Market Analysis: Review on Friday, Nov 19

On Friday, Nov 19 BSE Sensex gained 65 points and closed at 19,930, while Nifty gained 10 points and closed at 5,998.

BSE Metal and Auto indices gained 1.8 percent and 1.4 percent respectively. BSE Bankex and Consumer Durable indices were down by 1.6 percent and 1.4 percent respectively.

Corporate

Vicco brands on the block

Vicco Turmeric and Vicco Vajradanti, ayurvedic skincare and oral care brands, are up for sale. The Mumbai based Vicco Group has mandated Enam Securities to scout for a buyer and potential suitors have been sounded off on the likely sell-off three weeks ago.

Vicco Management had sought Enam's advice on whether to sell off the brands or list the company on the stock market to get a better valuation for its brands. Enam has advised to sell the brands instead of listing on the stock market.

The group's annual turnover is estimated at about Rs 400 crore and Vicco products account for 4 percent of the country's toothpaste market. Dabur and Emami both are interested in the Vicco brands.

Patni promoters, PE firm revive exit talk

The promoters of Patni Computer Systems and a private equity investor have revived attempts to sell their 60 percent stake in the Company.

A mix of private equity firms and so called strategic buyers have evinced interest in buying the holdings of Patni's owners Ashok, Gajendra and Narendra Patni and General Atlantic, the PE investor.

Three PE funds, Apax Partners, Carlyle Group and Advent Advisors are in the fray while Japanese firm, Hitachi, and two European firms are the strategic bidders, a term oftenly used to differentiate companies from private equity or other financial investors.

Financial investors are more aggressive this time, to but the stake in Patni. As compared to previous attempts the promoters are open to a more realistic valuation. Credit Suisse is the bank advising Patni on the deal.

PE cos wait to grab pie in Gitanjali Group cos

Global private equity firms Bain Capital, Advent International and Apax Partners are in the race to buy stakes in Gitanjali Group subsidiaries owning jewelry brands Nakshtra, Gilli and Asmi. The Company is negotiating to raise around $100 million from the stake sales to cut debt.

The stake sale plan is part of a restructuring exercise within the group and could involve hiving off of one of the Company's business units. As per the media reports, the Company's net debt in the third quarter of 2010 would be Rs 2394 crore and would have negative cash flow from operations of Rs 563 crore.

Gitanjali Group expanded rapidly in the last five years, partly through acquisitions in US and India. But its US acquisitions backfired after the economy slipped into its worst recession in 2008 since the great depression in 1929.

DRDO plans Rs 1000 crore investments in south

The Defense Research and Development Organization (DRDO) will spend around Rs 1000 crore on development activities in and around Hyderabad over the next five years.

About Rs 650 crore will be invested for increasing the missile manufacturing programme, while Rs 350 crore will go into developing a hypersonic wind tunnel for testing scram jet engine which will be six times faster than the speed of sound.

(An article by DAS CAPITAL MANAGEMENT & ADVISORS Pvt Ltd)