Asian Cables

Previous week's close: Rs 12

The scrip price of Asian Cables slipped about 24 per cent last week to Rs 8.75. The fall became predictable the moment the merger of RPG Telecom, Asian Cables and Upcom Cables was announced. The problem was the swap ratio, which was fixed at 1:5:2, i.e. the shareholders of Asian Cables and Upcom Cables will get one share of RPG Telecom for every five shares of Asian Cables and every two shares of Upcom Cables respectively. At this rate, the cost of an RPG Telecom share for an Asian Cable shareholder works out to Rs 56. And the existing market price of the said scrip is only Rs 17.

 

However, it must be mentioned that the earnings per share of RPG Telecom, at about Rs 14, is nearly 11 times that of Asian Cables. Nevertheless, the immediacy of the price mismatch between the scrips of Asian Cables and RPG Telecom has more than killed any positives that can be considered in the shape of a better EPS. And the current trend is likely to continue.