Market is locked in a trading range between 4700 and 5100 of Nifty. Though the budget announcements are around the corner they too are not likely to help in establishing a clear trend in the near term. In this range bound scenario stock specific approach will work best. One such stock which can be considered for accumulation is Innox Leisure. The company managed to acquire the entire holding of the promoter group at Rs 44, a very attractive buying price even after considering the Rs 90 crore debt which it agreed to take in its books. Thereafter it increased its holding to above 50% in this company. This deal immediately catapults Innox to the number two spot in the film exhibition segment and not too far behind the leader, Reliance Media. As expected the ADAG group has come out with an open offer to acquire 52 percent stake and prevent Innox from narrowing the lead in this segment. For Innox this has resulted in a very comfortable situation. It has acquired over 50 percent stake in Fame and therefore can never be forcefully edged out of the ownership of this company. Fame, along with its associate companies dealing in film production and distribution is a great strategic fit for Innox. The company has managed to catapult itself into the big league of film entertainment segment at a very reasonable price. It is not likely to tender shares to the ADAG group any time soon. However the ADAG group known for its aggression may keep revising the offer price higher in a bid to lure Innox. If at some stage the offer more than offsets the benefits of acquiring these assets the company may consider offloading its stake in favour of ADAG. That scenario will obviously result in a substantial profit to Innox and will help in creating a huge cash surplus which can be used for funding future expansions. Either way it is a win-win situation for investors. We recommend buying into this scrip at the current price and use dips to accumulate more.
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