The biggest beneficiary according to market expectations will be M&M. There is an expectation that the duty on multi-utility vehicles (MUVs) will be reduced -- it currently carries a higher duty of 30 per cent. Besides, it is likely that there will be a rationalisation of duty on tractors under one slab from the current two slabs of 8 & 13 per cent, respectively. M&M being thelargest manufacturer of tractors will stand to benefit the most. The M&M stock has been the single largest gainer in the entire sector, gaining 30 per cent in just one month, and the gains stretch out to 65 per cent over a three month period. In M&M's case, the gains in part are due to the rise in demand for tractors, leveraging on a strong growth in rural incomes (the Economic Survey has put the growth at 5.3 per cent).

The auto component stocks, on the other hand, have been witnessing a lot of negative sentiment. One reason, of course, is the uncertainty of volume growth given the over-capacity in the auto industry. Second, is the threat from imports of components despite the high import duty slabs. Finally, there is an expectation of rationalisation of excise duties on components which currently carry slab rates ranging between 13 and 18 per cent. So there are bound to be some losers owing to the reduction in duty differential. Auto component manufacturers have specifically asked for import dutyprotection, but it is unlikely to happen given that the highest slab of duties is already at 40 per cent. Almost all auto component stocks are at their all time lows. Only odd stocks like Talbros Auto have been seeing some buying interest.

Thomas Cook has bottomed out

The annual results from Thomas Cook was the best in terms of growth in the last three years. Revenues have grown by 27 per cent on the back of strong growth in leisure travel. The bulk of this growth has come in the last quarter, which is traditionally its strongest.

. The fourth-quarter contributed 29 per cent to the total revenue and one third of the net profit for the full-year. This performance has confirmed that the internal changes made last year are begining to work and the company is growing faster than before.

Growth in profits was a little less at 20 per cent mainly due to a sharp increase in interest costs. Even though interest costs are low compared to the scale of operations, it is consuming an increasing proportionof the operating profit. This has been the trend in the last couple of years as a larger proportion of funds are being blocked in current assets, which largely represents a stock of foreign currency assets, both currency notes as well as paid documents. Despite the slower growth in profit, the return on average equity has risen to 26.5 per cent.

The stock seems to have bottomed out after having fallen by more than Rs 100 in one week (slightly over 10 per cent). Analysts expect the rate of growth to accelerate to 25 to 30 per cent for the next couple of years.

Further, the company will be a beneficiary from any depreciation in the rupee for at any given time it has large outstandings of foreign currency assets. For example, as on March 31, 1997-98, the stock of these assets was Rs 21 crore.

-- Aaron Chaze