HDIL
India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Sunday, May 25, 2008
Niraj Cement Structurals IPO Analysis
Investors can avoid the Initial Public Offering of road building contractor, Niraj Cement Structurals. The asking price of Rs 175-190 appears stiff, given the small scale and limited scope of the company’s business, fluctuation in profit growth and high risks specific to the company.
At the offer band, the price-earnings multiple works out to 19-21 times its FY-2008 earnings on the pre-IPO equity base.
The asking price also discounts its estimated FY-2009 per share earnings (post equity expansion) by at least 18 times. Peers of similar size trade at a considerable discount.
On the company and offer
Niraj is a road construction company with most of the projects in the form of sub-contracts from principal contractors. While the company also manufactures cement structurals, this business forms a negligible portion of the total revenue.
The company plans to raise about Rs 60 crore through this IPO and seeks to list the stock at the Bombay Stock Exchange. This would expand the current equity capital by 45 per cent.
The offer proceeds are to be utilised towards purchase of capital equipment and for meeting working-capital requirements.
High volume on the cards
Niraj currently boasts of a massive order-book of Rs 660 crore, amounting to seven times its 2007-08 revenue of Rs 92 crore. This is likely to provide impetus to the revenue growth witnessed by the company.
However, the limited time-frame available for completion of the projects poses a challenge to its execution capabilities. Most of the orders need to be completed within a 12-20 month period. Agreed that the company’s plan (through the IPO proceeds) to increase capacities of its Ready Mix Concrete (RMC) batching plant would hasten the input availability, at least in the projects sites where they are installed. Transporting the RMC units between project sites may pose logistics problems.
In addition, the RMC batching plant planned would have a capacity of 1,44,000 cu. m. of RMC per year as against 20,000 cu.m consumed by it in FY-2008. This essentially implies that despite high orders in hand, the company may have excess capacities after captive consumption.
The sale or lease of the same may not be easy given that the market size for RMC remains limited in India, apart from transportation costs involved. The capital expenditure to be incurred hence holds risk of high costs.
Burdened by interest and taxes
The company’s profit margins have remained in line with other road builders such as C&C Constructions and Roman Tarmat. However, net profits have witnessed a decline since 2005-2006.
Despite surge in revenues, mounting interest costs and taxes have dented the bottomline.
The mounting borrowing cost is reflected in the shrinking interest coverage ratio. While profits (before interest and taxes) covered the borrowing costs by fives times in 2006, the same ratio shrunk to 2.8 in the latest fiscal.
The company has further disclosed its default in payment of interest and repayment of loans to some of its lenders. Taxes have also seen an increase; this apart, the company has stated that it has been claiming deduction under Section 80-IA of the Income Tax Act, a benefit that is no longer available for contractors such as Niraj.
The offer document states that the company has not made any provisions for the additional tax burden either for the current year or for retrospective years from 2000. The provisioning and higher tax burden in future would hurt net profits.
Further, Niraj’s sub-contract status has heightened its risks of non-payment from the principal contractor. Sundry debtors of Rs 103 crore, is higher than full year revenues for 2007-08, indicating legacy receivables and delay in collection.
This could lead to increased crunch in cash flows for the company. The offer is open from May 26-30.
Bafna Pharmaceuticals IPO Analysis
Scalability concerns, low profitability and presence in the highly competitive formulations business without a specific niche, peg up the risks associated with the Initial Public Offering of Bafna Pharmaceuticals.
The 27-year-old company is proposing to offer 40.05 per cent stake to the public and use the net issue proceeds (of Rs 23.55 crore) to mainly undertake brand-building in domestic and international markets, partly repay loans and procure R&D equipment.
The fixed offer price at Rs 40 per share, also does not leave much on the table for investors, as it discounts the 2007-08 (annualised) earnings per share of the company at 37 times, on the post-issue equity base.
The pricing appears stiff compared to similar sized players in the formulations business, as well as other entrenched players engaged in Contract Research and Manufacturing Services (CRAMS) — an area Bafna is targeting through its new facility at Grantlayon, near Chennai.
Though CRAMS is an exciting opportunity for Indian companies, Bafna’s size does not instil the necessary confidence in its ability to quickly occupy a position of strength and profitability in this area.
Bafna has long experience catering to less-regulated countries such as Sri Lanka but only limited experience in carrying out CRAMS in regulated markets.
Though these factors argue against an investment in the IPO, the stock may be worth reviewing, post-listing, with a longer financial record.
