Heard on the street

Taking the law at the face value

It’s the classic case of a law being honoured in letter, but not in spirit. Manaksia, a metal products company, is coming out with a public issue, constituting 22.29% of the post-issue capital of the company with a price band of Rs 140-160 per share. No issues with that, but dig a little deeper and one finds the face value of the share is Rs 2. Indian Securities Law states that any IPO where the face value of a share is less than Rs 10, then shares should be priced at above Rs 500. Now the merchant banker to the issue, ICICI Securities says since the company is already listed on the Calcutta Stock Exchange, this is not exactly an “initial public offer,” and hence the rules of face value do not apply. But the issue has been marketed just like an IPO and the investors who are buying shares (that will be listed on BSE and NSE) are treating the issue like one. Manaksia plans to raise Rs 250 crore at the upper-end of the price band. Issue is on from December 17 to 19.


Investors in Apollo Tyres see road to growth

Shares of Apollo Tyres have risen 25% in a week amid speculation the company may raise tyre prices soon. However, an analyst tracking the company said the price hike is unlikely to be significant, as the industry has already raised prices by 15-20% so far this year. The analyst believes the recent run-up in its share price to Rs 52.3 factors in expectations of a much higher price hike, than what is likely. Apollo Tyres enjoys the market leader’s position in the truck and bus tyre segment. Analysts estimate the company’s earnings per share in 2007-08 at Rs 3.1, as against Rs 2.5 in 2006-07. In 2008-09, it is estimated at Rs 4.1.


Sugar stocks spring a sweet surprise

Until some weeks ago, sugar stocks were not so sweet an investment. The counters were under pressure on fears that the sector is likely to witness a situation of plenty for the next two seasons. However, the perception has seen a turnaround over the past one week on expectations that the central government is to announce subsidies/exemptions to the ailing sector. According to market sources, domestic funds houses and a handful of operators have been shoring up on sugar stocks in large numbers. This is evident in the surge in stock prices of key sugar companies like Bannari Amman Sugar (up 6% over the past one week to close at Rs 890), Dwarikesh Sugar (up 28% over the past one week to close at Rs 75), Simbhaoli Sugar (up 21% over the past one week to close at Rs 49) and Shree Renuka Sugars (up 21% over the past one week to close at Rs 841).

(Contributed by Gaurav Pai, Nishanth Vasudevan & Shailesh Menon)