Wednesday, May 2, 2012

Pipavav Defence Stake Upped by LIC Again, for Rs. 171.21 Crore



Nikhil Gandhi, Chairman,
Pipavav Defence & Offshore Engineering

By Special Correspondent:

Pipavav Defence & Offshore Engineering Company Ltd (BSE: 533107, NSE: PIPAVAVDOC) again witnessed a stake upping by LIC of India on Wednesday, 2nd May 2012, when the insurance major bought over 2.15 crore shares of the ship builder in a transaction at NSE.

This was disclosed by National Stock Exchange on Wednesday, after normal trading hours had closed.

Both Pipavav Defence and Life Insurance Corporation of India, had recently disclosed that LIC had acquired 0.19% further stake during mid April, thereby taking the total stake of India’s largest DII, in Pipavav, to 5.04%.

Wednesday’s buy was massive compared to this, as 2.15 crore shares amount to a significant 3.12% additional stake in the company, and LIC has pumped in Rs. 171.21 crore to buy this stake at Rs. 79.50 a share.

If no other unidentified buys or sells by LIC have happened in the counter, after their last disclosure, the insurance giant’s stake stands at 8.16%, which makes it the second-largest non-promoter shareholder in Pipavav Defence & Offshore, just behind IL&FS Group which has a 9.19% stake, through two group firms, as per the latest Share Holding Pattern (SHP) available.

There were no identifiable large sellers in the counter on Wednesday, selling above 0.50% stake. But looking at the ease with which the stock slipped by 4.56% by closing, despite the mammoth buy by LIC, selling pressure was evident in the counter.

It is also possible that a clutch of institutional investors were selling a little less that 0.50% each on Wednesday.

Institutional investors holding large stakes include IL&FS Maritime Infrastructure Company, Smallcap World Fund, Valiant Mauritius Partners FDI, Life Insurance Corporation Of India, Export-Import Bank of India, IDBI Bank, IL&FS Financial Services, New York Life Investment Management India Fund, and American Funds Insurance Series Global Small Capitalization Fund.

Anyway, the significant stake hike by LIC at this point of time appears surprising as the scrip has already soared by nearly 57% from its 52-Week Low of Rs. 50.65 recorded on 21st November.

On the fundamental side, Pipavav Defence has been going through a strong positive turnaround in performance, with FY’12’s first nine months marking a 92% growth in revenue, while the bottomline turned around from a net loss of Rs. 9.38 crore to a net profit of Rs. 31.33 crore.

The company started out as a conventional ship-builder and has been trying its best, often successfully, to branch out into the lucrative defence business. The defence deals it had bagged were a matter of controversy with other more established Indian players contesting the award to Pipavav, but unsuccessfully.

The company is yet to announce its Q4 and annual results. Recently, it had announced the intention for a fund raising of non-convertible bonds, ECBs, or FCCBs worth Rs. 1000 crore.

Pipavav Defence & Offshore closed Wednesday’s trade at Rs. 79.55, down by 4.56% in NSE. It is noteworthy that LIC’s buy happened at almost this level.

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