Monday, January 12, 2009
 Market Blockbusters
Family truce turns Bajaj Hindustan sweet
Clutch Auto under pressure on slowdown in the automobile sector
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* Auto parts maker Clutch Auto lost 2.1% to Rs 23 on 24 December 2008 after foreign fund Morgan Stanley Mauritius Company bought 91,968 shares from another foreign fund Swiss Finance Corporation Mauritius at Rs 23.65. The stock fell further to Rs 22.50 on 26 December 2008, before bouncing back to Rs 23.50 on 31 December 2008. The scrip ended unchanged at Rs 24.65 for the fortnight ended 2 January 2009.

The auto component sector, which depends on original equipment manufacturers for its growth, is a victim of a sluggish domestic sector and a recession-hit global export market. Clutch Auto manufactures clutches and other components and spares for the automotive sector. Its clients include Tata Motors, Maruti Udyog, Escorts Tractors, Bharat Earth Movers and state transport undertakings.

* Genus Power Infrastructure jumped 11.3% to Rs 111.15 on 24 December 2008 after Morgan Stanley Mauritius bought 1.32 lakh shares from Citigroup Global Markets Mauritius at Rs 99. Amid a bout of volatility, the stock firmed up further to Rs 118.50 on 31 December 2008. The scrip rose 12.47% to Rs 119.95 in the fortnight. The company undertakes turnkey engineering, procurement and construction of power transmission and distribution projects.

* Kalyani Steels (KSL) moved up 0.5% to Rs 58.30 on 24 December 2008 after Morgan Stanley Mauritius Company bought 3.21 lakh shares from Citigroup Global Markets Mauritius at Rs 56.50 a piece. The stock firmed up further to Rs 59.15 on 31 December 2008. The scrip rose 1.32% to Rs 61.05 in the fortnight.

KSL manufactures forging quality carbon and alloy steels. Its clients include group company Bharat Forge, Mahindra and Mahindra and Tata Motors.

* Kamat Hotels India lost 0.22% to Rs 43.90 on 24 December 2008 after Morgan Stanley Mauritius Company bought 2.44 lakh shares from Citigroup Global Markets Mauritius at Rs 42.75. The scrip moved in a narrow range of a low Rs 39.60 and a high of Rs 45.90 in the period 26 December 2008 to 31 December 2008. The stock gained 3.3% to Rs 45.15 in the fortnight.

Kamat Hotels’ flagship property, The Orchid, in Mumbai is in the process of adding 130 rooms to its current inventory. The additional rooms in the Mumbai property will be a separate entity, branded as Orchid, but positioned higher than the existing hotel. While the new hotel will continue to operate and function as an ecotel, it is likely to be re-branded as a ‘premium’ or ‘upscale’ Orchid hotel.

* KNR Constructions, which designs, engineers, constructs and maintains roads, was up nearly 2% to Rs 34.10 on 24 December 2008 after Morgan Stanley Mauritius Company bought 5.41 lakh shares from Citigroup Global Markets Mauritius at Rs 33.50. The stock extended gains and settled at Rs 40.05 on 31 December 2008. The stock has staged a solid bounceback from a recent low of Rs 22.25 on 4 December 2008. The scrip rose 22.1% to Rs 41.60 in the fortnight.

* Rain Commodities advanced 4% to Rs 88.65 on 24 December 2008 after Morgan Stanley Mauritius Company bought 3.8 lakh shares from Swiss Finance Corporation Mauritius at Rs 84. The scrip firmed up to Rs 90.25 on 31 December 2008. The stock rose 5.76% to Rs 95.45 in the fortnight. In early December 2008, Rain Commodities, which markets cement under the Priya Cement brand, completed a buyback programme, resulting in reduction of equity capital to Rs 70.83 crore from Rs 72.03 crore.

* Ratnamani Metals & Tubes went up 2.65% to Rs 56 on 24 December 2008 after Morgan Stanley Mauritius bought 10.41 lakh shares from Citigroup Global Markets at Rs 52.50. The stock slipped to Rs 51.85 on 31 December 2008. The scrip lost 6.2% to Rs 54.85 in the fortnight. Ratnamani Metals manufactures stainless steel seamless and welded pipes and tubes of various diameters. In addition, it undertakes job-work for drawing of pipes.