Business profile
Bafna Pharmaceuticals’ profits have grown by 12 per cent on the back of 23 per cent growth in net sales on a compounded basis across five years.
The company now draws all of its revenues from its manufacturing facility at Madhavaram, near Chennai; a scale-up in revenues and margins could be expected once the Grantlayon unit gets MHRA accreditation, allowing it to enter the regulated markets of the UK and other European countries.
The company has signed a five-year agreement to supply Simvastatin — a drug to lower cholesterol levels — to a UK company.
However, it will be a little unreasonable to expect Bafna’s Grantlayon unit to make considerable contribution to both topline and bottomline over the next 12-15 months because the business may take time to scale up its client base.
This could put pressure on existing financials as planned brand-building exercises, consisting of significant deployment of human resources in marketing, would see a bulge in expenditure from hereon, thereby shrinking already low operating margins (7 per cent).
Bafna displays high client concentration (top five contribute 80 per cent) and product dependence (top five contribute 65 per cent of sales) — typical of smaller entities.
Bafna plans to further scale up domestic business (exports contributed 30 per cent in last nine months ended December 2007) and launch its own brands as well as cater to new therapeutic areas (life-style diseases).
Challenges to these will arise from the substantial presence of large established players and Bafna’s small scale of operations.
Bharat Forge
Shareholders can continue to stay invested in the Bharat Forge stock. Fresh exposures need not be considered at this point in time as the company is faced with the twin challenges of a slowdown in the US commercial vehicles industry and a pause in the domestic auto industry’s growth.
But the company’s conscious efforts to de-risk its exports business and the foray into the non-automotive sector hold promise over the long term, suggesting that investors need not part with their holdings in the stock. At the current market price of Rs 276, the stock trades at around 15 times estimated consolidated earnings for 2010.
De-risking of export business
To weather the US slowdown, the company has adopted a two-fold strategy. One, it has reduced the export of heavy truck chassis components and has instead concentrated on the supply of passenger car components.
From about 50 per cent of the total exports in 2006-07, the export of truck components has come down to around 38 per cent this year while passenger car component exports have increased by about 10 percentage points during the same period.
Two, the company has focussed on increasing its Europe business. For the year-ended March 2008, exports to Europe constituted almost half the total exports as against 31 per cent the previous year.
Non-automotive foray
In a bid to diversify client base and shield their businesses from cyclicality in the automotive industry, several auto component makers are diversifying by supplying to sectors outside of automobiles. This entails high-value products that also bring in better margins.
Bharat Forge has moved into forging and machining of high-value parts required for the oil and gas, Railways, aerospace and Defence sectors.
The company has recently ventured into the capital goods sector as well. This February, it entered into a joint venture with NTPC (National Thermal Power Corporation) to manufacture forgings, castings, fittings and high-pressure pipings required for power and other industries.
It plans to invest Rs 200 crore initially in this joint venture which will also look at manufacturing power plant equipmentin the near future. Non-auto components business currently contributes around 20 per cent to the revenues but the company plans to double that by 2012.
To serve this end, the company is setting up plants at Baramati and Pune which are expected to commence production in the second half of the current financial year.
To fund this expansion into the non-auto segment, Bharat Forge is also considering a rights issue of non-convertible debentures with detachable warrants for Rs 400 crore. They are also looking at acquiring small and medium companies in the non-auto space.
Financials
On a standalone basis, net sales grew by 12.3 per cent year on year to Rs 580 crore during the fourth quarter, backed by a 23 per cent growth in exports.
Net profits, however, fell 18 per cent to Rs 52.5 crore after excluding extra-ordinary income (profit) of Rs 30.3 crore arising from the consolidation of its overseas operations (excluding Bharat Forge America) into one company, CDP Bharat Forge.
The bottomline has been hit by a Rs 15.8 crore foreign exchange loss on restatement of its foreign currency debt.
Subsidiaries underperform
The company’s fully-owned subsidiaries registered a 4 per cent decline in sales in the fourth quarter. Net profits too fell by about 30 per cent compared to the same period last year.
This can be attributed partly to the subdued performance from Bharat Forge America, which has been hit by the slowdown in US truck sales. Operating margins for the subsidiaries too are at a thin 7.2 per cent, which the company aims to improve to 12 per cent in the next two-three years.
To achieve this, it has embarked on a process of product rationalisation to pull out low-margin products and change product lines, if necessary.
This exercise will help improve margins, but low synergies with the parent company and operations in mature markets such as the US and Europe may pose challenges to a significant improvement in their performance in the immediate future.
