Cerebra snaps winning streak as traders corner
Shares of Bangalore-based Cerebra Integrated Technologies snapped a 4-day winning streak to close at Rs 14.35, down 2.2% over the previous close. Buzz is that the stock is being cornered by traders close to “friendly circles” on talk that a Singapore-listed firm may pick up a strategic stake in the company. The overseas firm is said to be one of the largest electronic waste management in Singapore, and has been looking to expand its presence in India for some time.
According to people familiar with the development, the talks are at the final stage to set up India’s largest e-waste facility in India. Cerebra recently amended its main objects of memorandum of association to foray into electronic waste management. When contacted, V Ranganathan, MD, said confirmed that there were plans to foray into the e-waste segment.
Desperate house calls for stock recommendations
It is that phase of the bull run when analysts are unable to justify the valuations of shares by conventional ratios. Nevertheless, stocks have to be sold to eager clients, and there has to be some ‘story’ or ‘fundamental’ hook to it. As the joke goes, if a stock can’t be justified as a good buy based on the traditional price to earning multiple, then market it based on its price to cash earnings multiples.
If it still doesn’t look cheap, try the enterprise value to operating profits (EV/EBIDTA) ratio. If that doesn’t work, look at the market capitalisation as a multiple of sales. If that too fails, point out the “embedded value” in the stock in terms of holdings in group companies and other investments. And if everything fails, the scrip can still be marketed as a “concept stock”, only for the discerning investors with a long-term horizon. But above all, get the client to buy it.
Local institution’s sudden frenzy boosts Divi’s Lab
Shares of Divi’s Lab gained over 3% on Thursday to close at Rs 709.65, backed by heavy volumes. Over 10 lakh shares — more than 4 times the 2-week daily average volume — changed hands on both exchanges combined, but less than 30% of those trades resulted in delivery. Dealers said the sudden bout of buying came as a surprise, considering that the company’s third quarter numbers likely to be mediocre, just like those in the two quarters that preceded it.
A domestic institutional investor with a sizeable exposure to the stock is said to have whipped up the frenzy at the counter on Thursday. With most of the leading names already fully priced at current levels, investors now appear to be scouting for companies with not so impressive earnings, but those where a surprise performance could have a multiplier effect on the stock price.
Contributed by Apurv Gupta & Santosh Nair
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