SEL Manufacturing gains on possible Russian acquisition

SEL Manufacturing Company moved up 0.76% to Rs 264 at 11:10 IST on BSE on reports the firm may buy a Russian company for $100 million to $150 million.

The scrip had touched a high of Rs 273 and a low of Rs 248.95 so far during the day. The stock had hit a 52-week high of Rs 330 on 7 March 2008 and a 52-week low of Rs 76.65 on 22 October 2007.

The small-cap integrated multi-product textile company has an equity capital of Rs 15.22 crore. Face value per share is Rs 10.

At the current price of Rs 264, the scrip trades at a PE multiple of 7.37, based on Q3 December 2007 annualised EPS of Rs 35.80.

According to reports, the company is in talks with retail firms in Russia for acqusition and the negotiations are in the final stage. The deal, which is likely to be sealed in the second quarter of the next fiscal, would be in the retail textile and home furnishing segment and if necessary, SEL would dilute minority stake to fund the buyout, the reports added.

Reports suggested that SEL exports 100% of the garments it produces, primarily to Russia and the Middle East. Thus, acquiring retail firms in Russia can help it tap the markets better.

The net profit of SEL Manufacturing Company rose 236.3% to Rs 13.62 crore on 103.2% rise in sales to Rs 99.87 crore in Q3 December 2007 over Q3 December 2006.

SEL manufactures and exports readymade garments, knitted and dyed fabrics and cotton yarn. It has facilities in Ludhiana (Punjab) and Baddi (Himachal Pradesh).