its 52-week high at Rs 177. From its 52-week low of Rs 27 in June, it has been a smart move upward for the stock on the back of a steady recovery in the company's financials.

According to analysts, the recent move by the company to raise funds for capacity expansion through a rights issue will accelerate the growth further.

A Hinduja group of company, Ennore Foundries is doubling its automotive castings capacity to 1 lakh tonne per annum from current 50,000 tpa by purchasing the Ductron Casting unit from Ashok Leyland.

The rights issue is to mop up around Rs 57 crore.

The promoters, who currently hold around 80 per cent stake, however, would gain greater hold in the company after the issue at a cheaper price than the current market price. The rights Rs 10 stock would be available at Rs 60 each in the ratio of 14:10. The public holding is placed around 14 per cent.

"Infusion of Rs 10 crore by way preference shares has already helped to company to come out of potential sickness. Ennore's margins have improved significantly in the past one year or so", Mr Milan Bavishi of Anagram Stockbroking said.

Cost reduction, better capacity utilisation, trimmed workforce, reduction of debt and expansion of client list have been behind the recovery, Mr Bavishi observed.

The stock today posted a gain of 9.97 per cent to close at Rs 177.

In view of growing demand for automotive castings, the stock appears to be attracting long term investors, while low floating stock has made it demand sensitive.