Tech Mahindra (TM) and parent M&M (60:40 ratio) have announced the acquisition of Pininfarina, a listed Italian auto design and engineering services firm, at an EV of 81 million euros. This acquisition would provide engineering design capabilities and access to a few European automakers. We would have liked if TM had put its cash to acquire capabilities in the digital or financial services domain, instead. This acquisition, although small, combined with the recent foray into payments bank is not an optimum utilization of cash in our view. PINF provides engineering design services (93% of revenues) and some spares to automakers such as BMW, Ferrari, Peugot, Fiat, GM, Alfa Romeo and Maserati. It has been loss-making for past few years (loss at the EBITDA level in 9MCY15) and has undergone debt restructurings. We would have preferred TM acquiring digital capabilities or a firm in the financial services vertical. Recent foray into payments bank and now this acquisition is not the best use of cash, in our view. TM needs to be prudent on cash management or else risk losing investor confidence in capital allocation decisions. Delays in deal closures would work against TM in the short term; else we like TM leadership in telecom and solid positioning in manufacturing. Valuations are inexpensive and riskreward is attractive.
Posts tagged Financial Express
Aviation stocks soar as oil dips further (15-12-2015)
Stocks of Aviation companies surged 5-8% on Tuesday as prices of Brent crude oil touched multi-year lows. Shares of InterGlobe Aviation rallied 8.57% during the session, while shares SpiceJet and Jet Airways settled 7.2% and 5.16% higher respectively.
Price of Brent Crude Oil is hovering around $38.5 per barrel – about 43% decline from the 2015 peak of $67.77 per barrel. Falling prices of aviation turbine fuel – which accounts to 40-50% of the operating expense of airline companies – has improved the operating margins of the aviation companies during CY2015, experts said.
InterGlobe Aviation shares closed at a price of R1,184.5 in the BSE. Scrips of Delhi-based low cost carrier have rallied more than 50% since the stock got listed on the bourses in November. The company had raised more than R3,000 crore from the primary market via IPO.
The Union government had released Draft National Civil Aviation Policy 2015 on October 30 which aimed to make flying affordable for the masses. The draft underlines 16 critical areas of civil aviation including safety,regional connectivity, bilateral traffic rights, and MRO operations.
Shares of Airline companies rallied in the last one month after numerous High Networth Individuals(HNIs) including Rakesh Jhunjhunwala increased their stock holdings in Airlines. Shares of Jet Airways soared nearly 17% since November.
In Mid last month, Competition Commission of India (CCI) passed an order penalising the three airlines for cartelisation in determining the fuel surcharge on air cargo.CCI, which is the government authority to enforce the Competition Act, imposed penalties of R151.69 crore and R63.74 crore on Jet Airways and InterGlobe Aviation while SpiceJet was ordered to pay R42.48 crore.
New IPO rules to help investors: Jayant Sinha (15-12-2015)
New regulations for initial share sale such as shorter listing time for companies and mandatory application for investors through ASBA will come into effect January 1, 2016, UK Sinha, Chairman, Securities and Exchange Board of India (Sebi).
Sinha attributed the better performance of the new issues partly to enabling regulations in the IPO market and said that the improvement in rules will help investors and companies alike. Sebi has also taken up with the Reserve Bank of India (RBI) and the banking lobby Indian Banks Association to train bankers on ASBA to ensure that retail investors’ money is not blocked in IPOs, Sinha said.
“If you look at the data, time taken by Sebi in examining and issuing observations on IPOs has come down by half now. Part of the reason for the delay in the past was that Sebi had proposed safety net for retail investors in the IPOs,” Sinha said while addressing a meeting of the Association of Investment Bankers in India (AIBI).
Sebi had, in June 2015, approved norms for companies to launch their IPOs in an electronic form or ASBA (Applications Supported by Blocked Amount) to reduce the time taken between the share sale and listing of such shares, enhance retail investors’ participation and help reduce costs of doing a public issue.
ASBA is a facility that allows the money to remain blocked in the applicant’s bank account till the shares are allotted, thereby eliminating delays related to refunds of unallocated shares. Currently, companies are required to list their shares on the stock exchanges within 12 days of the last date of the IPO which keeps the funds locked in for a longer time.
Sinha also highlighted that most of the new issues of the past many years have been trading below the issue price and warned that retail investors may not invest again if they lose money in the primary market.
