The Hindu Business Line : Kesoram gains 7% on BK Birla’s announcement

Kolkata, June 28 The possible inclusion of Kesoram Industries in the domain of Mr Kumar Mangalam Birla, as outlined by Mr B K Birla on Wednesday, has come as a shot in the arm for the Kesoram stock, which today gained by over 7 per cent.

The Rs 10-face valued stock hit a high of Rs 465.75 on the National Stock Exchange, up from the opening mark of Rs 415, before closing at Rs 435.35. More than 18 lakh shares made up the trading volumes on the NSE.

Marketmen attributed the development to what they said were signals from Mr B.K. Birla that major companies in his group, including the diversified Kesoram, will go to his grandson. The ‘succession plan’, it was pointed out, will benefit the company in the long run.

The stock, which has its 52-week high and low at Rs 648 and Rs 196 respectively, witnessed sustained interest throughout the day – from traders who wanted to cash in on the rising trend and exit quickly without taking delivery.

Cementing gains

Among the factors that have lately prompted the Kesoram stock (before the announcement) are its cement operations. The latter contributes significantly to the company’s topline. Now, post-announcement, cement will be able to gel well with Mr Kumar Mangalam Birla’s own cement business, it is felt.

The immediate reference is to companies such as UltraTech Cement and Grasim Industries. Incidentally, both stocks went up substantially on Thursday along with other cement majors.

UltraTech, in fact, shot up by 7.2 per cent to close at Rs 870.40. It had opened at Rs 829.80 and reached the day’s high at Rs 876.15.

Grasim on the other hand advanced by 4 per cent after opening at Rs 2,525. It closed at Rs 2,626.55, the day’s high being Rs 2,675. These movements too are to be seen in the same context, market circles suggested.

LIC’s major stake

A number of major institutions hold a critical stake in Kesoram, according to the latest quarterly figures released by the company. These include Life Insurance Corporation, which has a large holding. Some of the others in this category are insurance companies (such as National Insurance and New India Assurance) and mutual funds (Franklin Templeton, Reliance, SBI etc).

The promoter group – which collectively holds 21.86 per cent of the company – includes Pilani Investment & Industries Corporation, which has the highest holding of 5.28 per cent. Some of the others, with about 1-3 per cent in most cases, are Jayashree Tea, Birla Institute of Technology & Sciences and Prakash Educational Society.

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