Thursday, June 7, 2012

Jain Irrigation Added by Macquarie Bank

Anil B Jain, Managing Director, Jain Irrigation Systems Ltd.

By Staff Reporter:

09:38 PM IST, Thursday, 7th June 2012:

Jain Irrigation Systems Ltd (BSE: 500219, NSE: JISLJALEQS) counter in NSE on Thursday witnessed hectic activity as the noted FII, Macquarie Bank bought 44.17 lakh shares.

The buy, which was at Rs. 74.20 a share, was disclosed at National Stock Exchange after trading closed on Thursday.

Macquarie’s buy amounts to a 1.14% stake in the micro irrigation systems player, and is an accumulation of stake in the company.

StockExplain had earlier reported about the Australian financial major’s recent identified buy into Jain Irrigation stock, two weeks back.

Since that buy of 0.58% stake at Rs. 70.23 a share, the long-running free-fall of the stock has been contained, and on Thursday, Jain Irrigation rallied till Rs. 76.

However, institutional selling is continuing in the stock, with Thursday witnessing a matching sell to Macquarie’s buy by, Fundamental Investors Inc which offloaded 44.17 lakh shares at the same rate.

Jain Irrigation’s Class-B or DVR (Differential Voting Rights) counter also witnessed a sell of 2.47 lakh shares by Small Cap World Fund Inc at Rs. 35.62 a share. There were no identifiable buyers for these shares (BSE: 570004, NSE: JISLDVREQS) on Thursday.

Both Fundamental Investors and Small Cap World Fund are arms of the US mutual fund giant, American Funds.

The diametrically opposite positions taken by the two investment majors - American Funds and Macquarie Bank - when the stock is ruling near its 52-Week Low is sure to ignite discussions on future valuations for Jain.

One interesting dimension to the deal is that for American Funds it is only a small and partial sell, while for Macquarie it has been an accumulation on a recent position.

American Funds’ parent, Capital Group has been the largest non-promoter shareholder in Jain Irrigation with three of its arms holding a 10.86% stake, as per the latest available Q4 Share Holding Pattern. However, Thursday’s identified sell and the stock’s downward trajectory in Q1 of this fiscal hints that it might have sold significant quantities post Q4.

If Macquarie Bank has not transacted in the counter after its first buy two weeks back, it is now holding a significant stake of 1.72% in the company.

As noted by StockExplain in its earlier news coverage on the topic, Macquarie seemed to be testing the waters with a smaller buy, two weeks back, while the accumulation on Thursday shows a certain conviction in the turnaround of this once-highflying but now troubled company.

On Thursday, Jain Irrigation Systems closed trade in NSE at Rs. 74.60, up by 1.84%, while the Class-B DVR share of Jain Irrigation closed at Rs. 35.20, down by 1.26%.