In my piece of 19th May 2016, I remarked, in my usual flippant manner, that if Astec Lifesciences, the micro-cap stock recently taken over by the Godrejs, was to merge with Godrej Agrovet, its parent company, the “sky is the limit” for the stock.
This proposition appears to be coming true if you consider the manner in which the stock has been surging with no apparent reason.
On 8th June 2016, the stock rocketed 20% and tripped the upper circuit. Today also, the stock was very strong and surged nearly 19%. The return in just the last three months is a mind-boggling 81%.
Understandably, the punters at MMB, who are famed for keeping their ears to the ground and their finger on the pulse of the market, are feverish with excitement. They are speculating that there may be an amalgamation, or a buy-back or a delisting proposal (Godrej Agrovet is not listed) on the cards. Some are even floating the theory that the recent FDI relaxations announced by NAMO may have a bearing on the issue.
A part of the surge in Astec’s stock price could be attributable to the statement made by Adi Godrej, the boss man of the Godrej group, that the group expects to grow “10x in 10 years”.
Adi Godrej to ET NOW: Hope to become 10x in 10 years via organic & inorganic growth.
— ET NOW (@ETNOWlive) June 22, 2016
At this stage, we must pay tribute to Gaurav Parikh, the stock market expert, who brought Astec Lifesciences to our attention by calling it his “stock pick for 2016”. Parikh’s logic was quite simple that whenever a minnow gets taken over by a behemoth, the fortunes of the minnow change for the better.
“In due course of time, one can also expect Godrej Agrovet to get listed either through a reverse merger with Astec LifesSciences or in a restructuring exercise in order to add value to the shareholders of both companies. In short, here’s a multibagger that has got a new shot at life” Gaurav Parikh had then stated in a prophetic tone.
Meanwhile, when I last checked, Vijay Kedia was grinning from ear to ear at the massive gains that have effortlessly flowed into his coffers. He holds a treasure trove of 200,000 shares as of 31st March 2016 which is worth Rs. 6.94 crore at the CMP of Rs. 347. The best part is that the gains have come with virtually no risk to his capital!