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Thursday, November 20, 2008

Promoters buying their own stocks

The slump in valuations on Indian bourses has come as a blessing in disguise for many promoters, particularly those who don’t own controlling stakes in their companies. Checkout which promoters have faith in their own companies and are buying own stocks...

With shares hitting rock bottom amid the stock market turmoil since January, an increasing number of promoters have been getting into a buying mode to take advantage of beaten down valuations. The recent hike in creeping acquisition limit from 55% to 75% has encouraged even those promoters having a controlling stake to go for further acquisitions through the secondary-market route.

Bharat Forge, Adani Enterprises, Aptech, SRF, West Coast Paper are a few notable examples where promoters have either hiked stakes or are planning to increase their shareholding through the creeping-acquisition route in the past few weeks.

Promoters are always in a better position to judge prospects of their own companies. It makes sense buying in the current market if they believe shares are available much cheaper than the true worth of their companies.

Valuations have fallen so sharply that the market may witness more hostile bids after high net worth investor Ashok Kumar Parmar made an open offer to acquire Bhilwara Spinners on Tuesday.

According to disclosures made on BSE, Sundaram Trading and Investment, one of the promoter companies of Bharat Forge, has bought 2.6% equity stake between October 10 and November 7, raising its stake to 8.6%. The combined promoter holding stood at 40.6% as on September 30, 2008.

Aptech is another notable example where Rakesh Jhunjhunwala bought 10 lakh shares as persons acting in concert with Aptech Investments, between October 27 and November 4. The open market acquisitions have raised the total promoter holding from 32.3% to 34.5% in the company.
Checkout: Rakesh Jhunjhunwala's Latest Portfolio-September 2008
Also Read: Rakesh Jhunjhunwala - Investment Principles Insights
Refrerence & Source: Economic Times

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