Institutional Buys Spin Up Saregama

Institutional buying in Saregama India's stock has increased its market capitalisation by 75.67 per cent from Rs 109.07 crore to Rs 191.61 crore on the Bombay Stock Exchange in 10 trading sessions, beginning March 11.

The surge in marketcap was, however, less on the National Stock Exchange where it went up by 41.57 per cent from Rs 135.04 crore to Rs 191.18 crore during the same period.

Market sources said the institutions took a fancy for the stock following the company's announcement of a foray into home video segment through a distribution arrangement with a Warner Brothers' subsidiary.

An official of a broking firm executing institutional trades in the stock said their participation was evident from the trading volume in the past 10 sessions. He said the combined volume on the BSE and NSE was over 15 lakh on March 21, the most active day in the recent past, against the public holding of 9.70 lakh.

"Going by the thumb rule of the capital market that at no point of time the entire public holding is traded, it can be concluded that a large portion of the trading was being generated by institutional shareholders, " he said.

It could not be confirmed which institution contributed how much to the stock spurt. Domestic institutions and bank hold 15.51 per cent, while foreign institutions account for 9.48 per cent in the company. Saregama has a paid-up equity of 93.42 lakh shares.

Hectic trading at the counter has confused a section of market men trying to find out the reason for the growth in volume as well as share prices.

A section of analysts said the rise in trading was based on a positive sentiment generated by the arrangement with the Warner Bros subsidiary rather than real fundamental changes.

Another section, however, believes that the arrangement with Warner Home Video is the beginning of such tie-ups and some more would follow soon.

However, both the sections believe that the foray in home video segment might prop the company's top line by Rs 20-25 crore.

As the net loss mounted to Rs 10.40 in the first nine months, the company is likely to slip to the red at the end of this fiscal. However, the management is hopeful of bouncing back to the black next year.

The company incurred a net loss of Rs 10.40 crore in the first nine months of the current year against the previous period's net profit of Rs 7.21 crore.

During the third quarter ending December 31, Saregama incurred a net loss of Rs 9.91 crore compared with the previous period's net profit of Rs 1.59 crore. Total revenue during the period stood at Rs 26.21 crore compared with Rs 45.69 crore in the previous fiscal.