Castro fund breezes into Suzlon Energy

STREET SIGNS

As soon as the wind-energy stock Suzlon Energy got listed, buyers made a beeline to the counter.

The stock made its debut at a price of Rs 640, a 25 premium on its issue price of Rs 510. Foreigners were said to have made aggressive bidding for the Suzlon IPO, which was subscribed over 45 times.

Among the biggies to get in to the counter was Castro Fund who had bought the stock at Rs 653 levels.

Suzlon Energy is the country's leading manufacturer of wind turbine generators (WTG) with a market share of around 42 per cent.

The company is also the world's sixth largest WTG manufacturer in terms of annualised installed capacity for 2004. At the current price levels of Rs 646, the stock has a valuation of 48, based on its FY05 EPS of Rs 13.40.

This kind of valuations will be considered rather high under normal circumstances, but investors like Castro seem to be willing to pay a premium for new and emerging businesses.

Paper tiger

Desi fund, Tumble Ton has decided to sell more than three lakh shares of J K Paper. Whether it has anything to do with the tumbling stock price, which has come down from Rs 77 levels to Rs 61 in little over a month is not clear.

But if you go by JK Paper management, everything is hunky dory. The company has a significant presence in high-value branded copier paper and coated paper.

It is now setting up a Rs 235-crore packaging board unit in Gujarat, which is expected to start production in late 2006.

This is expected to put JK Paper products in high growth segments such as branded copier paper, coated paper and high-end packaging boards, which have a faster growth rate (15-20 per cent) than the 5-6 per cent for the entire paper industry.

According to those in the know, paper prices are in a buoyant phase and the trend is expected to continue for the next six months to a year, which augurs well for companies like JK Paper. Alas, Tumble Ton has different ideas.

Dawn of wisdom

Metro Fund has decided to dump more than five lakh shares at the IFSL counter at a price of Rs 6.

Mr. Know All had recently barred the promoters of IFSL from dealings in the company's shares for suspected price manipulation.

Metro Fund had bought more than 43 lakh shares of IFSL at an average price of Rs 33.25 before the order was passed.

Other biggies who bought shares at the counter include Merry Lunch (16.65 lakh shares at Rs 26 levels) and Mr. AB Amro (39.50 lakh shares at Rs 27 levels).

With Metro Fund leading the way, it remains to be seen whether others follow suit by getting out of the counter.

The smarter ones like Jeweller Fund had already got rid of the stock at Rs 33 levels.