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Disk-Maker on a Roll

The recent rally in Moser Baer saw many diversified equity funds chase the stock. The removal of the anti-dumping probe by the European Union and the possible hike in the price of CD-RWs has been largely responsible for this.

While every other tech company bites the dust, Moser Baer has managed to hold steady. In fact, this company, which is one of the world's largest manufacturers of optical and magnetic storage products, has seen its fortunes soar recently on the bourses. Its share price has gained 78 per cent in 2003 to reach Rs 275 on May 22, 2003. The reasons for this phenomenal rise are many, including the removal of the anti-dumping probe by the European Union and the possible hike in the price of CD-RWs.

As a result, mutual funds have taken a sudden fancy to this stock. For instance, the number of diversified equity funds holding this stock went up from five in December 2002 to 10 in February 2003. In April 2003, Moser Baer found a place in eight fund portfolios. One of the biggest beneficiary of this rally in the stock has been Sundaram Select Midcap. When the CD maker's share price had hit a 52-week low in November 8, 2002, Sundaram Select Midcap fund had a 3.2 per cent exposure to the company. Since then, the stock is up 98 per cent, as on May 22, 2003. To capitalise on it, the fund booked profits by selling a large part of the stock in March 2003.

On the other hand, Birla Advantage and Templeton India Growth Fund (TIGF) haven't been so lucky since they bought the scrip at a high price and sold low. However, recently, Birla Advantage Fund bought the stock again in February 2003 and has benefited so far from the recent rally. While a buy-and-hold strategy proved costly for TIGF, the same strategy worked well for UTI Master Value fund, although Moser Baer formed a small part of the fund's portfolio (0.6 per cent).

Apart from these, other funds like Franklin India Prima, HSBC Equity and Magnum Multiplier Plus have also made substantial gains. All three bought Moser Baer in January this year. Today, Moser Baer is among Franklin India Prima's top three holdings (6.83 per cent, as on April 30, 2003). Interestingly, two equity funds from Reliance Mutual fund—Reliance Growth and Reliance Vision—have moved in and out of the stock, without realising any gains from it. For the moment, Moser Baer is a prized possession for some funds.