Ponds Spurts On Bonus Bonanza
The stock markets last week saw hectic trading in the Ponds India scrip which was in the limelight on account of the company declaring a 1:1 bonus after a long time. The last time Ponds declared a bonus was way back in 1990.
The announcement of bonus was eagerly awaited by small shareholders who had been demanding it for quite some time. Ponds Indias initial bonus issue had run in to litigation as the Karnataka High Court had restrained the company from allotting bonus shares from the share premium.
The scrip had shown an upward trend at the BSE and the NSE since August 1, 1997 with the market having got wind of a possible bonus announcement. The spurt in the scrip was particularly sharp in the last one week.
The scrip moved up significantly from Rs 1,767 (the closing price on September 5) to close at Rs 1919 (on September 12, Friday last) on the BSE. At the NSE, the scrip moved up from Rs 1,790 to Rs 1,908 during the same period.
The scrip had touched a high of Rs 2043 at the BSE and Rs 2044 at the NSE on August 10, when the bonus was declared, but prices fell down later .
The price rise for Ponds was 8 and 7 per cent at the BSE and NSE respectively. The number of shares traded in the scrip has been rising at both the exchanges over the past week.
From a traded volume of 5,366 on August 5, it went up to 29,599 shares at the BSE while it moved up from 15,050 shares to 1,35,000 shares over the past six trading days at the NSE.
Ponds India comes under the fast moving consumer goods sector (FMCG) which is the biggest plus point of the company because the consumer goods industry has witnessed a spurt in growth. The sector has been the least affected by the slowdown in economy.
Ponds India is now seeking to penetrate rural areas by launching low cost products like deodorants which can be within the reach of the masses. The companys products have strong brand image which is expected to help the marketing of its products aggressively.
According to Milind Karmarkar, head of research, Dalal and Barocha, the scrip could become an attractive investment at current levels of cum-bonus.