For the third quarter, CIL reported a 42 per cent increase in profit after tax, largely on the back of strong export growth and an expansion in margins. Its exports are mainly to the parent company's overseas network. A 138 per cent surge in export revenues has managed to push up Profit Before Tax (PBT) by one third; and resulting in the strongest period of growth so far in the current year. In fact, the company has managed to exceed its last year's entire export revenue within the first three quarters so far.

The performance from CIL has, no doubt, given a strong push to the stock. But there is a significant interest brewing in CIL, owing to the emphasis it has begun to put on information technology, as a business.

CIL has set up an IT subsidiary, which will be looking at implementing all of its own IT needs, and simultaneously, will look at implementing solutions for others. The parent company and its subsidiaries will play a large part in growing this business and will also be its largest customers; especially considering that CIL will be involved with upgrading their systems. It will also focus on the e-commerce segment both in India as well as for its parent company; hence the room for a revaluation.

Gramaphone Company
This stock is another example of a rerating triggered by an expansion in the bottomline and sustained by its venture into e-business. The Gramaphone Company of India, long considered to be a rather dormant player in the music business, had made a significant foray into e-commerce over the last year, having begun retailing music cassettes and compact discs over the Internet.

This has already given a considerable boost to the perception of the company, and has enhanced its valuation. This effect will continue, especially since it is planning to enhance its presence in e-commerce.

For the third quarter, there has been considerable improvement in earnings y-o-y. Profit after tax has almost doubled from Rs 0.29 crore to Rs 0.52 crore, while the profit for nine months has increased by over 50 per cent from Rs 2 crore to Rs 3.22 crore. The profit is lower as compared to the preceding quarter mainly due to a sharp reduction in other income.

The stock has nearly tripled during the last one quarter, from a low of Rs 400 at the beginning of October 1999, until the present, where it is trading at Rs 1,350.