MC Inside Edge: Beauty and valuations, Wockhardt looks for booster, Vedanta bulls await rerating

Know what stocks veteran bulls are eyeing, what the bears are ganging up against.

Beauty, as the saying goes, lies in the eyes of the beholder. Seems the same holds true for valuations, too. While trimming its stake in Whirlpool India in February, parent Whirlpool Corporation’s CEO Marc Bitzer had cited expensive valuations as the reason. Since then, the stock has quietly gained another 20 percent on thin trading volumes. March quarter revenues did not see a big jump year-on-year, though improved operating efficiencies lifted profits and profitability. Domestic mutual funds were the big buyers in the February block deal, but a sizeable quantity was picked up by high networth individuals as well. There was no major follow-up buying by mutual funds in April. Much of the recent action in the stock appears to be the handiwork of HNIs looking to book profits.

Booster dose 

Wockhardt is going in for another round of fund raising, shortly. It is not clear at this stage if the company plans to take the equity, debt or convertible route. The company had raised Rs 470 crore through a QIP just two months back, with funds managed by Madhu Kela and Prashant Jain among the investors. Back-to-back equity dilution may not exactly be music to the ears of the recent investors. But looks like the company badly needs some moolah to get its blockbuster antibiotics in the pipeline moving. If it can rope in some marquee investors in the upcoming round, that could lift sentiment for the stock.

Steely resolve

Shares of JSW Steel are holding firm despite a tepid set of earnings for the March quarter. A leading Mumbai-based Dalal Street veteran has been a regular buyer in the stock of late, and that partly explains the run-up in the stock price. The same veteran has also been a buyer in Jindal Steel and Power. Outlook on the metal space, in general, has turned positive of late; though aluminium and copper is what the Street is more excited about.

Bhau Bhagwan che

The big boys of Dalal Street, midcap Mugul and the Sheikh in the late Big Bull’s inner circle among others, are said to be quite active in Vedanta. There is chatter about another round of share sale by the promoter to raise funds which can then be used to pare debt. Stock is still suffering from a perception problem among leading fund managers. The White Knight Fund that had bailed out a corporate group last year was widely tipped to pick a slice during the previous round of promoter share sale. But that chatter turned out to be unfounded. In fact, the White Knight went on record to say that he has not bought a single share. Domestic funds have begun warming up to the stock of late. Mugul & co would be hoping that higher metal prices would tempt more fund managers to overlook some of the governance issues in the past.