INDIA GLYCOLS

India Glycols: This counter has been attracting investors and operators. Dealers say that this attraction for the scrip is attributed to the expansion and the diversification into production of industrial gases that IGL has initiated. It is setting up the plant for the manufacture of oxygen and nitrogen, which is expected to be commissioned by September 2005. Also, the price of molasses, a raw material for making MEG, too, has fallen by 25-30 per cent in the last 3-4 months, which makes IGL’s operations even more profitable. The effects of this expansion will be fully reflected in the working of the current fiscal. IGL could easily register 45 per cent higher sales of over Rs.810 cr. and earn a net profit of about Rs.110 cr. in FY06. Net profit is expected to jump to over Rs.135 cr. in FY07. The estimated EPS for FY06 works out to Rs.39 and Rs.48 for FY07. In view of expansion and diversification, leading to higher profitability, the low valuation of the scrip coupled with its bright future prospects, the shares of IGL can be purchased for decent appreciation for medium to long-term gain. The investment in this share is likely to fetch minimum appreciation of about 50 per cent in six-to-nine months