* Sugar maker Bajaj Hindusthan spurted 3.68% to Rs 66.10 on 30 December 2008 after Bajaj Group chairman Rahul Bajaj bought 3.98 crore shares, or a 28.2% stake, in two block deals transacted on the Bombay Stock Exchange. Family investment firms Bachhraj Co and Jamanalal & Sons sold 3.46 crore shares at Rs 64 and 51.9 lakh shares at Rs 66, respectively, comprising the inter-se transfer among the promoters as part of the settlement of a dispute between the promoter Bajaj family.

In a separate transaction, Rahul Bajaj bought 14 lakh shares on the same day at an average price of Rs 64.34, taking his total purchases to 4.12 crore shares, or 29.2% of the company’s equity. The stock extended gains to settle at Rs 72.75 on 31 December 2008. The scrip rose nearly 16% to Rs 72.55 in the fortnight.

Earlier, the Bajaj Hindusthan stock had scaled up 4% to Rs 62.70 on 23 December 2008, after the company said Rahul Bajaj will buy a little more than 29% equity from the other promoters at the market prices on 30 December 2008 and will transfer his stake to his brother Shishir Bajaj as part of a family settlement. The next step will involve Shishir offloading his stake in Bajaj Auto and other group companies controlled by Rahul Bajaj and his cousins, Niraj, Shekhar and Madhur, over the next few days. This would be between the Bajaj family members through off-market block deals.

* Navneet Publications surged nearly 10% to Rs 44.85 on 30 December 2008 after three domestic non-institutional investors bought a total 71.7 lakh shares from Aruna Fund – an FII sub-account. The stock rose almost 8% to Rs 45.25 in the fortnight.

Analysts expect Navneet’s core publication business to bounce back in the second half of the current financial year ending March 2009 (FY 2009) on higher sales volume and price hike. The growth in the first half of the year was impacted by the Union government’s initiative to provide free books in schools under Sarva Shiksha Abhiyan programme. With no major syllabus changes scheduled in FY 2009 and FY 2010, Navneet’s publication business is likely to grow at a compounded annual growth rate of 8.2% over FY 2008-10, according a recent report by a domestic brokerage.

* Infrastructure finance firm SREI Infrastructure Finance shed 2% to Rs 40.75 on 30 December 2008 after foreign fund Sanlam Asset Management Ireland bought 7.47 lakh shares at Rs 41.50. The name of the seller was not known. The scrip bounced back later to settle at Rs 46.10 on 2 January 2009 on a likely stimulus package from the government. The stock rose about 1% in the fortnight.

To ease cash woes of non-banking finance firms (NBFCs) lending to the infrastructure sector, the government in its second stimulus package announced after trading horus on 2 January 2009 allowed such firms to access external commercial borrowings from multilateral or bilateral financial institutions with prior approval from the Reserve Bank of India. Besides, PSU banks will provide a line of credit to NBFCs financing commercial vehicles. Moreover, a special purpose vehicle will be designated to provide cash support against investment grade paper to these entities. The scale of liquidity potentially available through this window is Rs 25000 crore.

As per recent reports, SREI’s loan disbursals are expected to be very low at Rs 400-500 crore in the quarter ending December 2008 as it is cash-strapped after the global credit meltdown. The private sector non-banking financing institution had disbursed Rs 5000 crore in the six months ended September 2008 as loans to fund infrastructure projects across India.

* Taneja Aerospace & Aviation jumped 7.2% to Rs 30.40 on 30 December 2008 after foreign fund Marshal India Select Fund bought 3 lakh shares from Citigroup Global Market Mauritius at Rs 29. The scrip fell nearly 3% to Rs 32.20 in the fortnight. Taneja Aerospace & Aviation manufactures and markets civilian aircraft, and offers air charter services.

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Volume No23 Issue No 23
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Markets
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Taxation
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Investment Strategy
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Scoreboard
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Commodity Watch
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Tax Matters
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Consolidated Scoreboard
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As credit market softens, stocks harden
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Creeping acquisition
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Family truce turns Bajaj Hindustan sweet
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Market Snapshot - Part I
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Market Snapshot - Part II
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Market Snapshot - Part III
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Movers and shakers - I
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Movers and shakers - II
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On a recovery trail
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