Stocks Radar: Bandhan Bank, Gruh Finance, Prabhat Dairy, India Cements

Indian equity benchmarks opened lower after a two-day rally. The S&P BSE Sensex traded flat at 35,820.30 and the NSE Nifty 50 fell as much as 0.15 percent to 10,757.15, as of 9:35 a.m.

The market breadth was tilted in favour of sellers. However, six out of the 11 sectoral gauges compiled by the NSE were trading higher led by the NSE Nifty Pharma Index’s 1 percent advance. On the other hand, the NSE Nifty Financial Services Index was the top loser, down 0.28 percent.

Here Are The Stocks Moving The Markets This Morning:

Bandhan Bank, Gruh Finance Slump After Merger Deal

Shares of the Kolkata-based bank declined as much as 5.5 percent to Rs 470.85 apiece, while shares of the housing finance company slumped 14.4 percent, the most in three months, to Rs 262.30 per share.

Gruh Finance is set to merge with Bandhan Bank in a share-swap deal. Shareholders of Gruh Finance will receive 568 shares of Bandhan Bank for every 1,000 shares of the housing finance company, according to an exchange filing.

Here’s What Brokerages Had To Say About Bandhan Bank:

Macquarie

• Maintained ‘Neutral’ with a price target of Rs 540.
• Acquisition of Gruh from minority shareholders’ point of view is a wrong decision.
• Shareholders will be paying 13 times for Gruh as against 4.5 times paid for Bandhan.
• Minority shareholders get short-changed with 26 percent dilution.
• Do not deny Gruh’s excellent franchise and growth story, but cannot ignore the price paid.

JPMorgan

• Maintained ‘Neutral’ with a price target of Rs 525.
• An expensive buy; merger synergies may be hard to come by.
• Merger allows a path for reduction of promoter shareholding, but more needs to be done.
• Combined entity will be a leader in micro finance and rural housing and should attract higher valuation.

Prabhat Dairy Surges After Foraying Into Animal Nutrition Business

Shares of the dairy products maker snapped its two-day blip and rose as much as 6.8 percent to Rs 98.20 per share.

The Navi Mumbai-headquartered company entered into animal nutrition business. The company, in its exchange notification, stated that it has taken preliminary steps by executing agreement with Denmark based DLG for developing two products to increase milk productivity and quality of cattle. The pilot phase will be for 4-6 months, the notification said.

The stock fell 60 percent in the past 12 months compared to a 5 percent gain in the S&P BSE Sensex Index.

CLSA Downgrades Cement Stocks; Says Price Hike Is A Must

Shares of cement manufacturers fell after brokerage firm CLSA lowered its stock recommendation and revised the price targets. CLSA said price hikes were a “must” for better stock price performance.

Here’s What CLSA Said On Cement Sector

• Lower energy prices are a relief, but cement prices are the key, and uncertainty prevails here.
• Yet again trim FY19-21 earnings per share estimates for the major players by 3-15 percent.
• Turn more cautious on the sector.
• India Cement: Downgraded to “Sell” from “Buy”; cut price target to Rs 75 from Rs 200.
• Dalmia Bharat: Downgraded to “Underperform” from “Buy”; cut price target to Rs 2,450 from Rs 2,550.
• Shree Cement: Downgraded to "Outperform” from “Buy”; cut price target to Rs 18,275 from Rs 20,100.

Exide Industries Falls After Plans To Set Up Solar Projects

Shares of the batteries manufacturer fell close to a percent to Rs 260.35 per share.

The company plans to invest up to 30 percent equity stake in Cleantech aggregating to Rs 20.05 crore for setting up captive solar power projects, according to its notification to the bourses. The arrangement will help in reduction of overall production costs, the notification said.

The stock traded at 24 times its estimated earnings per share for the coming year, according to data compiled by Bloomberg.

Endurance Technologies Gains After Acquiring Italian Firm

Shares of the auto-parts maker rose 3.2 percent intraday to Rs 1,250 per share.

Endurance Technologies’s Italian arm acquired aluminium die casting company Fonpresmetal. The acquired company has a capacity of 6,500 tonnes and the acquisition was for 8.16 million euros.

The trading volume was 12 times the 20-day average for this time of the day, Bloomberg data showed.