The newsmaker of the morning is undoubtedly, Century Textiles. Yesterday at the Board meeting, decision was taken to merge its cement unit into UltraTech Cement, in a bid to reduce debt and focus on its main money spinner, real estate.
As per the scheme, shareholders of Century will get one equity share of every eight shares of UltraTech held.
UltraTech will issue 1.4 crore new equity shares to the shareholders of Century, which will increase its equity capital to Rs 288.58 crore.
Though Century Textiles is among the top five losers on the BSE since morning, our Editor who has all along been recommending this stock, says that this is a positive move for Century.
He has explained, “The present price of Rs.1070 will get reduced to Rs.600, if we take effective share price of Rs.470 of UltraTech. Century gets debt free too and realty assets may be seen having NPV of 3 land parcels at Rs.7500 crore on a conservative basis. Paper division NPV maybe be taken at Rs.3500 crore and textiles at Rs.1000 crore. Al this adds to Rs.12,000 crore. Thus share price can move up by Rs.100-150 in next 2 months, even after providing discount to NPV of its residual business.”
Thus unlike what we see in the market today, Mr.Tulsian’s strong advice is to hold the stock for long term.
And the market as such has given it’s a big thumbs up for Ultratech because it among the top gainers on the BSE.
With this, UltraTech, will get three fully integrated cement units in MP, Chhattisgarh and Maharashtra, bringing in total capacity of 11.4 million tpa plus a grinding unit in West Bengal of 2 mtpa.
Century Textiles hit a new 52-week low today at Rs.976.75, down 8.5% while UltraTech Cement rose over 4% to Rs.4021.55.