Despite no assets and operations Buyers flocking to SM Dyechem shares

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Virendra Verma

Mumbai, April 6

STRANGE are the ways of stock investors and what they deem to be a profitable buy.

It matters not a whit to them that a company ceases to operate and its assets stand liquidated. One instance of investors staying bullish after a company had virtually become non-operational is the activity witnessed on the SM Dyechem counter.

In the last one week, the stock has been climbing and gained over 20 per cent. On Wednesday, the stock closed at Rs 7.54 on the BSE, up marginally from previous closing. Along with rise in the stock price, there is also a rise in trading volumes indicating more participation by investors. Trading volumes rose from 58,417 shares on March 30 to 1,84,093 shares today, a jump of 215 per cent. The number of trades in the stock has also increased from 90 to 369.

The delivery ratio is also high with an average 80 per cent of the shares traded going for delivery. For instance, on March 30 the deliverable ratio was 68 per cent while it was 78 per cent today.

But what has taken market players by surprise is that the stock is on the rise even after the company made an official announcement to the BSE on Tuesday saying it was left with no operations and assets.

It was in January that Reliance Industries had bought the assets of SM Dyechem's glycol division from IDBI.

Brokers said the current interest in SM Dyechem shares is similar to purchases made by investors in the shares of Global Trust Bank after it was made official that it will be taken over by Oriental Bank of Commerce. The present situation is reminiscent of the GTB days as the shareholders in both cases do not stand to gain anything, a broker said.

However, according to one market participant, there could a possibility of some value accruing to the SM Dyechem shares if the company ventures into a new business.

(This article was published in the Business Line print edition dated April 7, 2005)
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