In our earlier article series, “Which of India’s Top 10 “Family Named” Stocks is Most Valuable?” we discussed about ten companies with “Family” names like Birla, Bajaj, Dalmia etc. We also compared Mukesh Ambani and Anil Ambani groups previously in “Mukesh Ambani vs Anil Ambani : Which Brother's Companies are the better Investment?”. Let us now analyze the Birla Groups from a stock market perspective.
Basis for our analysis:
- Only those group companies belonging to Group ‘A’ or ‘B1’ (which are also traded at NSE) will be discussed here. As I have mentioned earlier, some brokers place restrictions in online trading of other group stocks; there is no point in analyzing such stocks if one can’t trade those.
The Birla Family:
The Birla Group was founded by Baldeodas Birla and it is one of the oldest business houses in the country along with the Tatas. Birlas supported the nation during freedom struggle. They were close family friends of Mahatma Gandhi. They are also known for their philanthropic and social work like the Tatas. Birla Institute of Technology & Science is a premier educational institution in the country. Aditya Birla Group’s Tanfac Jan Seva Trust shared half the cost of constructing 119 houses in Cuddalore district of Tamil Nadu, which was affected during the 2004 Tsunami.
Mrs. Rajashree Birla presenting a symbolic key to
Cuddalore district collector Gagandeep Singh Bedi
The Birla Family Tree is shown below.
The following companies are managed by MP Birla group.
- Birla Corporation consisting of Cement Division, Jute Division, Synthetics Division, Carbide and Gases Division, Vinoleum Division & Auto Trim Division
- Universal Cables which manufactures power/instrumentation cables and capacitors
- Vindhya Telelink which is involved in jelly filled telephone cables business
- Birla Ericsson Optical which manufactures fibre optic cables
- Optic Fibre Goa Limited
- Hindustan Gum & Chemicals Limited
- Birla DLW Limited
- Birla Financial Corporation Limited
Summary:
| Scrip/NSE Ticker | BSE Group | Scrip Code | Price 15-Nov |
| Birla Corporation (BIRLAJUTE) | A | 500335 | 321.90 |
| Universal Cables (UNIVCABLES) | B1 | 504212 | 98.40 |
| Vindhya Telelink (VINDHYATEL) | B1 | 517015 | 243.70 |
| Birla Ericsson Opticals (BIRLAERIC) | B1 | 500060 | 23.90 |
The following table shows the key financial ratios:
| Scrip | P/E | P/BV | Gain since 01-Jan |
| BIRLAJUTE | 6.86 | 3.77 | (5.28) |
| UNIVCABLES | 12.87 | 1.45 | (4.37) |
| VINDHYATEL | 112.99 | 1.29 | 82.21 |
| BIRLAERIC | - | 1.05 | 4.14 |
Let us now discuss the medium term technical scenario of these stocks.
- The weekly chart of Birla Corporation suggests that the stock had failed to close above its previous resistance at 372 made during the week ending Jan 26, 2007. It has however, not broken the support trendline as yet. A bearish engulfing pattern was formed near the resistance; however this could not be confirmed during the week that followed. We will need to wait for a technical confirmation in the weeks to come.
- The medium term chart of Universal Cables indicates that the stock had failed to close above the resistance trendline. The support however, has not been broken yet. It had formed one bullish piercing line pattern and two bullish engulfing patterns; but these reversals could not be confirmed. Like Birla Corporation, the current trend is unclear.
- Birla Ericsson Optical has been an unwanted commodity in the stock market since last 18 months. It has fallen from a high of 39.95 in May 2006 to a low of 15.60 in April 2007. This company declared a net loss of Rs.0.63 crores for the financial year 2006 – 07. However, during the last two quarters it has declared meagre profits. The stock has not been able to break resistances at all in the last 12 months or so. It has to close above 25 on a weekly basis for uptrend to begin.
- Vindhya Telelink has formed a bullish inverse head and shoulder pattern and the stock had broken its resistance trendline. It usually takes long periods of time for forming these type of chart patterns and the stocks invariably gain a lot. The medium term technical target for the stock works out to 261 when considering the low of 87.20.
Conclusion:
Apart from Vindhya Telelink, the other three companies from MP Birla Group have been underperformers this year. Their technical picture is also unclear.