The Hindu Business Line : De-merger hopes boost GE Shipping

Traders are buying the shares on the buzz that the company's offshore and drilling division, which is being de-merged, will get a very high valuation.

This view of market players is due to the high price-earning multiples most of the drilling companies command in the stock market.

For instance, Aban Loyd is trading at more than 30 times its earning of 2005.

Dealers said GE Shipping offshore division had a total income of Rs 348 crore and operating profit of Rs 159 crore.

The talk is that this division's revenues and profits are higher than companies such as Aban Loyd, Dolphin Off-Shore, Shiv-Vani Universal.

The exchange ratio expectation among market players is around 17 shares for 84 shares of GE Shipping.

There is also talk that the shares of the off-shore division would not have the face-value of Rs 10 as this division shares prices would be very high in absolute terms if the face-value is kept at Rs 10.

With a lower face value, the floating stock of the company would also be higher. The board of the company is meeting on September 15 to decide on the scheme of de-merger.

On Monday, the stock price of GE Shipping rose 3.91 per cent to Rs 215.35 on BSE with volumes of 9.58 lakh shares and on NSE it closed at Rs 215.55, up 3.95 per cent with volumes of 38.28 lakh shares.

Firm on good outlook

THE stock price of Steel Exchange, a company into steel manufacturing and trading, was locked in 20 per cent upper circuit on Monday. The stock closed at Rs 45.35 on the BSE with volumes of 17.88 lakh shares.

Dealers said the interest in the stock is due to the good outlook for the company in the next few years.

The talk is that the current financial year for the company is expected to be good and the company is likely to report EPS of around Rs 15. For March 2005, its EPS was Rs 5.83.

Profits this fiscal are expected to rise as the company's steel ingot plant has gone on stream in April.

Dealers say with steel prices remaining firm, the company's profits projection could be achieved.

Virendra Verma

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