Bear of the Day: Stock that rose 24% in 3 days

What analyst said?

SP Tulsian, sptulsian.com expects a 50% rise from current levels in Essar Shipping's stock price. Tulsian said, "I think the recent high court approval of the restructuring move will lead to the company getting bifurcated into two. One is that the shipping logistic and oil field services will go into one company that is Essar Shipping of which one share will be given to the shareholder for every three shares held in this company. Second will be Essar Port of which the existing company will be renamed as Essar Ports - three shares will become two shares in this post restructuring move. So a shareholder who is holding at present three shares in the company will be holding two shares of Essar Ports and one share of Essar Shipping after this restructuring."

He further added, "If you look at Essar Ports, this will be the second largest private sector port in the country. If I take the valuation or the market cap of Mundra Port it is right now at about Rs 27,000-27,500 crore while the entire company of Essar Shipping or Essar Ports & Logistics that it is called now has a market cap of close to about Rs 5,000 crore. I see huge value because the capacity of Essar Ports will be increased from 76 million tonne of crude receiving and dispatch capacity to about 156 million tonne by 2013."

"Similar is the case with Essar Shipping in which they would be having shipping, logistic and oil field services because they will be having oil rigs, the cargo ship and everything. So on a sum-of-parts basis if you are buying three shares today for about Rs 245 I see huge value maybe coming up post this restructuring move and one can expect an appreciation close to about 50% because restructuring is likely to happen in the next couple of months. Maybe the new entity that is Essar shipping will get listed probably in three months time. So maybe in six months one can expect a price of about 50% rise from hereon taking the valuation of both the companies."
 
Peer comparison: