Four companies inform bourses about allotment of shares on conversion.
In what has come as a relief for Foreign Currency Convertible Bond (FCCB) issuers, holders of these bonds have started converting them into equity after the Indian stock market recovered by 87 per cent from its recent low.
In the last two days, four companies – Gujarat NRE Coke, GTL Infrastructure, Core Projects and Jain Irrigations -- have informed stock exchanges that they have allotted equity shares to FCCB holders upon receiving conversion notices from them.
| REAPING BENEFITS | ||||
| Price in Rs | ||||
| Conversion | 1 Yr low | Jun-15 | %chg* | |
| IVRCL Infra | 234.03 | 56.50 | 319.10 | 464.78 |
| Aurob Pharma | 522.04 | 101.60 | 486.10 | 378.45 |
| M&M | 922.04 | 235.50 | 756.00 | 221.02 |
| Punj Lloyd | 272.59 | 66.65 | 202.05 | 203.15 |
| Tata Chem | 230.78 | 99.70 | 241.20 | 141.93 |
| Educomp Solut | 2,949.83 | 1,331.00 | 3,022.40 | 127.08 |
| Tata Power | 590.85 | 531.50 | 1,139.20 | 114.34 |
| Uttam Galva | 45.12 | 22.60 | 46.45 | 105.53 |
| HDFC | 1,399.00 | 1,116.10 | 2,288.55 | 105.05 |
| Lupin | 567.04 | 518.00 | 860.45 | 66.11 |
| *Change over 1-year-low market price Source: BS Research | ||||
Gujarat NRE Coke has allotted 5,00,224 equity shares at Rs 44.64 per share pursuant to notices received from FCCB holders for conversion of bonds worth $5,00,000. The stock is currently trading at Rs 51.25, 15 per cent higher than its issue price.
GTL Infrastructure has allotted 4.82 million equity shares at Rs 53.04 per share after receiving notices for conversion of FCCBs worth of $6.5 million. The stock, which touched its one-year low of Rs 27.60 in March 2009, is currently trading at Rs 44.15 on the Bombay Stock Exchange (BSE).
Core Projects and Technologies approved the allotment of 3.45 million equity shares on conversion of FCCBs, while Jain Irrigation Systems allotted 3,85,080 equity shares at Rs 345.59 per share on conversion of 3,000 Zero Coupon Convertible Bonds (ZCCBs) of $1000 each.
The bounce-back in the equity market has seen stock prices of most of the companies, which have issued FCCBs, more than double from their 52-week lows. Jaiprakash Associates, Bajaj Hindustan, Welspun Gujarat, Lupin, IVRCL Infrastructure and Sintex Industries are among the few whose FCCBs are currently trading above their conversion prices.
FCCB is an instrument that has the features of both equity and debt. Issued as interest-bearing or zero-coupon bonds, FCCBs are convertible into equity during their tenure.
Indian companies raised more than $15,000 million of foreign funds through FCCBs to finance their growth and acquisition plans during the bull run in the stock market between 2004 and 2007. However, the fall in the equity market that started in the beginning of 2008 saw the stock prices of most of these companies fall by over 80 per cent to their conversion prices.
Thirteen companies, including GHCL, Hotel Leelaventure, Micro Technologies, XL Telecom and Gitanjali Gems, had reset their FCCB conversion prices, while some others such as Reliance Communications, Tata Motors, Moser Baer, HCC and JSW Steel bought back their FCCBs after the Reserve Bank of India (RBI) permitted the same.
