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Max India: The investing angle

THE valuation of the Max India stock may perk up in the short-term on the back of its investments in the IT sector and the dividend announcement. The company has proposed a dividend of 250 per cent. Having just completed the merger of Max Corp (a wholly-owned subsidiary) with itself, the company is sitting on a pile of cash.

The dividend payout would involve an outgo of Rs. 28.83 crores. The company appears to picking up strategic investments in the IT sector with a view to invest and profit later. It has acquired a stake in Investment Research & Information Services (IRIS), a provider of corporate information.

The Max India stock, which trades at Rs. 439, may rule firm.

Duphar-Interfran: Decoupling pharma business

THE share price of Duphar-Interfran is likely to rule firm in the near-term on the heels of the move to restructure the operations. The pharmaceutical business will be hived off into a new company, with the Solvay group holding controlling stake of about 60.5 per cent.

Shareholders of Duphar-Interfran will get two shares in the new pharmaceutical company for every share held. By severing the chemicals business, the new company's valuation may be higher than that commanded by the existing Duphar-Interfran stock. The che micals business may not weigh on earnings growth and valuation.

The revenue stream of the demerged entity will be derived exclusively from the more profitable pharmaceutical business. As a company with a presence in a more profitable business embellished by a MNC tag, Duphar's share price is likely to rule firm. The share trades at around Rs. 550.

Agro Dutch Foods: Garnering cash inflows

THE preferential offer proposed by Agro Dutch Foods to a US based company may not improve the valuation of the stock in the near term. The board of directors have decided to issue 10,00,000 shares to Kannan Foods Inc, a US-based company, at a price of R s. 140 per share. The offering would raise Rs. 14 crores.

While the nature of operational support that the US company could provide is as yet unclear, the inflow of cash could strengthen the financial position of Agro Dutch Foods. However, the valuation may not improve by much till more tangible benefits of the deal become evident. The Agro Dutch Foods stock may, at best, be rangebound at the current price of Rs. 140. The possibility of some downside in the near term cannot be ruled out.

BL Research Bureau