Shares of auto ancillary major Mico lost sheen today in a bullish market and fell drastically after the company announced a buyback price of Rs 2,500 per share.
The stock plunged 15.46 per cent to close at Rs 2,184.90 on the Bombay Stock Exchange (BSE). It declined sharply to the day's low of Rs 2,170 after the buyback price was announced. "The price is lower than market expectations of around Rs 2,800-Rs 3,000," dealers said.
As on September end, the foreign promoters held 56.99 per cent, banks, financial institutions/ insurance companies 22.01 per cent, mutual funds and UTI 5.64 per cent, FIIs 2.9 per cent, the public 10.33 per cent and the balance was held by others.
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Ahead of the announcement of the buyback price, Mico shares had surged 68 per cent in less than two months from Rs 1,537 on October 9, 2001 to Rs 2,584.55 on December 5, 2001. The rise was also aided by signs of a revival in the automobile sector, that is the main consumer of auto ancillaries.
Mico has decided to buy back up to 2 lakh shares or 5.87 per cent of its paid-up equity capital through the tender offer route. This is the third buyback announced by the MNC and the price of Rs 2,500 is lower than that made in the second buyback, which is lower than that of the first buyback.
Mico bought back 2,00,000 shares in May 2000, at Rs 4,200 per share and increased the parent's stake in the company from 51 per cent to 53.83 per cent. In January 2001, Mico bought back a further 2,00,000 shares from its shareholders at a price of Rs 3,800 per share and increased the parent's stake to 56.99 per cent.
Mico is a pioneer in the manufacture of diesel fuel injection systems and auto electricals in India. With access to the international standard technology of the parent company, conscious commitment to quality and more than 11,000 employees, Mico is the largest manufacturer of diesel fuel injection equipment in India and one of the world's largest. Apart from diesel fuel injection equipment, Mico manufactures industrial equipment, auto electricals, hydraulics for industrial and tractor applications, electric power tools, packaging machines and Blaupunkt car audio systems.