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Never-Say-Die Ambassador Going Places, Company’s Stock Soars In
Markets
Anuradha Himatsingka KOLKATA
IT’S suddenly small cars everywhere! Ratan Tata’s drive on to
the stage in a white Nano at the Auto Expo has been momentous in
more than one sense. Not only has it launched India’s cheapest
car so far, it has also drawn attention from almost every other
segment to the magic world of small cars as every other
manufacturer is vying with each other to launch a viable
alternative.
But amid this frenzy, a very different car is going places. The
age-old never-say-die Ambassador or the Amby of Hindustan Motors
(HM). In today’s day and age, when nearly everybody has written
the staid old Amby off, the company’s Rs 10 paid-up has stepped
on the gas in the stock market and hit top speeds that have left
most others far behind.
Very aptly again, only a few on the stock market actually knew
about this or kept tabs because the market too has its
ever-expanding set of newer stars who hog the limelight these
days and the HM counter is definitely not one that many people
are interested in keeping a watch on.
But between November 26, 2007 and January 7, 2008, the rickety
old Amby has zoomed a spectacular 137% as the Rs 10 paid-up
began climbing from around Rs 37.50 to Rs 88.95 over the period.
It kind of took a breather twice along the way, once at Rs 53 on
December 11, 2007 and then again at Rs 60.90 on December 31 even
as the New Year bells were chiming, before going flat out to
touch Rs 88.95 on January 7, 2008.
Old as it is, a little tiredness wasn’t unbecoming of the Amby
as it paused to book profits and get its breath back, which was
why it closed at Rs 77.10 on Tuesday. However, the 52-week high
for the scrip is Rs 95 and the handful of players in the counter
that are there, have no doubt that in the next phase of its run,
the Amby would go beyond the previous high.
What was fascinating all this while had been the volumes at
play. The Amby rarely ever attracts volumes, either on the road
or on the marketplace. But during this run, volumes just soared.
Between December 27 and January 1, nearly 100 to 170 lakh shares
of HM changed hands. On January 2, 4 and 7, the volumes at the
counter were a mind-boggling 300, 433 and 392 lakh shares
respectively.
Although profits are being booked now, the volume pressure is
still considerable and turnover is hovering between 118-200 lakh
shares a day to the usual counter turnover of 20-25 lakh per
trading session.
Chandra Kant Birla is generally out of the media glare, but
what’s it he has done to make the Hindustan Motors scrip do a
star turn on the market of late?
A predominant section of the stock market grapevine says he is
going to sell off the Thiruvallur unit of the company in
Chennai, for which negotiations are currently on between the
Birlas and Mitsubishi Motors, its technical partner. The
grapevine says the Birlas may be hiving off the unit into a
separate subsidiary and it may subsequently offer a stake in the
subsidiary to prospective partners.
The two-stage transaction, sources said, will be simultaneously
implemented. First, the transfer of Chennai plant will be done
from HM to the new subsidiary, while in the second stage, shares
of the subsidiary would be sold to prospective partners and the
CK Birla group. The deal is expected to result in cash flow to
HM.
In fact, proponents of the view recalled that the Birlas had
done something very similar with their component business in
2004.
“They had hived off the component business from Pithampur and
Hosur into a new subsidiary, AVTEC and the new subsidiary then
offered a stake to Actis Capital LLP, Hindustan Motors and the
Birlas,” sources said.
Some others wondered if HM was more interested in a straight
sell-off to its technical partners instead. The company,
however, said nothing.
“Hindustan Motors and Mitsubishi Motors are working on a number
of new products. A joint announcement to this effect was made in
a press conference held in New Delhi on January 9,” Hindustan
Motors said in response to a mail sent by ET on Tuesday.
That isn’t saying much at all, except for confessing that some
sort of negotiations are going on for sure. The company version
had its backers. Another section of the stock market felt that
‘some were trying to spread rumours that hardly have any basis,’
referring to those who think that the Chennai unit of the
company might be sold off. However, these pundits could not
offer any suggestions as to why otherwise would the company’s
scrip dance around on the stock market all so suddenly.
Whatever the reasons for the price hike might be, the jump in
the scrip price would do investors in HM a good turn. The scrip
had been languishing at Rs 33 levels for a long time and a spurt
now can only turn out to be good. Its Thiruvallur unit began
manufacturing Mitsubishi Lancer since 1998.
The plant with a capacity to produce 12,000 vehicles per annum
rolls out economy, standard, luxury and sports version of the
Lancer. It also produces the top end Pajero 3.2 litre, the
Pajero Q car (2.8 litre), Cedia and Montero. This division is
also engaged in the manufacture and sale of spare parts used in
the Lancer cars, the company’s states in its official website.
anuradha.himatsingka@timesgroup.com
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