Spotlight now on companies where FIIs raised stake recently

Riken Mehta
moneycontrol.com

The sell-off by foreign institutional investors in government securities has finally caught up with the equity market. With the rupee close to its record low and the pressure on the currency expected to persist near term, fears are that FIIs will start pulling money out of Indian shares as well.

Stocks have been beaten down to a point where it may not make much sense for the long term players among FIIs to sell at these levels. However, short term players like hedge funds and exchange traded funds are another class of investor altogether.

These funds chase quick gains, and absolute price moves and currency swings matter more than fundamental factors. Beyond a certain threshold of tolerance, they will dump shares irrespective of the price.

The spotlight is now on the companies where FIIs increased their stake in the recent past (data is available only till the March quarter)

An analysis of the shareholding pattern of BSE-100 companies shows that foreign funds have hiked stake in nearly 50 companies by 1-9 percent between September 2012 and March 2103. So far this calendar, till May, foreign funds net bought around Rs 61,000 crore of shares. There is no way of knowing how much of the money has come from long term players like pension funds, insurers and India-dedicated funds, and how much from short term funds.

Source: Capitaline. % Chg is the price change from May 17 to June 20

Company	FIIs holding (Mar qtr)	FIIs holding (Sep qtr)	Inc in Holding	% Chg
Shriram Trans	49.45	40.97	8.48	-7.00%
Axis Bank	40.94	32.79	8.15	-19.10%
Suzlon Energy	13.13	5.43	7.7	-35.10%
IndusInd Bank	40.49	34.26	6.23	-12.10%
Federal Bank	45.93	39.89	6.04	-9.70%
Zee Entertainment	41.69	36.14	5.55	-6.10%
NTPC	9.37	3.95	5.42	-12.30%
Dr Reddy's Labs	29.66	24.52	5.14	0.00%
M & M	35.01	30	5.01	-4.50%
HDFC	73.67	68.72	4.95	-9.60%
Satyam Computer	30.35	26.01	4.34	5.80%
NMDC	4.76	0.66	4.1	-15.50%
HCL Technologies	24.32	20.31	4.01	5.50%
Adani Enterp	18.97	15.08	3.89	-22.30%
HPCL	9.75	6.24	3.51	-19.50%
Cipla	23.89	20.79	3.1	-10.70%

Bargain hunting: 24 stocks you can pick up post mkt carnage

 
Riken Mehta
moneycontrol.com

It was carnage across the board on Thursday after the rupee touched an all time low of 59.93. Fears of a large scale pullback of FIIs from India saw the Sensex crashing 526 points, lead by shares in the metal, banking and realty sectors.

Yet, periods of turmoil like these also provide investors with an opportunity to buy stocks at reasonable valuations. One of the yardsticks used by investors is the market price compared to the book value.

Book value is the net asset value of the company. Technically speaking, it is the sum of the company’s equity capital and reserves divided by number of shares in issue. Simply put, this is the price that a shareholder would get per share if the company were to be liquidated. The book value is a reasonable indicator of whether a stock is overpriced or undervalued.

As per latest data, 25 companies out of BSE 100 are trading at discount to book value post Thursday’s sell-off. Check them out

Source: Capitaline. Close price as on 20th June, 2013

Company	Close Price	Cons Book Value	Latest P/BV
HDIL	36.15	257.8	0.14
Reliance Infra	339.8	957.5	0.35
Unitech	21.05	43.54	0.48
Sterlite Inds	81.4	161.78	0.50
IDBI Bank	74.25	145.63	0.51
SAIL	53.55	99.45	0.54
Hindalco Inds	97.7	178.09	0.55
HPCL	251.65	394.48	0.64
Bank of India	260.25	390.81	0.67
Reliance Capital	330.7	487.34	0.68
Canara Bank	358.5	522.42	0.69
Reliance Comm	124.65	181.26	0.69
Sesa Goa	139.7	201.07	0.69
Bank of Baroda	576.6	785	0.73
Punjab Natl Bank	687.35	934.58	0.74
NHPC Ltd	18.35	24.69	0.74
Union Bank	201.1	265.14	0.76
Tata Steel	272.4	351.85	0.77
Power Fin Corp	154.4	183.01	0.84
JSW Steel	687.2	762.09	0.90
IOC	240.9	259.63	0.93
Reliance Power	64.55	66.24	0.97
Jindal Steel	222.15	227.35	0.98
Adani Enterp	182.65	186.88	0.98

Weak rupee spells trouble for FCCB issuers; check them out

A falling rupee is bad news for companies that had raised capital through foreign currency convertible bonds, if the stock price is quoting at a steep discount to the conversion price. What this means is that the bond holders will ask for their money back, along with interest, instead of converting the loans into equities.

It is a double whammy for the FCCB issuing companies because the weak rupee means not only will the companies have to repay the loans, but there will be an added cost because of the weak rupee. There is a possibility that the rupee may stabilize by the time the bonds come up for redemption, and the impact may not be as bad as feared. However, in the short term, the company will have to make provide for the currency loss in their profit & loss statements.

Following are the companies that have raised capital between USD100-550 million through FCCBs over the last five years.

Source: Capitaline
* = Rs 58 per dollar conversion rate

Company	Source	Issue Size	Issue	Maturity Date	Conversion	Latest	Cash
	Date	(USD mn)	(Rs mn)*		Price (Rs)	Price (Rs)	[Latest]
Tata Steel	19/11/2009	546.9	31720.2	21/11/2014	605.53	290.55	3947
Sesa Goa	24/09/2009	500	29000	31/10/2014	346.88	145.85	24.88
Tata Motors	9/10/2009	375	21750	16/10/2014	623.88	291.75	1841
Tata Power	6/11/2009	300	17400	21/11/2014	1456.12	82.6	1087.4
Larsen & Toubro	9/10/2009	200	11600	22/10/2014	1908.2	1437.4	1778.1
Videocon Inds	3/12/2010	200	11600	16/12/2015	239.53	223.15	504.55
JP Power	27/01/2010	200	11600	13/02/2015	85.81	22.05	583.67
Suzlon Energy	4/4/2011	175	10150	6/4/2016	54.01	9.66	262.65
Welspun Corp	25/09/2009	150	8700	17/10/2014	300	46.3	640.94
JP Associates	28/08/2012	150	8700	18/09/2017	77.5	63.35	1022.2
REI Agro	23/10/2009	105	6090	13/11/2014	46.7	13.55	274.76