Shares of Ahmedabad Electricity Company (AEC) has risen an astounding 338 per cent in November, on rumours that power utility rivals BSES Ltd and Tata Power were in race to pick up stake in the company.
Today the share was frozen after hitting the 20 per cent upper filter on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The stock was at Rs 29.25 on November 1 and wound up at Rs 98.75 on the BSE today. The price was even higher on the NSE, where it closed at Rs 101.35 after being locked on the upper circuit almost till close of trade.
R V Shahi, chairman and managing director, BSES Ltd, could not be reached for comment as he was travelling, while a senior official of Tata Power dubbed buzz of his company picking up stake as "baseless".
According to the market grapevine, the Ahmedabad-based Torrent group, which owns AEC, is a "local presence" and it makes good sense for it to tie up with any of these two utilities in order to expand.
Another source said this could also be the beginning of a hostile bit but he himself was sceptical on the fruition of such an attempt stating that there is very little floating stock in the market.
The market capitalisation AEC is Rs 363 crore, with closely held shares amounting to over 50 per cent of the floating stock: thus, it is impossible for an outsider to acquire a majority of the shares without the consent of management and other insiders.
The capitalisation of the floating stock (i.e., that which is not closely held) is Rs 95.69 crore. Thus these shares are not very liquid and even small spurt in volumes push up the stock price.
The two companies are said to be in the race to acquire the beleaguered US power major Enron's Dabhol Power Corporation at a distress value, sources said.
The Ahmedabad Electricity Company Ltd produces and distributes electricity at five coal and gas-based power plants.
The other activities of the company includes undertaking of electrical installations, maintenance, civil construction and other power services and manufactures building materials.
Electricity production and distribution account for 95 per cent of revenues and electrical installation and 5 per cent building materials.
