Mumbai brokers mop up Texmaco shares

K K Birla group does not foresee takeover threat

A handful of city-based brokers have been purchasing the shares of Texmaco Ltd, the engineering company of the K K Birla group, driving the trade volume as well as price of the share to a record high.

Sources in the K K Birla group said that they were aware of the acquisition of shares but added that they do not foresee a takeover threat as the promoters have a majority stake. The promoters hold a 52 per cent stake in the company.

Sources close to a brokerage which has a sizeable stake in the company said the trigger for the huge spurt was the anticipation of a favourable Supreme Court order which would unlock the huge real estate assets of the company in New Delhi and thereby will improve the company's valuation.

The company sources said the case was pending with the apex court for years. "We are not sure about the timing of the judgment, forget about whether it will go to our favour," they added.

The price of the Texmaco stock has doubled in 17 trading sessions, beginning August 16 to Rs 140.45 on September 7 on the Bombay Stock Exchange.

During this period, the bellwether BSE Sensex went up by 3 per cent to 5,264.67. Daily trading volumes on the counter, during the period, went up from 2,520 to 1,58,575. The stock slipped after it was listed with the NSE on September 9.

Shyam Sunder Dalmia, a Kolkata-based broker, picked up 5 per cent stake in the company nearly a year ago and has subsequently scaled up his holding to 10 per cent. But that was no threat to the management as Dalmia has been close to the K K Birla group, market sources said.

The floating shares of the company increased as a fall out of expansion of the paid-up equity through a rights issue.

The company has recently concluded a rights issue for 51,63,378 equity shares of Rs 10 each for cash at a premium of Rs 20 per share in the ratio of one equity share for every one share held. Post-issue, it was listed with the NSE.