Revenue growth for the subsidiaries have so far been lacklustre and earnings have not gained traction since they were acquired, beginning 2004.
But a marked shift to the Europe geography and, hence, the access to a wider clientele indicate that subsidiary earnings may improve in the medium term.
This, along with the revenue flows expected from the non-automotive business, make the stock worth holding on to in the castings and forgings space.
Geodesic Information Systems
Investments with a 12-18 month horizon can be considered in the stock of Geodesic Information Systems, considering its niche business, moderate valuation and good growth prospects. At Rs 181, the stock trades at 11 times its FY-08 earnings and nine times its estimated current year earnings.
With a net profit margin of 49 per cent, much higher compared to other listed, products-focussed technology companies, the valuation appears attractive, especially considering the good growth prospects.
The company has managed a compounded annual revenue growth of 67 per cent and profit growth of 68 per cent over the past three years
Geodesic operates in a niche area in technology. The company derives most of its revenues from developing instant messaging platforms/services and licensing them mainly to enterprises under the ‘Mundu’ brand. Instant messaging is a rapidly expanding mode of real-time communication across the world. A Radicati Group report of August 2007 puts the market size of IM to be $530 million by 2011.
Geodesic’s product (Mundu ICE stack) caters to clients ranging from portals and publishers to telecom operators, mobile handset manufacturers, system integrators and even end-consumers. Geodesic also licenses its instant messaging platform to mobile handset manufacturers and telecom operators, thus providing it with sustainable revenue streams, with scope for expanding margins.
The product’s capability of allowing seamless chat services across Google Talk, Yahoo! and MSN has been a major selling point to drive sales.
Hybrid revenue model
For its enterprise and portals and publishing clients, Geodesic charges a licence fee, a customisation fee, annuity based service charges and charges for upgrades and updates.
For retail customers, it charges a fee based on subscription.
This model clearly provides a sustainable revenue stream.
The significant proportion of licence revenue means that it is also able to de-link revenue growth from headcount growth, by optimising costs.
Client profile provides sustainable business: A recently won deal from Nordisk Mobiltelefon, a European telecom and ISP operator, for providing messaging and Internet radio on the mobile phone, is a typical example of its engagements. Geodesic has won a similar deal from Idea Cellular in India. This allows leeway for clear revenue-sharing arrangements, as downloads or logins to access internet radio on the mobile would be clearly measurable.
The company has also launched its messaging services in Nokia and Sony Ericsson smartphone handsets and has an agreement with players like BenQ. Mio Digi-walker, a key player in the mobile GPS navigation space is another client. The roster also includes portals such as Naukri and bigadda.com, players which constantly upgrade their Web sites and offer more cutting edge-services, providing a sustainable business proposition for Geodesic.
As handset manufacturers increase their smartphone presence in rapidly growing markets such as India and the rest of Asia, Geodesic stands to gain from their expansion.
The company has launched an instant messaging platform for the hugely successful iPhone and may be well-placed to capture a share as and when Apple allows third-party software platforms on its phones. iPhone’s impending Indian foray later this year also represents an opportunity.
Other key developments: This apart, the company has also developed voice over internet protocol (VoIP) products to work with Windows mobile and Symbian-based phones and desktops, for PC-to-PC calls. VoIP is also an ever expanding market providing for cheap communications.
The launch of Amida Simputer, a wireless data processing and communication device, is under trial runs with about three million customers for the government’s proposed multi-purpose national ID card project.
The company has also forayed into publishing by acquiring the Chandamama brand. The subscriptions have increased 60 per cent in the past quarter after the acquisition.
With its Telugu version already launched and Hindi and Tamil versions on the anvil, this may help capture regional audience as well. An increased subscription may lead to more keenness on the part of advertisers, leading to increased ad revenues.
The risks to this business are scalability challenges in executing any multi-million dollar deals, technological obsolescence and competition from platforms such as IBM’s Lotus Sametime.
ENIL
Investors with a long-term perspective can buy the stock of Entertainment Network India (ENIL), which operates the radio channel, Radio Mirchi 98.3 FM. Within the media sector, radio is poised to record the fastest growth in advertising spends, although on a low base. It is also likely to be less vulnerable to any slowdown in advertising spends given its lower advertising rates compared to television and print. As a market leader with a 47-48 per cent share of the radio industry and an increasing presence in the other emerging and promising media platforms – outdoor advertising and event management – ENIL is a unique play within the listed media space.
