MC Inside Edge: MFs tread cautiously on Tata Tech, new VIP boss has bulls excited, ABFRL squares up to Trent, Ind-Swift investors lose patience

Know the major deals and all the inner goings-on from Dalal Street.

Very important stock?

Sudden burst of activity has emerged in the VIP stock over the last few trading sessions. Last week's presentation by the company's new MD, featuring ambitious targets, appears to have turbocharged the bulls. Chatter of promoters selling stake at a hefty premium to the market price has again started doing the rounds. No, say those familiar with the negotiations. Last time, talks stalled as the asking price by the promoters was way too high, said sources. After the hammering that the stock has taken in the last six months, chances of a deal happening at those valuations look even slimmer, considering there has not been any major improvement in the operating performance either. Those betting on the stock need to be prepared for the long haul.

Too pricey

News of the partnership with BMW fired up the Tata Technologies stock, but some mutual funds are said to be booking profits at every rise. SIP money is gushing in torrents, but that is not stopping fund managers from being fussy about valuations. They were net sellers of the stock in February, and looking at the price trend, the same may have been the case in March as well. Another reason for fund managers to be cautious is that the 6-month lock-in for a section of pre-IPO investors will end in the last week of May. Already, the stock is quoting more than twice its IPO price. Most of the locked-in investors would have got the shares even cheaper and would be tempted to sell a part of their holdings. Not to mention those investors who enthusiastically bought shares on the listing day. Also, the outlook on the auto sector is not as rosy as it was till some months back.

Mixed reviews

Aditya Birla Fashion Retail is getting trolled for again demerging its Madura Garments division, after having merged it less than a decade ago. But this appears to be the season for demerging previously merged business. ITC did the same with its hotels division a few months ago. ABFRL’s move appears to be aimed at getting the kind of valuations that rival Trent enjoys with much lower sales. There are various chatter in market circles. A section is hoping that ABFRL will be able to find a buyer for its Pantaloons brand before long. Reason: a possible Arvind Fashions like rerating when that company sold its fashion retail chain Unlimited to V-Mart in July 2021. Another set of investors are happy at the demerger, but jittery at the announcement of more capital raising. They are hoping that the capital is not used to add more brands to the portfolio, which would again weigh on its balance sheet.

Swift exit

Special situations funds seem to have run out of patience waiting for Ind-Swift Labs to finalise the sale of its API business, which has been in the works for almost three years now. Funds owned by Edelweiss have dumped a few million shares since last week, but those have been absorbed without much damage to the price. The Street is not sure if the buyers are high networth individuals trying to stir up action in the stock or they are a part of ‘friendly’ circles.