“If retail investors feel they are continuously losing money in the primary market by subscribing to IPOs, they may not invest again. If you look at data prior to 2013, more than two-thirds of the new issues were trading below issue price. Obviously, it had impact on investors. But I am happy that IPOs that have come this year, 56 per cent are trading above the issue price,” Sinha said.
The Sebi chief asked merchant bankers to promote the new platform for start-ups and new age companies, and find new ideas to make listing easier for such companies, besides taking an active role in REITs issuances and municipal bonds.
“I am not disappointed with a single start-up not being listed yet. It is likely to take time as it did in the SME segment. India is the third largest after the US and UK in terms of entrepreneurial activities. I am hopeful that merchant bankers should come together to promote the market (start-up). Market development activities and awareness will take time. If review of regulations needed, Sebi will not hesitate to look at them,” Sinha said.
Sinha said common e-KYC for all financial products (securities, banking, insurance, pensions) would also take more time. The intention of common e-KYC was not to implement something and create disturbance, Sinha observed.
“It is a big issue. The issue is not conceptual but procedural. The procedural part will take some more time as regulators are working on it. A group (members drawn from each regulator) is drawing plans. This will take time,” Sinha added.
Essar Oil’s shares gain 4 per cent as delisting offer by refiner begins (15-12-2015)
Essar Oil Ltd, India’s second biggest non-state oil refiner, had earlier this month issued a public notice to delist the company from local bourses by buying out the non-promoter shareholding of 28.54 per cent at Rs 146.05 per share. (Photo: PTI)
Essar Oil’s stock went up by 4 per cent as delisting offer by the refiner began on Tuesday.
The stock climbed 3.93 per cent to settle at Rs 217.95 on BSE. Intra-day, it gained 6.34 per cent to Rs 223 – the 52- week high. On NSE, it rose by 3.85 per cent to Rs 218.20.
Essar Oil Ltd, India’s second biggest non-state oil refiner, had earlier this month issued a public notice to delist the company from local bourses by buying out the non-promoter shareholding of 28.54 per cent at Rs 146.05 per share. The floor price for the delisting offer is Rs 146.05.
Shares will be bought in a reverse book building, beginning today and ending on December 21.
“The proposed delisting of equity shares from the stock exchanges is to achieve complete operational or financial flexibility in furtherance of the company’s business or financial needs and enable promoter shareholders and the promoter to pursue strategic opportunities in respect of its investments,” according to a company delisting notice.
The group has recently delisted Essar Energy from the London Stock Exchange and also made its locally listed ports business private.
Following changes by Sebi in its delisting regulations earlier this year, the shares are now tendered and settled through the stock exchange mechanism.
Under this mechanism, the stock exchanges provide a separate window for purchase of the shares by the acquirer during the tender period.
When shares are sold through the stock exchange mechanism, short-term capital gains is taxed at 15 per cent and long term capital gains is exempted from any tax liability.
Lux Industries shares surged 20% today, here is why (15-12-2015)
Lux Industries share price hit upper circuit on the National Stock Exchange on Tuesday after some changes in circuit limit were implemented.
Lux Industries share price hit upper circuit on the National Stock Exchange on Tuesday after some changes in circuit limit were implemented.
The scrip jumped 20 per cent to Rs 3,607.95 on Tuesday after the exchange transferred the stock from trade for trade segment to rolling segment. As a result, the circuit limit of Lux Industries changed from 5 per cent to 20 per cent now. It was kept in trade for trade segment for 11 trading sessions.
The share price of the innerwear manufacturer opened at Rs 3,199 on Tuesday and touched a high and low of Rs 3,607.95 and Rs 3,199, respectively, in trade.
Lux Industries shares got listed on the NSE at Rs 3,342.05 on December 1. Although the company’s share were listed on the Calcutta and Ahmedabad stock exchange earlier.
The promoters holding in the company stood at 73.71 per cent while corporate bodies and individuals held 14.22 per cent and 12.07 per cent respectively.
Adani Enterprises shares gain nearly 7% on Australian court order (15-12-2015)
Adani Enterprises share price gained on reports that an Australian court rejected a bid by environmentalists to stop its $16.5 billion controversy-hit Carmichael coal mine project. The court said, the firm can go ahead if it agrees to some environmental measures. (Photo: Reuters)
Adani Enterprises share price gained as much as 6.99 per cent on Tuesday on reports that an Australian court has rejected a bid by environmentalists to stop its $16.5 billion controversy-hit Carmichael coal mine project. The court said, the firm can go ahead if it agrees to some environmental measures.
