Trading volume surged to 51 lakh shares in engineering giant Siemens Ltd within an hour of start of trading on the BSE today apparently because of equity dilution by its parent Siemens AG.

However, the stock price did not witness any wild swing as the sale was probably through block deal.

According to an agency report, Siemens AG was paring its stake in the Indian subsidiary by 1.2 per cent from 75 per cent. Siemens Ltd's equity capital is Rs 68.05 crore.

The report said the company will be selling around 4 million shares of Siemens Ltd in the price band of Rs 649.15 to Rs 698 a share.

It was not clear why the parent company was diluting its stake. It will not be for complying with the SEBI norm on public shareholding of minimum 25 per cent in listed private companies as the parent's stake is just at that level. According to the BSE data, the other stakeholders in Siemens Ltd equity are FIIs 3.25 per cent, DIIs 8.45 per cent and others 13.30 per cent. Hence, Siemens AG's stake is within the stipulated norms.

But its turnover in the third quarter ended June 30 this year was only marginally up compared to the corresponding quarter in the previous year. While the turnover in June ending quarter this year was Rs 2,793.49 crore (Rs 2,748.09 crore), the net profit was down sharply to Rs 36 crore from Rs 154.77 crore, a huge 76 per cent decline compared to the same quarter in the previous fiscal.

The EPS (share face value Rs 2) dived to Rs 1.07 in the third quarter this year compared to Rs 4.55 in the same quarter last year.

Much of the equity dilution, if not the entire selling, has apparently been done through the BSE today. The counter registered a trading volume of 51 lakh shares by 10.15 a.m. compared to the normal trading of about 14,000 shares in the exchange. On the NSE, the counter saw a trading of over 10.60 lakh shares. The share was trading around Rs 676 on the BSE, a loss of about Rs 22. Though the stock shed some value, the huge selling did not unsettle the counter probably because of block deal(s).

The company had, at the time of publication of Q3 results, stated that the profitability was impacted due to increasing project cost and unbooked profit due to customers delaying offtake.

(This article was published on September 12, 2012)
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