Thursday, April 19, 2012

Ahmednagar Forgings Shares Accumulated by Asia Investment Corporation for Rs. 6.27 Crore



Arvind Dham, Chairman,
Ahmednagar Forgings & Amtek Auto Group

Special Correspondent:

Ahmednagar Forgings Ltd (NSE: AHMEDFORGE, BSE: 513335) on Thursday, 19th April 2012, witnessed a significant buy of 3.25 lakh shares by the FII sub-account Asia Investment Corporation Ltd (AIC).

The deal was disclosed in National Stock Exchange after the trading hours on Thursday.

The buy makes up a significant 0.89% stake in the auto castings & forgings major, belonging to the Amtek Auto Group.

At a per share price of Rs. 192.80, Asia Investment Corporation, has pumped in Rs. 6.27 crore for the stake.

This is an accumulation for AIC, as this foreign institutional investor had recently emerged as the fourth largest non-promoter shareholder in Ahmednagar Forgings, behind ChrysCapital controlled Warhol, HDFC Trustee Company, & Copthall Mauritius. 

As per the Q4 SHP published recently, Asia Investment Corporation held 11.86 lakh shares amounting to a large 3.23%  stake. In Q3, AIC hadn’t figured in the list of investors holding more than 1%.

Asia Investment Corporation (Mauritius) Ltd is a sub-account registered under the FII, HSZ (Hong Kong) Ltd. Promoted by former Swiss banking professional, Hansrudolf Schmid, HSZ mainly runs China focused funds from its headquarters in Hong Kong.

On Thursday, there were no identifiable institutional investors selling more than 0.50% stake individually, as counterparties to AIC’s buy. 

Energised also by this institutional buy, Ahmednagar Forgings marked a new 52-Week High of Rs. 197.50 on Thursday. 

With this move, the scrip has gained an impressive 152% from its 52-Week Low of Rs. 78.25 recorded just 4 months back.

Ahmednagar Forgings Ltd is a leading maker of forged automotive components, cold forged parts and high tensile fasteners. Its products include components for 2-wheelers, 3-wheelers, cars, tractors, light commercial vehicles (LCV), heavy commercial vehicles (HCV) and stationary engines.

The company is a constituent of the more than 25-year old Amtek Auto Group, one of the largest business groups in the auto ancillary as well as the allied sector of castings & forgings. The Group has two more listed players, Amtek Auto Ltd  and Amtek India Ltd. Together, the Group companies run 39 manufacturing setups in India, and 4 in Europe.

Group companies are noted for their fundamental and market performance with Amtek India being one of the best performing stocks in the Indian market in a difficult FY'12, rising by over 180%.

The main buy cues for AIC seem to be the company’s resilient performance in the first three quarters of FY’12, and the recent interest rate cut by India’s central bank, which was a first during the last three years.

Despite the prevailing high interest regime during most of FY’12, that affected auto and ancillary companies badly, Ahmednagar Forgings had put up a stable performance with nine-monthly revenue growing by nearly 35% and net profit growing by 11%.

The obvious logic is that when the interest rates are cut continuously from the prevailing peak, auto companies and in turn ancillary companies would do well, especially on the bottomline.

On the anticipation of the rate cut, auto and ancillary stocks were already on a roll, and on Thursday, the indicative BSE Auto Index marked a new all-time high. 

Interestingly, the rapid run-up and the resultant overbought situation was very visible in Ahmednagar counter on Thursday. Despite marking a new 52-Week High, which was 5.57% up from previous day’s close, the scrip could close only 1.50% up in NSE at Rs. 189.40.

Apart from AIC, ChrysCapital, HDFC Trustee, & Copthall, other large investors in the company include Religare Finvest and Anand Rathi Share & Stock Brokers.

Sellers in Q4 included Morgan Stanley and Anand Rathi, while buyers were Asia Investment Corporation and Religare. Promoter holding remained steady at 54.96%.

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