At 2.58 pm, the share price of Adani Enterprises was trading 4.59 per cent up at Rs 78.55. The scrip opened at Rs 79 and had touched a high and low of Rs 80.35 and Rs 77.55, respectively, in trade so far. Later, the share price of the company closed 4.53 pe cent up at Rs 78.50.
The mega project located in Queensland’s Galilee Basin, which would be the biggest in Australia, was challenged by Conservation group Coast and Country in Brisbane Land Court on the ground that the mine would affect groundwater, climate change and biodiversity, including black-throated finches, an endangered species.
The coal mine is facing another legal challenge in the Federal Court by the Australian Conservation Foundation. Adani group says its project will deliver 10,000 direct and indirect jobs, and $22 billion in taxes and royalties to the state.
In the past one year, the share price of Adani Enterprises corrected 83.11 per cent to Rs 75.10 on December 14. Sensex dipped nearly 8 per cent during the same period.
For the quarter ended September 30, 2015, the company posted a consolidated net profit of Rs 298.86 crore, up 42.12 per cent against Rs 210.29 crore in the same quarter a year ago.
With agency inputs
Sun Pharma shares gain on divestment of US manufacturing unit (15-12-2015)
Sun Pharma shares gained after the pharma major informed BSE that one of its wholly-owned subsidiaries has entered into an agreement with Nostrum Laboratories Inc for the divestment of the Bryan (Ohio) unit in the US.
Shares of Sun Pharmaceutical Industries gained as much as 1.62 per cent on Tuesday after the pharma major informed BSE that one of its wholly-owned subsidiaries has entered into an agreement with Nostrum Laboratories Inc for the divestment of the Bryan (Ohio) unit in the US.
“During the divestment process, Sun Pharma was cognizant that the interests of its employees working in the unit were not compromised,” the company said in a BSE filing.
At 2.54 pm, the share price of Sun Pharma were up 1.01 per cent on BSE and 0.83 per cent on NSE at Rs 776.35 and Rs 775, respectively. Sensex was up 0.67 per cent, or 167.39 points, at 25,317.74.
While other details of the transaction are confidential, the financial impact of this development on Sun Pharma is negligible, the Mumbai-based firm said.
In the past one year, the share price of Sun Pharma dropped 8.71 per cent to Rs 768.60 on December 14. Sensex fell around 8 per cent during the same period.
The promoters holding in the company stood at 54.71 per cent while institution and non-institutions held 35.62 per cent and 9.67 per cent respectively.
Investors won’t return if they lose money in primary market: U K Sinha (15-12-2015)
Attributing better performance of recent IPOs to easier norms, Sebi Chairman U K Sinha today said retail investors may not invest again if they lose money in the primary market. (PTI)
Attributing better performance of recent IPOs to easier norms, Sebi Chairman U K Sinha today said retail investors may not invest again if they lose money in the primary market.
“If retail investors feel they are continuously losing money in the primary market by subscribing to IPOs, they may not invest again,” Sebi Chairman U K Sinha told an investment bankers’ summit here.
Notably, the IPO market has seen a boom this year after a near-drought situation in the past five years. Companies like, InterGlobe, CCD, Alkem and Dr LalPath Labs, among others got tremendous response to their issues this year.
While most of the new issues of the past many years have been trading below the issue price, 56 per cent of the IPOs this year are trading above the issue price.
Attributing the better performance of the new issues partly to enabling regulations in the IPO market, such as reduced time to process and clear DRHPs, Sinha said the new IPO norms will be effective from January 1.
“If you look at data, the time taken by Sebi in examining and issuing observations on IPOs has come down by half now. Part of the reason for the delay in the past was that Sebi had proposed safety net for retail investors in the IPOs,” he said.
“If you look at data prior to 2013, more than two-thirds of the new issues were trading below issue price. Obviously, it had impact on investors. But I am happy that IPOs that have come this year, 56 per cent are trading above the issue price,” the Sebi chief said.
On the IPO market, he said the total primary issues in FY15 were worth Rs 9,700 crore, but this fiscal it is Rs 18,300 crore, out of which Rs 16,150 crore would come from sectors such as healthcare, education, hotel and restaurants, while there are no issues from banks, and power companies which have been traditionally active.
