The former has attracted considerable buying interest on the bourses thanks to its excellent first quarter results, while the latter is rising on hopes of a turnaround. On the Mumbai Stock Exchange, Pricol has appreciated by 46 per cent in the last few trading sessions to Rs 190, while VDO India has gained 17 per cent to Rs 46.70 since July 10.

With Pricol setting off the trend reversal pattern with a net profit growth of 110 per cent in the first-quarter of 1999-2000, industry watchers expect VDO India to follow suit. Both Pricol and VDO India faced tough times in the last financial year on account of suppressed demand by the auto sector.

While the former saw its bottomline dipping by 42 per cent, thelatter slipped into the red with a net loss of Rs 4.68 crore. But things seem to be improving now thanks to the surge in demand from the automobile industry.

In the first-quarter of the current fiscal, Pricol has posted a net profit of Rs 3.88 crore compared with Rs 1.84 crore in the corresponding period last year. Aiding the bottomline growth is the 40 per cent jump in sales from Rs 45.2 crore to Rs 32.2 crore. Pricol manufactures dashboards, oil gauge, oil pumps and speedometers which are used in two-wheelers, cars and jeeps. About 75 per cent of sales is in the OEM market, while the rest is in the replacement market. The Coimbatore based company has a technological tie-up with Denso Corporation of Japan, which also has taken an equity stake in the company.

The company has recently developed a new product `idle speed control valve', which is one of the few components that go into the production of fuel injection system. With the Supreme Court's order on Euro norms, all petrol vehicles will now have tofitted with fuel injection systems in the next few years. Denso Corporation, which is already in the process of setting up a fuel injection system unit to cater to the requirements of Maruti Suzuki, will be sourcing the valves from Precol. This should give a major boost the company's bottomline.

This coupled with revival in the automobile sector should see the company's earnings per share rise to over Rs 22 in the current fiscal as against EPS of Rs 10.66 reported in the last fiscal.

Another reason for the buying interest in Pricol is the 40 million yen loan extended to the company by its parent. The loan agreement has a provision for converting debt into equity at the option of Denso for a price not less than Rs 200 per share. Although the share price has moved up to nearly these levels, analysts say with the scrip trading at 8.6 times its expected earnings, there is some more steam left.

VDO India, a subsidiary of Mannesmann VDO of Germany, currently manufactures dashboards for passenger cars, but nowplans to enhance its product-range.

Some of the new products on the anvil are automotive information systems, control and fuel systems, production of completed vehicle modules such as cockpit and integrated tank modules. The German parent, which earlier held only 40 per cent of the company's total paid-up capital, acquired majority control in fiscal 1998 by buying out Mahindra & Mahindra's equity stake in the company.

The company markets its products under the `Yankay' brand. Although analysts expected VDO India's performance to improve after German company acquired majority stake, the recession in the user industry saw the company's net turn negative. With the automobile industry on the recovery path, VDO India is likely to come out of woods in the current fiscal. Analysts expect the company's turnover to be over Rs 55-58 crore in the current fiscal.