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Focus shifts to smallcaps
Wed, 10 Nov 11:30 am

Indian indices pared their opening losses over the previous two hours of trade on buying interest in heavyweights and are now trading flat. Stocks from the auto and consumer durables space are trading firm while stocks from the capital goods and metal space are trading weak.

The BSE-Sensex and NSE-Nifty are trading flat. BSE-Midcap is up by 0.6% while BSE-Smallcap index is trading 1% above yesterday’s closing. The rupee is trading at 44.41 to the US dollar.

Food stocks are trading mixed with Lakshmi Energy and Golden Tobacco trading firm while Nestle and Godfrey Phillips are trading weak. As per a leading financial daily, Tata Global Beverages (TGB) is in talks with private equity firms for raising funds through dilution of a minority stake. While it is not known whether the dilution would be at company level or in the UK subsidiary, Tetley, the dilution is likely to be between 10-12%. The company plans to raise funds for future acquisition and for value creation. The fund infusion is aimed at powering TGB’s growth plans, which entails achieving revenues of US$ 5 bn in the next five years from the present US$ 1.5 bn. Growth is expected to come from the company’s existing brands and through acquisitions. Other than beverages, TGB is also looking at acquisitions in the foods space. UK-based investment bank Rothschild is advising TGB on this deal. If the deal is successful, Rothschild is likely to explore similar value unlocking and restructuring in global subsidiaries across the Tata group.

Construction stocks are trading flat with Patel Engineering and DS Kulkarni leading the gains. IVRCL Assets & Holdings, a subsidiary of IVRCL Infrastructures Ltd. plans to sell up to 49% stake in three of its road projects and raise Rs 6 bn through QIP of shares by March 2011. The company has an enabling resolution to raise Rs 10 bn through QIP and has raised Rs 1.5 bn till now. It also plans to sell its land bank of approximately 3,000 acres and raise Rs 3-5 bn over the next three years. Funds raised via QIP and stake sale at the SPV level will used to fund future projects. In order to accelerate the fund raising programme the company plans to club all the three road projects into one SPV and then dilute the holding to the extent of 49%. As two of the road projects are already operational we believe the company will not face any difficulty in attracting investors.

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