Earlier this month, the scrip had fallen from Rs 542 to Rs 464. But a 3866 per cent jump in net profit has seen investors flocking back to the counter. Analysts expect the scrip to continue its upward march. With the recession in the economy expected to be end soon, purchasing power of people would go up, which means more sales for this camera and photographic film company.

Kodak's performance in the third-quarter confirms this. The company's sales have improved by 25 per cent from Rs 106 crore to Rs 132 crore. Net profit has galloped from Rs 15 lakh to Rs 5.95 crore. This rise in the net profit was despite a provision of Rs 4.5 crore for taxes and another Rs 1.5 crore for contingencies. The company's equity, too, has risen in the last quarter from Rs 6.99 crore to Rs 11.19 crore consequent to a rights issue at Rs 175 per share. The proceeds of the rights issue are being used to finance the regular capital expenditure plans and working capital requirement. As the interest burden and depreciating rupee were responsible for the squeezing profit margins. the company plans to reduce its debt by supplementing equity and to ward against a fluctuating rupee, the company has recently set-up a base in Goa.

Another factor that is responsible for the rising stock price is company's plan to develop software in India.

The parent Eastman Kodak Limited, UK (which holds 74 per cent stake), is already developing software in the US in collaboration with companies like Intel, AOL and Picture Vision. The company plans to be a significant player on the Internet. In January 1998, Kodak set up a software product development centre in China. The company plans to have a joint venture with an Indian software company which will help it `localise' Kodak's software products for the Indian market. In future, the joint venture or partnership will help Kodak develop products for the Indian and other markets. Analysts say the company will foray into software only if demand for its digital imaging products picks up in India. The company has recently launched digital science scanners to meet the needs of large corporate houses, government departments, banks, insurance companies, healthcare units and publishing sector.

The company also plans to get into the theatre business in India. Analysts say the company will be investing in multiplexes in a joint venture with an Indian partner. This can initially put pressure on the company's bottomline but should pay well in the long run. Given its past track-record and strong technical backing, Kodak India appears set to sustain a healthy earnings growth rate.