Financial Daily from THE HINDU group of publications
Wednesday, Mar 22, 2006
Financial Daily from THE HINDU group of publications Wednesday, Mar 22, 2006 |
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Markets
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Stock Markets Value buying props up JK Lakshmi Cement Our Bureau
Kolkata , March 21 J K Lakshmi Cement (formerly J K Corp) is witnessing heightened activity on apparent value buying. The stock today recorded a traded quantity of 4.89 lakh shares (fortnight's average — 12.38 lakh) on the BSE. Its price registered a sharp upward swing to Rs 114.80 (Rs 111.25). However, towards the end, it declined to close at Rs 109. According to analysts and fund managers, this 3-million-tonne-per-annum cement company seems under-priced, considering its replacement value compared to its current market capitalisation. According to industry sources, the company's future has been building on higher consumption and margins. In the last six months, cement price in the northern market has gone up by over Rs 50 per 50 kg bag on increasing demand. A fund manager pointed out that the market has not yet fully valued its investments and their value entitlement after the proposed transfer of the assets to a NBFC. The replacement cost of the cement capacity alone is estimated by the market experts at around Rs 2,100 crore. The market value of the investments could take the total thumb-rule valuation of the company to a much higher level, market observers argue. Shareholders of the company have approved the proposed de-merger of J K Lakshmi's investment division and transfer of assets to Ashim Investment Co Ltd (AICL), a registered NBFC. JK Lakshmi shareholders, entitled to receive the paid-up equity shares of AICL, are alternatively entitled to receive fully paid cumulative redeemable preference shares (CRPS) of ACIL in ratio of 7 CRPS of Rs 100 each against entitlement of 10 equity shares of Rs 10 each. The CRPS option, however, is restricted to 20 per cent of aggregated value of the equity shares to be issued by AICL.
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