The Hindu Business Line : Balmer Lawrie Investments sees bulk deals

THE stock of Balmer Lawrie Investments (BLI), the listed special purpose vehicle for holding 61.8 per cent in the PSU Balmer Lawrie, on Friday attracted substantial increase in the trading volume on bulk buying. The counter recorded a traded quantity of over one lakh shares, up from Thursday's volume of just 328 shares. There were two block deals involving around 45,000 shares each at Rs 50.75 a share. The stock, however, closed at Rs 45 (Rs 45.50), after touching the day's high at Rs 50.90.

According to brokers, the stock price of the holding company is linked to the movement in the price of Balmer Lawrie, which finished at Rs 114.30 from Thursday's closing of Rs 115.05. During January, the BLI counter had seen a closing price peak at Rs 60.15, while Balmer Lawrie stock witnessed a high of Rs 148.85.

Balmer Lawrie, which is on the disinvestment (strategic sale) list, has been seeing investments through market purchases by the Patton group, controlled by the Budhias. It may be mentioned that the Kolkata-based Patton group had earlier placed formal expression of interest for Balmer Lawrie.

Patton International, a Budhia outfit, has increased its holding in Balmer Lawrie to 3 per cent in the third quarter from 1.49 per cent in the second quarter. Patton group has also been increasing its stake in BLI. An individual, Mr Bharat Patel, along with a corporate body called Pat Financial has also been acquiring both the Balmer Lawrie and BLI shares recently.

Mr C.B. Desai, owner of broking firm CD Equisearch, who holds a little over 0.7 per cent in BLI, told Business Line that it is often easier and cheaper to increase holding in Balmer Lawrie through market operations in BLI than in Balmer Lawrie itself. "One share of Balmer Lawrie means 2.3 of BLI stock. Whenever the price slips disproportionate to the BLI-Balmer Lawrie intrinsic valuation ratio, it generates a savings for the acquirer. For example, going by today's BLI closing price on the BSE, acquisition of one share of Balmer Lawrie comes at Rs 101, providing the purchaser a benefit of Rs 14," he explained.

Improvement in financials of Balmer Lawrie has also been behind the upward movement of the two stocks. Balmer Lawrie posted a 62 per cent growth in the net in the third quarter.