However, all three platforms – radio, out-of-home media and event management – are yet to mature as advertising platforms. Radio as yet accounts for only 3 per cent of the advertising pie. Hence, a three-five year holding period is necessary to reap the full benefits of this investment. The valuation of the stock, too, from a near-term perspective is expensive. Government approval of TRAI’s recommendations for the radio sector on hiking the FDI limit, allowing operators to operate multiple channels within a city and permitting the broadcast of news, are likely triggers for the stock.
ENIL has successfully rolled out 22 radio stations over the past year, taking its total number of stations to 32. New stations weighed on profitability in 2007-08, with margins on a standalone basis dropping by about 200 basis points to about 24 per cent. Operating margins of its 10 legacy stations are, however, at close to 40 per cent levels. Margins have also improved sequentially, which suggests rising profitability in newer radio stations as well. There is, therefore, significant headroom for margins to expand once the new radio stations start maturing.
ENIL has a presence in all key markets and enjoys a leadership position in most. This makes it a preferred choice for both national and local advertisers. Both the outdoor media and the events management business are growing at a strong pace, on the strength of the promoters’ experience in this business. The outdoor media subsidiary, TIM, is well funded for further expansion in the outdoor business and is aggressively buying properties in key metros. Delays in handing over of properties can affect operations, however, as was the case in the fourth quarter. However, ENIL may be one of the leading players in this emerging media segment.
Saturday, May 24, 2008
Reliance Communications looking at MTN
Anil Ambani group company Reliance Communications (RCom) has initiated talks with South Africa's largest telecom operator, MTN Group. The company officials have discussed the possibility of acquiring majority stake with MTN executives on Thursday, according to sources close to the development.
This follows Bharti Airtel, which was in "exploratory" talks with the South African company, pulling out of the deal.
According to sources, RCom has formally approached MTN Group on Thursday and the company has started discussions for a possible takeover.
When contacted, an RCom spokesperson declined to comment.
This is the second attempt by RCom to acquire MTN Group, as earlier last year the company had initiated talks with the South African company. RCom chairman Anil Ambani had met MTN Chief Executive Officer Phuthuma Nhleko last year, even though the talks were not "successful".
via BS
Bharti pulls out of MTN deal
Bharti has decided to disengage from the ongoing talks with the South African telecom major, MTN, to explore the possibility of a merger between the two "emerging markets" telecom giants.
Bharti has already conveyed its decision to pull out of the talks to the MTN board, after discussions that continued till late last night could not achieve a breakthrough.
According to a statement issued by the Bharti group, the decision to pull out of the talks was prompted by its consideration that the new structure proposed by the MTN board would not have been in the interest of Bharti Airtel's minority shareholders and in its plans for growth as an Indian telecom multinational.
A few weeks ago and at the invitation of MTN board, Bharti had entered into exploratory discussions on the possibility of combining the two 'emerging market' telecom giants. A number of structures were discussed and evaluated between the lead bankers on both sides. An in-principle agreement was also reached on May 16 and a term sheet was initialled between the two lead bankers.
On May 21, according to the Bharti statement, the agreed term sheet was presented to the MTN Board.
However, MTN has now presented a completely different structure, from what was agreed. This new structure envisages Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel, in exchange for a controlling stake in MTN.
Bharti believes that this "convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity".
Bharti also believed that its vision of transforming itself from a home grown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised.
The Bharti statement also pointed out that the reference price at which MTN shares were to be transacted was agreed and frozen at the point of starting the discussion and Bharti would like to confirm that there was no further discussion on the share price of MTN, at any point.
This is in line with Bharti's highly disciplined approach towards any acquisition and consistent with Bharti's philosophy that it will not engage in a bidding war at any stage, the statement noted. Bharti had obtained letters of confidence from over a dozen internationally reputed bankers from the US and Europe to provide funds of over $60 billion to facilitate the proposed merger.
Weekly Report - May 24 2008
Crude oil and inflation worries have been playing party poopers over the past several weeks. This trend is unlikely to change for a while, which will in turn keep investors edgy. On local front, the Government is under pressure to consider a hike in retail fuel prices. Whether it actually materialises or not remains to be seen as the Left parties have already issued a warning to the Congress coalition. Still, given the huge losses being suffered by public sector oil marketing companies, the Government will have to workout some way of resolving the crisis. A hike, howsoever small will push up inflation, which crossed 8% in the week ended March 15. On the flip side, if the Government is unable to hike fuel prices, the oil PSUs will be hit further.
