TIRUPATI-based Amara Raja Batteries Limited is expected to post a large jump in profits for the current financial year. Profits are expected to jump over 50 per cent following the recent commissioning of a new plant with capacity for manufacturing one million automotive batteries per annum.

The company is likely to post a net profit of close to Rs 30 crore for the year, The Insider learns. It has a paid-up capital of Rs 11.39 crore, implying that the company will have an earnings per share of nearly Rs 28 for the current financial year.

At current market price the stock is quoted at a PE of less than 3 times the earnings. The company also plans to double its automotive battery capacity in the next phase.

The Indian promoters and US-based MNC Johnson Controls have a 26 per cent stake each in the company. Last year they had hiked their stake in the company through a preferential allotment of shares at a price of Rs 100 per share.

Amara Raja Batteries has been a market leader in supplying batteries the industrial, telecom and railway applications. Last year it entered the automotive segment and has already claimed a substantial share of this lucrative segment.

In the automotive segment, it exports batteries exclusively to MNC giants like Ford, General Motors and Daimler-Chrysler. It is now targeting the domestic market in a big way, The Insider learns.

The stock had come under selling pressure earlier this year after some market players attempted to corner a large chunk of the company's stock. Sebi subsequently investigated and prosecuted these players after the company complained of large scale cornering of stock by them. With that hiccup now behind it, the stock is set to chart a new course.

Major gains

RELIANCE Petroleum Limited could be a big beneficiary of the revamp in the MSCI India Index next year. According to estimates of Morgan Stanley Dean Witter the weightage for the scrip in the revamped index could rise to a whopping 4.2 per cent, representing almost two thirds of the energy sector representation.

This is based on the stock's 25 per cent free float at present and could rise more if the free float increases after dilution of stake by the Reliance group.

Last week MSDW resumed its coverage of Reliance Petroleum Limited with an outperform rating and a price target of Rs 40.

Among a host of reasons that the reputed research house has given for being bullish on the stock, it points out that less than 1 per cent of RPL's equity was held by FIIs and an inclusion in MSCI's India Index would spur buying by FIIs following the index for their portfolio management.

MSDW also noted that it expected RPL to earn the highest gross refining margins in the country. It also believes that deregulation in the oil marketing segment would help the company as it sets up its own retailing network and bids for the government's 34 per cent stake in IBP Limited.

MSDW says that marketing deregulation would improve margins significantly and RPL has the cash resources to set up a strong retail network. With so many positives on its side and endorsement from one of the top international research houses, the stock could attract substantial institutional activity.

Winner all the way

WELLWIN Industry is likely to report a turnover of Rs 100 crore at a net profit of Rs 9.5 crore for the financial ending September 2001, The Insider learns. This would amount to a 50 per cent jump in turnover and 25 per cent jump in net profit over the previous fiscal.

On an equity base of Rs 7.50 crore, it would result in an EPS of Rs 12.66. While the scrip has a book value of over Rs 55, it is quoted at Rs 24. Despite being a debt-free company, the earnings are discounted just two times.

Being a dividend paying company, the dividend yield works out to over 10 per cent on a pre-tax basis. Wellwin is developing embedded software products for process industries application.

While the company has bagged several orders from auto manufacturers, it has also developed an embedded software product for the healthcare industry and installed it in the Madras Medical Mission, Chennai.

Its other lines of business include auto electricals and instrumentation. The company is in the process of setting up subsidiaries in Australia and the US to further its interests in embedded software. -