The flagship of the B K Birla group has been hitting the upper end of the circuit on BSE for last seven trading sessions. What has generated the sudden interest in the stock of this diversified company with unrelated commodity businesses? Reasons are not far to seek. One, the company is likely to stage a turnaround in the first quarter of the current fiscal. Two, the company has decided to restructure its portfolio and has already put its shipping division on the block.

The company had been suffering financially for the last two fiscals mainly on account of recession in key sectors where operates. For fiscal 1999 it reported a loss of nearly Rs 90 crore. However, the company's fortunes are likely to change as prices of cement, paper andrayon are firming up.

According to analysts, in the first quarter of fiscal 2000 the company should report a net profit of around Rs 25 crore.

The company's cement division contributes 38 per cent to the turnover. Century operates five cement plants with an aggregate capacity of 4.7 million tpa. For the past two years the division was not faring well due to poor offtake and low realisations. However, the scenario is changing fast.

The cement prices are firming up , even the offtake figures are more than encouraging.

Textiles division contributes around 25 per cent to the turnover. The division was hit badly by high cotton prices prevailing in the last couple of years. Now with the bumper cotton corp, cotton prices (main raw material) have fallen by 25 per cent. But at the same time there has been no drop in the realisations, thereby cushioning the profit margins. The company has also worked at improving its raw material logistics thus saving on costs of storage and interest. The division's exportshave also increased substantially during the last fiscal. Paper and pulp division is another major contributor to its turnover. The division has a capacity to produce 37,500 tonne of paper annually and account for 17 per cent of income. Internationally, the pulp and paper prices have started hardening. Paper prices have improved on an average by US $ 25 per tonne.

Rayon division contributes around 15 per cent to the company's turnover. The division is also showing signs of improvement. The company has decided to dispose off its shipping division which was only a drag on its bottomline over the years. The company is scouting for interested parties to buy its shipping division along with ships for an amount of Rs 170 crore. It plans to use the proceeds from this sale for retiring its high cost debt and thereby reducing interest pressure on its bottomline. Other than poor demand, high interest cost has also made a dent in company's bottomline in the past couple of years.

All these are adding up for CenturyTextiles to make a comeback on the investors buy list. This market favourite of yesteryear is expected to settle around Rs 80-90 in the next couple of months.