Telco was in high gear in afternoon trades on Tuesday as the market is generally optimistic that the company will turn out a sterling performance for the third quarter.

The scrip of the Tata group flagship and India's largest commercial vehicles maker climbed 2.29% to Rs 167.50 by 14:25 IST. Around 6 lakh Telco shares had changed hands on BSE till then.

Telco has now risen 8.5% to its current levels from Rs 154.35 on 7 January 2003.

Institutions, retail investors and operators are all buying on the counter in anticipation of solid results from the commercial vehicles company.

Telco is scheduled to unveil its third quarter ended 31 December 2002 results tomorrow (22 January 2003). For Q3, a capitalmarket.com poll of eight automobile analysts expect Telco to post a net profit of Rs 74-87 crore compared to a net loss of Rs 55.54 crore in the corresponding period of the previous year. Net sales are projected to increase by 15-23% to Rs 2,039-2,183 crore (Rs 20.39-21.83 billion).

Telco's results will be bolstered by a sterling showing by the company's commercial vehicles. Margins, as a result, will improve. Besides, the fledgling passenger car segment has not done too badly either in the last quarter.

Earlier this month, Telco said December 2002 sales were at 15,216 vehicles, a 25% growth over the 12,178 vehicles sold in December 2001. Sales for the nine-month period ended 31 December 2002 were 1,42,024 units, 25.3% higher than the 1,13,337 vehicles sold in the corresponding period last year.

However, month-on-month, sales declined marginally by 3% following the lower sales of the car Indica.

Commercial vehicle sales, though, were impressive at 9,787 units, a 39.5% growth over the 7,018 vehicles sold in December 2001 and a 20.6% rise over the November 2002 sales figure (8,113 units).

For the nine-month period, Telco recorded sales of 73,481 units, 33% higher than the sales in the corresponding period last year (55,265 units). Sales of medium and heavy capacity vehicles at 50,561 units, grew 33.2%, and light commercial vehicles at 22,920 units, rose 32.4%.

In the passenger vehicles segment, the company recorded sales of 5,429 vehicles in the period under review. It ended the first nine months of the current fiscal with a cumulative sale of 68,547 units, a growth of 18% over the same period last fiscal. However month-on-month, sales dropped 5.7% from 5,758 units in November 2002.

The fall in passenger vehicles sales is mainly blamed on the sluggish performance of the Indica (at 3,441 units, flat compared to December 2001). The company said that cumulative sales for nine months stood at 51,469 units, a 24.2% growth over the same period last fiscal. The Tata Indigo, launched towards the second half of December 2002, recorded sales of 466 cars for December 2002, Telco said.

Analysts say there are concerns, though, that Indica sales have turned out unimpressive in December 2002. Even so, they insist that the commercial vehicles segment is doing well, so overall, there were no doubts about the company's future profitability, margins being higher in the commercial vehicles segment.

Telco is expected to record further growth in the coming months due to the government's thrust on infrastructure projects, the boom in the replacement market, the shift in consumer preference from one- and two-axle vehicles to multiple-axle vehicles (in which Telco holds No. 1 position), and the increase in demand in the northern region (where Telco has a strong presence). A rise in road transport carrying food grains has also helped the company's growth. Besides, the company has resorted to aggressive cost-cutting and financial restructuring.

For Q2 ended 30 September 2002, Telco's total income (net of excise) went up by 24.6% to Rs 2,165.23 crore (Rs 21.65 billion). The company posted a net profit of Rs 58.80 crore, sharply reversing its net loss of Rs 61.83 crore in the corresponding quarter of last year.

As on 30 September 2002, promoters held 32.2% stake in Telco, while foreign institutions, the public and local institutions held 20%, 16.3% and 21.2%, respectively.

BSE Code: 500570