Wednesday, May 16, 2012

Kirloskar Pneumatic’s Promoter Buys Shares for Rs. 24 Crore, Ups Stake by 3.89%

Sanjay Kirloskar,
Director, Kirloskar Pneumatic,
and CMD, Kirloskar Brothers.
By Staff Reporter:

Kirloskar Pneumatic Company Ltd (BSE: 505283) on Wednesday, 16th May 2012, witnessed a massive stake upping of 5 lakh shares by two promoter entities.

The two deals were disclosed by Bombay Stock Exchange, after trading hours on Wednesday.

While the main promoter group company, Kirloskar Brothers Investments Ltd bought 1 lakh shares at Rs. 490 a share, another promoter company, Kirloskar Industries Ltd bought 4 lakh shares at Rs. 483.40 a share.

Both the buys taken together amount to a 3.89% stake in Kirloskar Pneumatic and is worth Rs. 24.24 crore at the buy prices.

Against these 5 lakh shares, there was an identifiable seller in ICICI Prudential Tax Fund which sold off 2 lakh shares at Rs. 490 a share.

This kind of massive buy by promoters in one-go is a rare instance in Indian markets, especially when the promoter group stake is already high, and is definitely sending a signal about the prospects for this company in the long-term.

StockExplain had earlier reported that Kirloskar Pneumatic’s promoter group was on a massive buying spree, when we reported on a 0.65% stake upping with no identifiable sellers on 27th March. We had also mentioned that they had earlier picked up 0.83% from DSP BlackRock Mutual Fund.

On March 30th, the promoters bought again, when they picked up 0.79% against an identical sell by Sundaram BNP Paribas Mutual Fund.

And all of these deals were reflected in its totality in Kirloskar Pneumatic’s recently published Share Holding Pattern for Q4, which shows that the promoters have upped their stake by 2.24% over the previous quarter, to reach a stake of 58.09%.

Even more recently, one promoter group entity had disclosed of two minor market buys into the stock, amounting to an additional 0.07% stake.

Combined with Wednesday’s massive buy, all these deals total to a robust promoter stake of 62.05% in the company now.

Since this series of promoter buys often had institutional sellers as matching counterparties, the stock hadn’t appreciated much since the first of these buys was executed on 17th February. 

However, it was definitely this strong and continuing support provided by the promoters that had spared the scrip from the painful correction that has happened in comparable scrips and in the general market.

And with today’s steep rise owing to the strong buying demand from promoters, Kirloskar Pneumatic has more than cancelled the shallow losses in the latest round of market downfall, thereby making it a good defensive bet.

On the fundamental side, Kirloskar Pneumatic had a good year in FY’12 with consolidated sales growing by 35.56% and consolidated net profit rising by 40.97%. However, much of the good performance has happened in the earlier quarters and not the recent Q4, thereby revealing the long-term philosophy behind the promoter buys into the stock that have happened in Q4.

The largest institutional investors in the stock are Reliance Diversified Power Sector Fund, HDFC Tax Saver Fund, Eastspring India Fund, ICICI Prudential Tax Plan, Reliance Small Cap Fund, and Reliance Capital.

On Wednesday, Kirloskar Pneumatic closed at Rs. 484.65 in BSE, up by 13.67%, in a bearish general market that saw the main Sensex index crashing by nearly 300 points.       

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