Tuesday, October 16, 2012

Kajaria Ceramics Bought by GMO


Ashok Kajaria,
Chairman & Managing Director,
Kajaria Ceramics Ltd.

By Mohammed K, Special Correspondent:
Tuesday, 16th October 2012, 09:45 AM IST:

Kajaria Ceramics Ltd (BSE: 500233, NSE: KAJARIACER) counter in BSE, on Monday, witnessed a significant buy of 4.86 lakh shares by the noted FII, GMO Emerging Markets Fund.

The buy was disclosed at Bombay Stock Exchange after trading closed on Monday.

GMO invested Rs. 10.20 crore to pick up a 0.66% stake in this leading ceramic tiles player of India, at Rs. 210 a share.

There were no identifiably large counter-party sellers in the Kajaria counter in BSE, selling above 0.50% stake. At National Stock Exchange, no large deals in Kajaria were reported.

As per the latest available Share Holding Pattern, which is for June quarter end, GMO was not an identifiably large investor in Kajaria, holding above 1% stake. 

However, Monday’s buy by GMO has come at the height of an ongoing rally in Kajaria, and hints at possible earlier buys by this FII in Q2 of this fiscal. Kajaria is yet to file its SHP for the September quarter.

On Monday, the stock rallied by 3.27% in BSE to close at Rs. 211.65, while in NSE it rose by 2.85% to close at Rs. 211.35. Counters in both exchanges witnessed new 52-Week Highs, with the NSE year-to-date high recorded on Monday at Rs. 212.50. 

The promoter group of Kajaria Ceramics holds a healthy 53.51% stake. Institutional stake is reasonable at 16.51%, dominated by FIIs at 10.54%.

However, there are only a few institutional players in the counter, still, and Kajaria may attract more FIIs and DIIs in the long run.

Major investors in the counter are HSBC Bank (Mauritius) Ltd A/C Jwalamukhi Investment Holdings, Bengal Finance & Investment Pvt Ltd, DSP Black Rock Small & MID Cap Fund, and DSP Black Rock Tax Saver Fund.

The stock is noted for its robust consolidated Return on Equity (RoE) of over 29%, which can be attributed to the company’s impressive growth in both topline and bottomline, with no equity expansion at all during the past several years.

Earlier, the stock had significant participation from celebrity investors like Ashish Dhawan, which has been pared significantly. But even after Dhawan’s sells, Kajaria had continued its rally.

First quarter results in this fiscal showed a sequential dip in both revenue and profit, even while on year-on-year terms it continued the expansion.

The stock may correct to a reasonable degree due to profit booking, but the rally in Kajaria may resume on further market strength, especially if the upcoming Q2 results are up to the expectations.