A truck driver drinks water in front of a line of Ashok Leyland Ltd. goods-carrier trucks parked at a toll plaza in Mumbai. (Photographer: Abhijit Bhatlekar/Bloomberg News)

BQEdge | There May Be More Pain In Store For Ashok Leyland’s Stock

BQEdge is specially curated for BQBlue subscribers. Every day this note will offer special equity market and stock-specific insights and flag select emerging trends in the tricky-to-trade derivatives market.

On Today’s Edition

  • Ashok Leyland’s stock chart suggests the truck maker may not be done with its downward journey.
  • How Bank of Baroda, Dena Bank and Vijaya Bank may react to the swap ratio for the three-way merger.

Short Build Up Seen In Ashok Leyland

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Dena Bank, Vijaya Bank May Correct As Merger Ratio Seen Not Favourable

Shares of Bank of Baroda, Vijaya Bank, and Dena Bank will be in focus today after Cabinet cleared a three-way merger and the banks announced share swap ratio for the transaction.

For every 1,000 shares of Dena Bank worth Rs 10 each, Bank of Baroda will issue 110 shares of Rs 2 each, the lender said in a stock exchange notice yesterday. Also, Vijaya Bank’s shareholders will get Bank of Baroda’s 402 shares of Rs 2 each for every 1,000 shares of Rs 10.

As the table suggests, there is a possibility of a cut in the prices of Dena Bank because the valuation price is over 25 percent lower than the current market price.

JPMorgan said that the merger swap ratio alleviates the pricing concerns and is mildly positive for Bank of Baroda, even though the merger synergies will take a long time to play out.

While Motilal Oswal said the swap ratio appears fair in respect to Dena Bank -- owing to the multiple challenges faced by the bank -- it believes Vijaya Bank shareholders have nothing to gain from this merger.

Bonus!