Indian share markets open firm

Fri, 14 Jun 09:30 am

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Barring Taiwan (down 0.2%), all major Asian stock markets have opened the day on a firm note with Indonesia (up 2.9%) and Japan (up 2.5%) leading with hefty gains. The Indian equity market indices have opened the day on a firm note. Stocks in the consumer durables and realty space are leading the gains. However, information technology stocks are trading weak.

The Sensex today is up by around 189 points (1%), while the NSE-Nifty is up by around 57 point (1%). Mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 1% and 0.9% respectively. The rupee is trading at Rs 57.90 to the US dollar.

FMCG stocks have opened the day on a firm note with Emami Ltd, Colgate and Marico Ltd leading the gains. Following the announcement of March 2013 quarter results of FMCG major Hindustan Unilever Ltd (HUL), the Anglo-Dutch parent firm Unilever Plc had announced a US$ 5.4 bn (approximately Rs 292 bn) voluntary open offer to buy a 22.52% stake in its Indian subsidiary. As per a leading financial daily, the company has received approval from the Securities and Exchange Board of India (SEBI) for the open offer. The open offer will commence on June 21 and end on July 4. Unilever will offer Rs 600 per share in the open offer. After successful completion of the open offer, Unilever's stake in HUL will increase from 52.48% to 75%.

Tyre stocks have opened the day on a firm note with JK Tyres and Industries, Ceat Ltd and MRF Ltd leading the gains. However, Apollo Tyres is trading in the red. As per a leading financial daily, tyre major Apollo Tyres has announced that it will acquire US-based Cooper Tire & Rubber Company in an all-cash transaction valued at US$ 2.5 bn (approximately Rs 145 bn). Apollo will buy back all shares from Cooper shareholders at US$ 35 per share in cash, which translates to a 40% premium. This will be the largest merger and acquisition deal in the history of the Indian automotive industry. Prior to this deal, Tata Motor's US$ 2.3 bn Jaguar-Land Rover acquisition was the largest acquisition in the industry. After the acquisition, Apollo will become the 7th largest tyre company in the world from its current position at number 16. The deal will help Apollo spread its footprint in both developed as well as emerging markets, including major markets such as the US and China. A large part of the deal, about US$ 1.9 bn, will be financed through debt. This will substantially increase Apollo's debt burden. Currently, the company's debt to equity ratio stands at 1:1.

The stock of Apollo Tyres witnessed a very heavy sell off yesterday owing to concerns pertaining to the highly leveraged acquisition. The share price tumbled by 25.4% yesterday over the previous day's close.