And even for this bullishness, the credit goes to the buy-back scheme. In October, the company announced its plans to buy-back its shares at a price of not more than Rs 200. The announcement had a positive impact on the stock price but the price nowhere came close to Rs 200. Nor did it showed a sharp fall.

The recent restructuring will give Sterlite an opportunity to focus on its metal business, the market may not give very high discounting in the medium term, as it does with other commodity stocks. As for fundamentals, there has been a rise in copper prices in domestic as well international markets. This augurs well for its financials as it would mean a higher margins for Sterlite. The difference in price between copper concentrate, and refined copper defines the margins for Sterlite, which is called treatment/refinening charges (TC/RCs).

For the first quarter ended September 2000, sales stood at Rs 821.22 crore - a growth of 82.55 per cent over Rs 449.85 crore in the corresponding period in the previous year. At the same time, profit at the net level risen from Rs 21.17 crore to Rs 35.49 crore. Undoubtedly, the performance was impressive by any standard.

As for future, with a positive scenario for the sector, and continuous focus to reduce the cost, the company is expected to do well in the near future. The company is expanding its smelter capacity from 1.2 lakh tonnes to 1.5 lakh tonnes. This project is likely to be commissioned by March 2001 which will reduce the cost.

The company also plans to acquire two copper mines in Austria which will provide a further cost-advantage over its competitors. Overall, margins are expected to remain firm, and while the volume growth will ensure sustained growth in earnings. While fundamentals appear favourable, one can not expect substantial growth in stock price as market discounting is unlikely to show a major jump from the current levels. Whatever support the stock is getting at the current levels is mainly due to its buy-back scheme.

From technical point of view, the stock has a good support at Rs 145 which should be used as stop loss level for long positions.

Deepak Singh Tanwar