Date:26/04/2005 URL: http://www.thehindubusinessline.com/2005/04/26/stories/2005042602271300.htm

Back Selling off engg unit boosts Hyderabad Industries

Our Bureau

Kolkata , April 25

THE Hyderabad Industries counter on Monday spurted to finish at Rs 210.80, up by about 5 per cent, on sell-off of its loss making heavy engineering unit.

According to analysts, the unit was a non-core business and a drag on its bottomline.

Mr Milan Bavishi of Anagram Stockbroking said the asbestos cement roofing market leader with a 23-per cent market share would now be able to concentrate on the core business. "The demand for these building products is likely to stay firm led by growth in rural housing and price advantage of asbestos sheets over galvanised iron sheets," he observed.

The company expects the asbestos roofing industry to grow at a health annual growth rate of 10-12 per cent over the next couple of years. Considering the demand growth, the company has plans to increase its production capacity by one lakh tonnes to six lakh tonnes per annum.

The new capacity will be on stream by the end of September this year. Hence the full effect of the capex would be seen in the next fiscal.

However, according to the company, it expects to run at capacity of 5.30 lakh tonnes for major part of the current fiscal.

The company's thermal insulation products are understood to be maintaining a stable growth on the back of demand from fertilizer, power and cement units.

At today's closing price, the stock traded at around 4.2 times FY06 expected earnings of around Rs 50 per share.