Vanavil betting on swap ratios

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VANAVIL Dyes & Chemicals, a Clariant group company, is making sharp moves forward on expectation of a favourable swap ratio in the proposed merger of the group entities.

Ahead of an official valuation report, the market has begun betting on stock, the cheapest among the three listed Clariant group outfits - Clariant India, Colour-Chem and Vanavil.

According to market sources, the ratio of book value-to-market price for the three suggests that Vanavil's market valuation has the best opportunity for growth.

Vanavil counter on Tuesday closed at Rs 77.25 with a gain of 15.30 per cent and traded quantity of 1.06 lakh shares on the BSE. It also created its 52-week high at Rs 79.95.

Vanavil's book value is Rs 64 and cash earnings during 04-05 stood at Rs 9.92 per share on an equity base of Rs 4.93 crore. Clariant India (book value Rs 84) closed at Rs 340 and Colour-Chem (book value Rs 147) finished at Rs 305.65.

Jumps on turnaround hopes

STERLING Holidays seem to have raised hopes of turnaround among a section of market participants. The stock gained 5 per cent to finish at Rs 64.05 with a traded volume of 1.83 lakh shares on the BSE. The company reported a PAT of Rs 10.57 crore in the fourth quarter of 2004-05 after posting losses in previous quarters.

According to market sources, Sterling is also negotiating with bankers for reducing its interest burden. The company with a paid-up capital of Rs 18.22 crore, in the meanwhile, has increased its list of properties. With tourism industry in a buoyant state, it is expected that going forward, Sterling may be able to improve its performance.

Merger talk at it again

DALAL Street expectation of merger of CMC Ltd with TCS has resurfaced. After the merger of Tata Infotech with TCS, CMC's amalgamation with the country's biggest software company has been considered as a fait accompli, but speculations seem to recur on the timing.

CMC fetches one of the lowest P/E of around 12 in the software space. The company with an equity base of Rs 15.15 crore posted a net of Rs 15.33 crore in the first quarter of 2005-06. The current weakness in rupee against dollar also augurs well for the company, the market appears to think.

CMC, one of the best pedigree counters, on Tuesday closed at Rs 500 with a gain of 2.08 per cent and some increase in the traded quantity.

Jayanta Mallick

(This article was published in the Business Line print edition dated August 31, 2005)
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