Our Bureau

Kolkata , Feb. 23

THE Crompton Greaves stock shot up on Wednesday with a significant spurt in volumes on expectation of an overseas acquisition by the company and news of capacity expansion.

According to Mr Devarsh Vakil of Anagaram Stockbroking, the company is understood to be in negotiations with a couple of European electrical equipment and systems manufacturers for acquisition. The company has also indicated that it is going in for a 25 per cent capacity expansion at its domestic manufacturing facilities at a cost of Rs 100 crore to cope with the surging order flow.

Crompton Greaves is into electrical and electronic equipment and systems. Its product list includes switchgears, transformers, motors, alternators, fans, luminaries, pumps and telecom equipment. The company showed a robust growth in sales and profits in the last quarterly results, Mr Vakil pointed out.

During the third quarter to December 31, 2004, the net profit doubled to Rs 31.6 crore, from Rs 15.9 crore during the corresponding period in the previous fiscal. Net sales grew by 19.2 per cent.

According to analysts, today's heightened activity and interest in the counter was mainly owing to the acquisition possibility. At today's closing price of Rs 386, the stock traded at approximately 20 times its trailing 12 months' earnings per share of Rs 20.

Mr Ajay Jaiswal of Lohia Securities said the market is also expecting major announcement for the power sector in the Budget for 2005-06. "Crompton Greaves would surely be a beneficiary, if further reforms and consolidation measures are announced in the Budget", he added.

The stock today gained by 15.7 per cent and attracted a combined volume of three lakh shares on the BSE and the NSE. Over 35 per cent of the deals were delivery based, suggesting strong investment buying.

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