The stock, which touched the upper circuit on Monday, has doubled since February. On Monday, the scrip closed at Rs 53.9.

Mumbai: At least five investors have taken large bets on shares of Punjab Alkalies and Chemicals (PACL) in the run-up to the dramatic turnaround of the company where the Punjab government owns 33.5 per cent of the equity.

Sukhbir Singh Dahiya and Jagbir Singh Ahlawat, who have business dealings with PACL, have together accumulated 6.6 per cent of the stock. Their family members — Prerna Ahlawat and Dayawati Dahiya — have purchased 2.25 per cent and 2.17 per cent, respectively. Himalaya Alkalies and Chemicals, where Sukhbir Singh Dahiya is a director, has picked up 1.56 per cent, while Nipun Khosla, another investor, has bought 1.97 per cent. All these transactions happened between January and March 2018.

PACL, which has been losing money for more than four years and has been unsuccessful in pushing through a pestment plan, reported a net profit of Rs 10 crore (after adjusting for one-off or exceptional gains). The stock, which touched the upper circuit on Monday, has doubled since February. On Monday, the scrip closed at Rs 53.9.

Besides a surge in caustic soda price (following supply cuts in China), a sharp drop in electricity cost contributed to PACL’s improved bottomline. Sensing the benefits that could accrue to the company, Punjab State Co-Op Supply & Markteting Federation Limited also bought 1.52 per cent in PACL.

The company suffered losses of Rs 11 crore in the December quarter and Rs 7 crore in the quarter ended March ’17. Investors buying into the company over the past few months may have been driven by the belief that the state government would ensure cheap power. PACL’s expenses on power fell from 79 per cent of sales to 43 per cent — in line with the manifesto of the Congress government in Punjab to lower power tariff.

The company’s operating profit margin — the ratio of EBITDA (earnings before interest, tax, and depreciation) to sales — rose to 24 per cent from negative a quarter ago. If power tariff stays low and caustic soda prices remain firm, PACL would be in a position to lower interest outgo and shore up top-line during the year.

Investors would also track whether the state government revisits the pestment plan which fell though on several occasions in the past one decade.

Among the recent investors, Sukhbir Singh Dahiya and Jagbir Singh Ahlawat are not typical traders but investors who are familiar with PACL’s business and operations. Dahiya and Ahlawat are directors of Flow Tech Chemicals, which, according to PACL’s 2015-16 annual report, was allowed to set up a chlorinated paraffin wax plant in PACL’s complex to reduce PACL’s cost of disposing chlorine, a hazardous chemical and a by-product in caustic soda production. (Flow Tech uses chlorine as raw material to produce paraffin wax.) The combined direct stake of the Ahlawat and Dahiya families is more than 11 per cent.