Tuesday, April 17, 2012

Tecpro Systems Stake Bought by Kitara Capital for Rs. 10.29 Crore

Ajay Kumar Bishnoi,
Chairman & Managing Director,
Tecpro Systems Ltd.

By Staff Reporter:

(Editor's Note: This story was updated on 18th April 2012 11:20 PM to include a disclosure made on 18th by a Director of Tecpro Systems. Update marked in italics.)

Tecpro Systems Ltd (BSE: 533266, NSE: TECPRO) counters in BSE & NSE, on Tuesday 17th April, witnessed significant buys by Oman based private equity firm Kitara Capital.

As per data published by BSE & NSE after trading hours on Tuesday, Kitara has picked up 5.14 lakh shares, which makes up a 1.02% stake in the company.

At both the exchanges, there were no identifiable institutional sellers, selling above 0.50%.

(Editor's Note: However, on Wednesday, 18th April 2012, Achal Ghai, a Non-Executive Director of Tecpro Systems has disclosed in the Exchanges that he has sold off 2.5 lakh shares each in BSE & NSE. Ghai is the Founder & Managing Partner of Avigo Capital Partners, an India based private equity firm. Its Group company, Avigo Venture Investments Ltd is Tecpro's largest non-promoter investor with a 13.51% stake as of Q4 end.)

The buys were executed by Kitara PIIN 1101, which is an FII sub-account registered under the FII, Kotak Mahindra (UK) Ltd.

At a per share price of Rs. 200 a share, the deals were worth a total of Rs. 10.29 crore.

Tecpro Systems Ltd is an Engineering, Procurement, & Construction (EPC) company that specialises in turnkey solutions in select sectors like bulk material handling for cement, power, steel etc, ash handling systems for thermal power plants, balance of thermal plants, captive power plants, Waste Heat Recovery (WHR) boilers, pollution control systems, water treatment, solar energy systems etc.

The firm is headquartered in Chennai, with a pan India marketing presence, manufacturing facilities in Rajasthan & Haryana, and an international presence in Singapore. It also has technical assistance from a Chinese company in the field of WHR boilers.

Kitara Capital's top investments in India's listed space are APL Apollo Tubes where it has a 14.78% stake, and Vivimed Labs where it holds 13.13%. Its speciality in the PE business is said to be the direct investment opportunities into the Indian equity market that it provides to its investors. 

Tecpro Systems had a sluggish standalone performance in the first three quarters of FY’12 with net profit growing by just 8.12%, despite revenue growing by 41%.

The stock had corrected deeply during the last 52-Weeks, falling from a high of Rs. 328 on 3rd May to a year-to-date low of Rs. 141 on 3rd January, which was a fall of 57% within 8 months.

Kitara’s identified buy has come on Tuesday, after the scrip has rebounded by nearly 42% from its 52-Week Low. 

The buy cue seems to be the deep correction as well as some recent order wins by Tecpro Systems. The orders were by public sector power major NTPC and private sector power company Abhijeet Projects, with the total order value pegged at Rs. 297 crore.

These orders are of significance, as the consolidated annual sales of Tecpro is around Rs. 2000 crore only.

Despite the significant buys by Kitara Capital, and despite a strong Indian market on Tuesday, the scrip struggled to close in green. Though part of it is due to the steep gains in the scrip in recent days, it is clear that there are enough sellers at these levels to accommodate institutional buys like of Kitara’s.

Major non-promoter stakeholders in Tecpro are Avigo Venture Investments Ltd with a 13.51% stake, and Metmin Investments Holdings Ltd with 8.51% stake.

Institutional holding was down by 1.3% in Q4 to reach 20.09%, mainly due to FII selling. But the institutional holding is dominated by DIIs with a 18.63% stake, which was marginally up in Q4. Promoter holding remained unchanged at 52.63% in Q4.
Due to the steeply corrected nature of the stock during the year-to-date, significant order wins, as well as identified institutional buying on Tuesday, the scrip is likely to find buyers at lower levels.

Tecpro Systems closed trade in BSE at Rs. 199.40, up by just 0.18%.

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