The Hindu Business Line : Block deal propels Welspun to year high

THE stock of submerged arc welded (SAW) pipes maker, Welspun Gujarat Stahl Rohren, hit a 52-week high of Rs 32.25 on the BSE on Tuesday. Market sources said that a huge block deal of 3 crore shares was undertaken on the counter in mid-afternoon trades.

According to the grapevine, the deal was executed between IFCI, which sold to five major funds. As per rumours SSKI is said to have done the placement. The deal was struck around Rs 27-28.50 levels. Market talk has it that among the buyers was GMO, an emerging market fund.

While the stock slipped from its high to close at Rs 29.70, brokers said that today's deal is likely to provide a boost to the counter. "The stock has in the past been languishing over concerns that the deal may not happen at all. Since these concerns have been put to rest, one is likely to see renewed activity at this counter,'' a broker said. The stock closed up 7.41 per cent with around 5.6 crore shares traded on the BSE. The stock is not listed on the NSE.

While the market may take a re-look at the stock post this deal, analysts call it an earnings growth led story. And a strong order book position would appear to lend weight to this perception.

"Ever since the company has received accreditation by several international agencies like American Petroleum Institution, it has been in a position to bid for international tenders. This has placed the company on a strong footing,'' said senior analyst Mr Kaushal Shah of LKP Securities.

The company's order book currently is said to be around Rs 1,500 crore strong. This includes orders worth $102 from Petroiran Development Company of Iran and IGAT IV Iran, orders from Gail with yet another Rs 600 crore order from ONGC in the pipeline.

"The company will also be one of the major beneficiaries of the plans oil and gas majors have to set up pipelines. Its attempts to re-negotiate its debts thereby bringing down interest costs significantly will also add to its bottomline," Mr Shah added.

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