Market Analysis: Review on Thursday, Dec 9

Mumbai, Dec 10: BSE Sensex lost 454 points and closed at 19,242 on Thursday, Dec 9, while, NSE Nifty lost 137 points and closed at 5,766 on the back of price rigging by few promoters and net sell off from FII"s and DII"s. Except IT index all other BSE sector indices closed in red. BSE Consumer Durable and Realty indices were down by 6.3 percent and 4.8 percent respectively.

Munjals in search to buy Hero Honda stake

The promoters of Hero Group have initiated talks with lenders to secure bridge financing for buying out its joint venture equity stake from Honda. Some foreign banks such as Bank of America and domestic non-banking financial companies such as HDFC and L&T Finance are in fray to part finance Hero Group.

The 26 percent equity held by Honda could be worth some $1.2 billion at 40 percent discount to its market valuation. As per the Company sources, the Hero Group assets, such as its BPO business, real estate and auto ancillary business may be pledged as collateral for the loans.

Strides Arcolab buys 70 percent in biotech start-up Inbiopro

Strides Arcolab on Thursday announced its entry into biologics, with the signing of an agreement to acquire 70 percent stake in biotechnology company Inbiopro Solutions. Inbiopro is a biotech outsourced research start-up and has eight candidate products in oncology to begin with. Strides will invest Rs 65 crore over three years in the form of growth capital to develop and commercialize the eight products. The investment will be made through newly rebranded steriles subsidiary, Agila Specialties. It will be financed from incremental licensing income in the specialties domain.

The existing promoters of Inbiopro and its funding partner Accel Partners will hold the remaining 30 percent stake and continue to lead technology development. The acquisition will be made through a mix of direct subscription and acquisition of shares from existing shareholders. The acquisition gives Strides immediate access to a pipeline of eight products estimated to have global sales of over $28 billion.

Commercialization of these products is expected to begin in 2013. Once the products are ready for market, Strides, would sell them on its own in India, Africa and Australasia. It would tie up with global pharma majors to take the products to the highly regulated markets of the US and Europe.

Ispat, Stemcor talks for stake hit a dead-end

Its negotiations with UK-based steel trading company Stemcor for a 10 percent stake in the company has failed to materialize. Instead, in a new twist, Stemcor now seems more keen to buy out the Ispat promoters. The situation between Stemcor and the Mittals has deteriorated over the past month, as the plant has shut down due to acute shortage of money.

There were also disagreements on business operations and board seat allocation. There were also disagreements on business operations and board seat allocation. Stemcor, is seeking better terms than before as the plant will need at least Rs 150-200 crore to restart and bring back to production. It is no longer a running plant and therefore, more investment is required to run the plant.

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