The Government finds itself in a very tough situation and it will take a Herculean task for it to get out of it. Internationally, crude oil will remain the bugbear for markets across the globe. It will require a sharp drop in oil prices for the markets to regain their footing. Predictions from top global brokerages are not encouraging. So, one must brace for a bumpy ride in the near term. FIIs remaining net sellers is another cause for concern as is the weakness in the rupee (not for exporters though). Next week, we will have the F&O expiry, which will increase volatility in the market. The US market is shut for a holiday on Monday. The market is likely to be choppy with a negative bias.
Weekly Newsletter - May 24 2008
SBI to resume tractor loans with immediate effect
State Bank of India (SBI) found itself in the eye of a raging storm after newspapers reported that the public sector banking giant had decided to suspend fresh loan disbursements for buying tractors and other agriculture equipment. "The bank has put on hold financing New Tractor and Farm Mechanisation activities with immediate effect in view of the very high overdues in this sub-segment of agri advances," SBI said in a May 16 circular. The decision will be reviewed based on the progress achieved in reduction of overdues in due course," it added. The circular sparked a major uproar across the country, with farmers, tractor manufacturers and political parties criticizing the bank's move. The outrage reached alarming proportion and eventually SBI had to withdraw the circular. "We regret that our circular dated May 16, concerning tractor loans has been misunderstood and has given rise to concern," SBI Chairman OP Bhatt said. The intent was to sensitise the borrowers to avail the facility under the loan waiver scheme that was announced by the government, in the Union Budget, said Anup Banerjee, deputy MD and head of agri business at SBI. The bank would have resumed lending after the loan waivers were executed, he said. Finance Minister P. Chidambaram said the circular was withdrawn at his behest as it was poorly worded and not justified.
Essar's Esmark bid hits roadblock
Essar Steel too was in the limelight as its proposed acquisition of US-based steel company Esmark ran into some trouble. Russia's steelmaker Severstal matched the Essar group’s offer to buy Esmark for US$17 per share, that it said was worth US$1.2bn. The Russian company’ offer came exactly 20 days after Essar Steel Holdings announced its agreement to acquire Esmark. Severstal appointed Merrill Lynch as financial advisor. The Essar offer was approved by the Esmark board but failed to get the support of the United Steel Workers, the main trade union of Esmark. The union's contract allows it to reject any deal that changes control of the US company. Severstal said it has the support of Esmark's main union. Reports suggested that Essar Steel Holdings may raise its bid for Esmark. The Ruias will submit its revised bid after negotiating with the United Steel Workers, according to reports.
Margins under pressure: ACC
There is tremendous pressure on margins because of rising input costs and the company will have to hike prices once the freeze ends in about three months, ACC said. Core margins had fallen 4% in the January-March quarter and would see more erosion in April-June period, officials said. "Given the current situation in the industry, ACC is under tremendous pressure as costs are going up... not incrementally, but leap-frogging," ACC MD Sumit Banerjee said. He said ACC would raise prices after the three-month freeze is over. "If we can, we will," Banerjee said. Earlier this month, ACC had said it would hold prices for 2-3 months after the Government asked cement companies to help contain inflation. ACC's CFO Onne van der Weijde said core margins are being eroded by 1% each month. Core margins, which exclude interest, taxes, depreciation and amortisation, were 26% in the first quarter ended March, he said, adding they fell despite a 9.5% rise in sales. "For the last 12 months, the company's factory-gate prices are falling and costs are increasing. The next nine months will be no different," Weijde said, adding that cost had risen 18-20% in the year ended April.
HP need not make open offer for Mphasis: EDS
Electronic Data Systems Corporation (EDS) said that Hewlett-Packard (HP) will not be required to make an open offer to the shareholders of Mphasis if the proposed merger with it goes through. HP won't be required to make an open offer for buying Mphasis shares under SEBI's takeover regulations, as a result of the exemption contained in section 3(1)(j)(ii) of the regulation, EDS said in a statement. HP and EDS have noted that certain press reports in India appear to suggest that, if the proposed merger is consummated, HP may be required to make a tender offer for shares of Mphasis, which is a subsidiary of EDS, the US company said. On May 14 , HP said that it will acquire EDS for US$13.9bn. Under the terms of the deal, HP will pay US$25 per share in cash for EDS and expects the deal to close in the second-half of 2008. EDS owns 60.9% in Mphasis and according to SEBI regulations, any company buying 15% or more in another company, has to make an open offer for 20% more shares in the target company.