He also said the regulator has taken up with Reserve Bank and the banking lobby Indian Banks Association to train bankers on ASBA so that retail investors’ money is not blocked indefinitely by participating in IPOs.
On the proposed exit options and convertible issues, he expressed hope that comments from the public and other stakeholders would be in place soon so that Sebi could issue the final guidelines soon. “Our intent is to implement these norms early as possible,” he said. Describing the rising bad loans in the system as worrying, Sinha said the RBI report on top 500 companies shows that they are utilising only 71 per cent of their installed capacity.
“These companies are not in financial and banking sector. The worry is that these companies are hugely leveraged. One third of them can’t even generate net accruals to meet their interest obligations. One estimate is that Rs 7 trillion worth equity would be required if these companies don’t generate internal cash,” he said.
Regulation on municipal bonds have taken care that only solvent municipalities will issue bounds.
He also said Sebi is looking at the role of credit rating agencies and debenture trustees in the issuance of bonds.
On the call to regulate algo trading, he admitted that this is challenge.
On the much-talked about common KYC norms for all financial markets investments, the Sebi chief said this will take some more time.
Hotel Leelaventure shares gain on completion of Rs 725 cr sale of Goa property (15-12-2015)
Shares of hospitality chain Hotel Leelaventure gained as much as 5 per cent intra-day on Tuesday on completion of Rs 725-crore sale of its Goa property to Ceres Hotels. (Image Source: The Leela )
Shares of hospitality chain Hotel Leelaventure gained as much as 5 per cent intra-day on Tuesday on completion of Rs 725-crore sale of its Goa property to Ceres Hotels.
At 11.15 am, the share price of Hotel Leelaventure were up 3.46 per cent on BSE and 3.73 per cent on NSE at Rs 20.95 and Rs 20.85, respectively. Sensex was marginally down 0.15 per cent, or 37.55 points, at 25,112.80.
Affirming the sale of ‘The Leela, Goa’, Hotel Leelaventure said in a BSE filing, “The shareholding of the company shall remain unaffected”.
In the past one year, the share price of Hotel Leelaventure dropped 4.70 per cent to Rs 20.25 on December 14. Sensex fell around 8 per cent during the same period.
The promoters holding in the company stood at 63.88 per cent while institution and non-institutions held 5.66 per cent and 30.46 per cent respectively.
Hotel Leelaventure operates hotels and resorts in India. It also operates spas; and offers facilities for meetings and events, weddings, and social celebrations. The company’s portfolio includes luxury hotels and resorts primarily in Mumbai, Bangalore, Goa, Kovalam, Gurgaon, and Udaipur.
Jain Irrigation shares gain over 3% on allocation of over 623 acres land (15-12-2015)
Jain Irrigation share price climbed over 3 per cent in the morning trade on Tuesday after the Andhra Pradesh government allotted over 623 acres of land to the company for setting up an integrated agriculture and horticulture park in Kurnool district of the state. (Photo: Reuters)
Jain Irrigation share price climbed over 3 per cent in the morning trade on Tuesday after the Andhra Pradesh government allotted over 623 acres of land to the company for setting up an integrated agriculture and horticulture park in Kurnool district of the state.
At 11.19 am, Jain Irrigation shares were trading 3.35 per cent up at Rs 63.30. The scrip opened at Rs 61.90 and had touched a high and low of Rs 63.40 and low of Rs 60.65, respectively, in trade so far. Sensex was marginally down 29.30 points at 25,121.05.
The government after careful examination of the matter and after due examination of the report submitted by the VC&MD, APIIC… hereby accord permission to APIIC Limited for the allotment of the land of an extent of 623.40 acre Jain Irrigation Systems Ltd at Thangadancha Village, Jupadu Bangalow Mandal, Kurnool district on lease basis for 99 years.
The market value of the land is Rs 4.5 lakh per acre and the total cost of the land is Rs 28 crore.
In the past one year, the share price of Jain Irrigation plunged 18.11 per cent to Rs 61.25 on December 14. The benchmark index BSE Sensex slid around 8 per cent during the same period.
For the quarter ended September 2015, the company posted a consolidated net loss of Rs 29.48 crore, down 24.97 per cent against net loss of Rs 23.59 crore in the corresponding quarter a year ago.
(With inputs from PTI)