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Cos on revamp mode score

S. Vaidya Nathan

IN a flat market, only stocks of obscure and unknown companies have had sharp swings in prices. Big names have had some modest gains and a few of them such as German Remedies have been in the red. Restructuring appears to be boosting the valuation of sel ect stocks.

The stock of ICI India has been on a steady uptrend and this has come ahead of the announcement of a major restructuring plan. The company plans to sell its polyurethane business to Huntsman, US. At the global level, ICI India's parent - ICI Plc - had so ld its business to Huntsman and the deal now struck would bring the Indian operations more in line with the parent's.

The proposed hive off of the paints business to a joint venture with Berger Paints would also strengthen the company. Both partners are to take a 50:50 stake in the joint venture. These moves could bring in cash to the tune of around Rs 100 crore and imp rove the focus of ICI and its operational profile over the next year or so.

Much in the same league as ICI India is IPCL. The stock is up again after languishing for some time now. The gains have to be viewed in the light of the intent indicated by the Union Government to start the divestment move afresh and complete it a time-b ound manner.

As a prelude, a restructuring of IPCL is on the cards with Indian Oil Corporation taking over the business unit at Vadodara. The remaining part of the company may come up for strategic sale. Last time, in a process that was not completed, there were two bidders at the end - the Reliance group and the Soros-Chatterjee combine. But any sharp upside form present levels do not seem likely as the disinvestment process may take time and the implications of the restructuring are as yet unknown.

The share price of Finolex Industries, which had been in weak terrain, has spurted following indications of a possible buyback. The stock is up 60 per cent in the last two weeks. The board of directors is to meet on November 27 to consider a possible buy back. As the buyback normally involves an offer at a premium to the market price, speculative interest appears to have emerged. If the buyback is announced close to the current price levels of around Rs 25, the possibility of price weakness enveloping th e stock does exist.

The stock of Gujarat Gas, which has had a good run in a flat market in recent months on the back of sound fundamentals and good institutional investor interest, has started to show some signs of weakness. The stock is down seven per cent in recent tradin g and the fact that the downward bias had been there for nine trading sessions in a row suggests the likelihood of some profit-taking. But the fact that the magnitude of price downtrend has been limited to around seven per cent may also point to interest on the part of new investors.

JB Chemicals, DSQ Biotech, Binani Industries, Cranex, Amara Raja Batteries and Jain Studios are some of the other stocks which have posted notable gains in recent days.