Tata Steel secures permit to find Iron Ore
Tata Steel bagged permit to find iron ore in Jharkhand as it doubles production to 10mn tons. The permit allows Mumbai-based Tata Steel to prospect an 1808- hectare (4,468 acres) area, the Ministry of Mines said in a statement. Last month, Tata Steel was allowed by the nation's highest court to seek the environment ministry's clearance to mine iron ore in a forest area in Chhattisgarh, where the company plans to build a five million-ton plant. Jharkhand, Chhattisgarh and Orissa account for 70% of the country's coal reserves and half its iron ore deposits.
Tanti talk turns REpower shares volatile
Shares of REpower Systems turned volatile amid reports that Suzlon Energy, which had acquired a 34% stake in the German company a year ago, was looking to sell shares in the open market. "We may think of selling some stake in the market as it will lead to value creation," Suzlon chairman Tulsi Tanti was quoted as saying while announcing financial results for the year ended March. Following Tanti's reported remarks, REpower stock fell to €225 in Frankfurt before recovering. On Monday, it had touched a 52-week high of €243.54. However, later in the day, Tanti denied reports about stake sale in REpower. The company also released a clarification in the evening, saying that there was no change in its overall strategy regarding REpower and that it will proceed as originally planned. Suzlon currently holds 33.6% in REpower and has an option to acquire 30.9% from French energy giant Areva and another 23% from Martifer by May 24, 2009.
Ranbaxy launches operations in Yemen
Ranbaxy Laboratories said it has commenced operations in Yemen, introducing its products to around 350 doctors. Ranbaxy has tied up with Pharma Ltd. (Natco) as business partner for its Yemen operations. Pharma is one of the pioneers in the healthcare sector in Yemen. Ranbaxy has robust plans for the Yemen market and will focus on therapy areas such as Anti infectives, Gastro-intestinal, Cholesterol lowering and Anti-Allergic categories. Ranbaxy is the first Indian company to have established such a major presence in
Educomp Solutions picks 51% stake in Learning.com
Educomp Solutions announced that it has acquired a 51% stake in leading US-based elearning company Learning.com. The majority stake has been acquired at an investment of US$24.5mn, which included the purchase of existing shares as well as an infusion of new capital. Founded in 1999, Learning.com is the premier provider of Web-delivered curriculum and assessment, and partners with schools and districts throughout US to improve student learning outcomes. It currently serves nearly two million students in schools across the US. This investment provides Educomp with unparalleled distribution access to over 800 districts and 2mn students across the US and leverages its substantial content development and IP capabilities to reach out to North American markets.
Firstsource wins 3-year order from Bharti Airtel
Firstsource Solutions, one of the leading global BPO services providers and Bharti Airtel, India's largest private telecom services provider, signed a three-year outsourcing agreement. Firstsource will provide a suite of BPO services covering both voice and backoffice in areas such as customer accounting, VAS provisioning, fraud & credit monitoring, customer service, collections, customer retention and the likes to Airtel from its centres in Chennai and Mumbai. It will set up centres in Vashi, New Bombay and Chennai for Airtel and expects to have over 1000 employees in the first year focused on providing services in English and 8 other regional languages to Airtel’s customers.
Tale of two dubious re-listings
An obscure company by the name KGN Industries caught the attention of most market players after its shares zoomed to a jaw-dropping Rs55,000 in a matter of just a few minutes on May 21. KGN, which is an NBFC (formerly known as Royal Finance) got re-listed and resumed trading at Rs72 on the BSE. Early in the session trading was light, but as time progressed bids for the stock slowly inched towards the Rs1,000 mark. Within no time, the stock's prices surged from Rs10,000 to Rs55,000. Since it was the day of re-listing, as per current rules no circuit-breakers were in place, allowing the stock a free run. Fortunately, BSE officials found that orders were being placed at unrealistic prices. As a result, trading in the scrip was suspended after nearly two-and-half hours of trading. KGN stock closed at Rs15,001 on thin volumes of just 827 shares. As if that wasn't enough market participants were stunned to witness another dubious re-listing the very next day. This time, the beneficiary was a company called Sylph Technologies. The company's shares got re-listed at Rs152, and then surged to an intra-day high of Rs800. The stock had closed at Rs0.80 per share before getting suspended. Sylph Tech closed the day at Rs200 amid volume of only 6,500 shares. Shares of KGN was locked in 5% lower circuit on Friday, slipping from its high to end at Rs4,863. The total number of shares traded on the counter was only 36 shares.
Subscribe to:
Posts (Atom)