KM Birla to hike holding in Hindalco

On Tuesday, KM Birla, chairman of Aditya Birla group, said that he is working on a plan to hike promoter’s holdings in Hindalco to over 50%. Currently, the group’s ownership is less than a third in Hindalco. This statement comes on the back of intense speculation in the markets that one of the world’s largest aluminium producers has written to Hindalco’s board members expressing its interest to buy the company at about Rs 225 per share. Market operators say this was at a 50% premium to Hindalco’s stock price at the time of writing of the letter. A spokesperson for AV Birla group said it was a ‘‘company policy not to comment on speculative stories.’’ Be what as it may, fact remains some interesting changes have taken place in Hindalco’s shareholding pattern between April 1 and June 30. Accompanied, of course, by a spike in volumes and stock prices. In April, Hindalco’s promoters raised stake in the company by about 4.5% to 31.4%, through the preferential allotment route. This move, also bought into effect regulation that prevent the promoters from increasing stake using the creeping acquisition route until the end of the current financial year. A look at the company’s GDR holding pattern shows the number of shares held as GDRs has gone up by about 3 crore shares. This translates to about 2.5% of the company’s expanded equity. The number of shareholders though did not change. What it means is this. Three shareholders now hold 15.1 crore shares — up from 12.1 crore. Thanks, to ADR/GDR-domestic shares fungibility, either one or more of these three hold 3 crore more shares in the company. Fungibility allows shareholders to convert local shares into listed ADRs/GDRs and vice versa. A top dealer at a foreign brokerage house pointed out that under current rules, the identity of the GDR holders might not be disclosed. While GDRs of most of the companies usually trade at discounts to the domestic stock price, for some time Hindalco’s GDRs were trading at a substantial premium, indicating buying by interested parties through the GDR route, the dealer said. While some investors cornered Hindalco’s GDR in the foreign market, in the domestic market, Hindalco stock went up by 32% since June 1__from Rs 140 to Rs 187 now. Of this, 21% gain came in the last 12 sessions. Although a number of analysts attributed this recent spike in stock prices to a re-rating in the aluminium sector globally, following Rio Tinto’s takeover of Alcan, people in the know say there may be more to the rise. Compared to Hindalco’s 32.3% jump, the stock price of Nalco, another pure-play aluminium producer, rose just 14% while Sterlite Industries, Hindalco’s peer from the private sector, gained 20%. The rise in Hindalco’s stock price was also accompanied by huge volumes, with average daily volumes for the period since June 1 nearly three-times the comparable previous period. The rise in daily volumes along with the rise in prices, as one broker pointed out, indicates buying by investors with deep pockets.