Once a turnaround has been effected, say brokers, the market tends to treat these companies with a less favourable eye. Mere profits aren't enough; management perception, earnings' growth, industry scenario, etc. assume an important role. And rightly so, as these are necessary paradigms for taking a long-term view of a stock.

Consider the case of ITI Ltd. The public sector telecom equipment supplier has seen an impressive growthin net profit rise after staging a turnaround in fiscal 1997. The company has entered the new year with an order position of Rs 1,000 crore and has set a sales target of Rs 2,000 crore for FY 2000.

The company has also started marketing non-ITI products in India in order to have a better product-basket and offer total solutions. However, on BSE, the stock quotes at a PE multiple of 7.9, much below its peers. One factor for the relatively low discounting could be ITI Ltd's large equity base of Rs 88 crore, yielding an unattractive earning per share of Rs 2.3. To top it, the company has a very large work-force, resulting in a huge wage bill.

On the contrary, take the example of Deepak Nitrite. Apart from consistently improving its financial performance, Deepak Nitrite has shifted its focus to export to grow faster. Earlier, the company focused on the domestic market and import substitute products. It has now changed from intermediates (which are viewed as commodities) to the high-margin specialityintermediates.

From an export turnover of Rs 9.33 crore five years ago, exports have now crossed the Rs 35-crore mark. In the first-quarter of 1999-2000, the company earned a profit of Rs 3 crore and hopes to end the year with a net profit growth of 20-22 per cent. With the prospects of its user industries looking up, marketmen are upbeat on Deepak Nitrite.

Bajaj Hindustan is another stock which is quoting at higher than industry average. After coming out of the red in FY 1997, Bajaj Hindustan has managed to brave the rough weather in the sugar industry. Despite the low price and cheap imports, Bajaj Hindustan has recorded an impressive growth of over 30 per cent.

The company has tightened its belt after coming out of losses and the effective management measures have improved the financial strength of the company. Thanks to the fact that the levy quota price for the current year is higher than last year and Bajaj Hindustan's option to shift majority of its production to its incentive unit in UP,marketmen have started taking positions in the counter.

Vashisti Detergents, which manufactures toilet soaps, detergent powders and bars on contract for Hindustan lever, has improved up on its performance after turning in losses at the net level till 1996-97. Vashisti returned to profitability in 1997-98. Although Vashisti does not sell under its own brand name (which results in a lower discounting than rival P&G), given that its fortunes are largely insulated from economic and seasonal vagaries and its long-term supply arrangement with Hindustan Lever, Vashisti's earnings are expected to remain stable. Plus, the ability to increase product prices in tune with the rise in input costs enables the company to sustain its margins.

C G Igarishi Motors, a Thapar group company, is riding the auto ancillary boom in the market. The rise in the stock is not surprising as the company has nearly doubled its sales income and posted a massive jump in net profit for the quarter-ended June 1999 by ensuring cost benefitsto customers and quality.

The company manufactures motors and armatures for automobiles, appliances, office equipment and power tools. The company has earned a net profit of Rs 98.54 lakh on net sales of Rs 11.35 crore. The company exports to the United States, Europe and Australia. With the prospects of the auto sector looking up, the future of the company looks bright.