The Hindu Business Line : Krone volume, price rise on dividend bonanza

THE Krone Communications stock on Tuesday had a volume and price increase on the bourses on announcement of a one-time special dividend of Rs 26 per share of Rs 10 each.

The counter, fairly illiquid, saw a traded quantity of 66,403 shares, up from Friday's 9,682 on the Bombay Stock Exchange. The stock price rose 18.8 per cent to close at Rs 110.35.

Market had anticipated a dividend bonanza last week. From a low of Rs 83.70 on the previous Monday's closing, the stock had advanced to Rs 92.90 at the end of the trading session last Friday. The trading volume in the counter also crept up through last week.

As the record date for the dividend payout is May 18, this left an opportunity for enhancement in the stock's trading in the intervening period, according to dealers.

Last month, GenTek Inc of the US, which has controlling stake in the Krone Group, announced plans for selling off the Krone group business to ADC Telecommunications Inc, another US company.

Mr Ketan Thacker of Anagram Stockbroking pointed out that though Krone Communications, the Indian outfit, reported a decline of net profit by 36 per cent, the proposed deal is providing an additional trigger for the stock. The Gen Tek deal is likely to be sealed in May, subject to regulatory approvals. Krone GmbH, Germany, holds 51 per cent stake in Krone Communications. Gen Tek, on the other hand, had the controlling stake in Krone GmbH.

Once the Gen Tek deal is through, it will trigger an open offer for 20 per cent stake in Krone Communications by the new acquirer under the current SEBI regulations. This, in turn, means new valuation for the Krone Communications stock in the domestic market.

Since the announcement of the proposed deal in the US, Krone stock witnessed a gradual improvement in activity in the domestic market.

Despite the recent rise in price, the 52-week high of Rs 156 is way off. At Tuesday's closing, the stock had the P/E multiple of 16.6.