Friday, May 4, 2012

HCL Tech Promoters Sell Stake for Rs. 500 Crore, FII Buys for Rs. 406 Crore

Shiv Nadar, Chairman & Managing Director,
HCL Technologies Ltd

By Associate Editor:

HCL Technologies Ltd’s (BSE: 532281, NSE: HCLTECH) promoter group on Friday, 4th May 2012, sold off 1 crore shares amounting to 1.44% stake in the company, thereby raising a little over Rs. 500 crore, in a deal executed at BSE.

The deal done by HCL Tech’s main promoter group entity, Slocum Investments (Delhi) Pvt Ltd at Rs. 500.15 a share, was disclosed by Bombay Stock Exchange after trading hours on Friday.

There was a ready buyer for Rs. 406 crore worth of shares, when First State Investments bought 81.19 lakh shares at Rs. 500 a share. Entities who bought the rest of the shares sold by promoters remain unidentified.

The massive buy amounting to 1.17% in the company was specifically by First State Asia Pacific Leaders Fund, which is a sub-fund of First State Investments ICVC, which in turn is the part of the asset management division of Commonwealth Bank of Australia which handles assets worth $158 billion.

In India, this sub-fund is registered as an FII sub-account under the FII National Westminster Bank Plc as Depositary of First State Investments ICVC. National Westminster Bank is part of The Royal Bank of Scotland (RBOS) Group.

Neither First State Investments nor NatWest / RBS are currently holding large stakes in HCL Tech, above 1%.

HCL Technologies stock had appreciated much in recent weeks after the software major delivered reasonable results for the quarter ended March 31st 2012 which was noted for year-on-year growth in revenue and net profit, unlike bigger peer Infosys.

The company which follows a July-to-next-June fiscal, has also maintained strong nine-monthly results till now. Coupled with it, the recent weakening of the rupee has benefited this software exporter’s stock, with HCL Tech marking a new 52-Week High of Rs. 523.50 on Wednesday.

Evidently, the promoter group has made best of this situation by selling very close to this peak, at Rs. 500.15 a share. It shouldn’t be a concern normally as their holding in the company as per latest available Share Holding Pattern (SHP) was at 63.77%. It is also comforting that a prominent FII has absorbed most of Friday’s selling even at these high levels.

At the same time, this promoter selling can be taken as a sign that an immediate and significant upside in the stock is limited. This is especially so as the promoters had also shed a smaller figure of 18.19 lakh shares in the quarter ending March 31st.

Major institutional investors in HCL Tech include HSBC Global Investment Funds, Life Insurance Corporation of India, Master Trust Bank of Japan Ltd A/c HSBC Indian Equity Mother Fund, Dali Ltd, and Warhol Ltd (of ChrysCapital Group).

HCL Technologies stock closed down by 0.40% in NSE at Rs. 513.20, in a bad day for market which saw  Nifty closing down by 1.96%.

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