The optimistic market view is mainly on account of improved performance and expectation of a better result. Performance in the recent past has been impressive. For instance, during the first nine months of 1998-99, the company recorded a 60 per cent growth in sales. But what is impressive is the fact that the operating margins have improved from 17.7 per cent to 20.13 per cent. This improvement in mainly on account of low raw material prices. Volume growth also helped, which was mainly on account of the acquisition of manufacturing facilities of Standard Batteries last year. The net profit too managed to record a growth of 62 per cent to Rs 29.42 crore, netting an annualised EPS of Rs 10.89.

Forthe future, although sales growth is unlikely to be repeated, a positive demand outlook coupled with strong market share augurs well for the company. As for profit margins, cost control, restructuring and lower raw material prices would come in very handy. And in that case, the market would have no option but to give it a higher discounting. The technical position is also in favour of a higher price multiple. Unless the price dips below Rs 183, the outlook for the stock continues to remain positive, and a sharp rally cannot be ruled out.

Blue Dart - will have to perform
Blue Dart stock had bottomed out in mid-1998 and since then, the performance has been impressive. From a bottom of Rs 19 in July last year, the stock has recently touched a high of Rs 114. The counter has also witnessed improvement in liquidity. Even despite an overall negative sentiment, the correction on this counter has not been much and the stock was available at Rs 103 on Thursday.

The credit for this sustained uptrendshould strictly go to management efforts which has manage to record a smart turnaround in its working. As against a net loss of Rs 4.24 crore in 1997-98, for the first nine months in 1998-99, the company has already posted a net profit of Rs 4.88 crore.A major improvement has witnessed during the second and the third quarter. As a result of higher value addition, there was a steady growth in revenue resulting in higher profit margins.

Income from operation improved from Rs 38.68 crore in the first quarter, to Rs 42.92 crore in the second and Rs 43.05 crore in the third quarter. At the same time, expenditure during the second and the third quarters remained unchanged at Rs 39.4 crore. A focus on higher value services will continue to ensure revenue growth. The company has recently entered into a regional service participation agreement with the Franch Express which has resulted in expansion of its network to 516 locations in Southern India. The company has also tied up with Cargolux, the Luxembourg-basedCorgo Airlines.

While Blue Dart has made a smart come back, Elbee, another player in the courier sector has failed to do so. The company's performance is far from impressive. For the period June-September 1998, the total revenue stood at Rs 32.91 crore whereas the loss stood at Rs 3.05 crore. While revenue for the consecutive quarter (September-December) improved to Rs 24.78 crore, the company has also managed to reduce it losses to Rs 1.65 crore. The stock market is however yet to take this improvement seriously as the price has failed to record major gains. The only positive sign for the scrip, that is visible is the fact that the liquidity has shown a smart improvement in the past two months.

For the future, as far as the Blue Dart stock is concerned, unless the growth trend is maintained, the stock is unlikely to sustain the rally as most of the positive changes have been factored in at the current price. As for Elbee, the uptrend it yet to start.