Kinetic Scrip Crashes On Buzz Of Honda Exiting

The stock price of Kinetic Honda, the Pune-based scooter joint venture between Honda Motors and the Firodias has been crashing over the past few trading sessions due to sustained selling pressure at the counter.

Trading volumes too have witnessed a sharp spurt in the past few at this thinly traded counter. Yesterday 23,800 shares were traded on the BSE, while 8,200 shares changed hands on the NSE. On Thursday last week, 16,000 shares were traded on the BSE, which is far higher than the average daily volumes of 2,500-3,000 shares.

According to market reports, the reason for the fall in the price is that Honda, the 51 per cent owner of the company, has decided to sell its stake back to the Firodias, who hold 26 per cent of the company's equity.

 

Unconfirmed reports suggest that negotiations between the two promoters are currently underway but the parties are yet to arrive at a mutually-acceptable price.

When contacted, Arun Firodia, director, Kinetic Honda said: "We are very happy working with Honda. We would not like to feed the speculation going in the stock market based on the prices of the share."

The representatives of Honda Motors were not available for comment as they are currently in Japan.

However, market sentiment seems to have turned against the scrip. On Monday, trading was frozen at the counter at Rs 61 on the BSE and NSE after there were no buyers. Yesterday too, sustained selling pressure was witnessed at the counter, sending the stock crashing to a new 52-week lows of Rs 58.15 on the BSE.

The scrip finally closed at Rs 57.50 on the BSE down Rs 3.50 over the previous close and at Rs 57.90 on the NSE, a loss of Rs 3.80 over the previous close. The scrip has already shed 13 per cent in the last two trading sessions.

Sources said that the decision to part ways could also have been due to Honda's dissatisfaction over the performance of the joint venture.

Sales of Kinetic Honda's vehicles during the first quarter from April-June 98, inclusive of exports, have slid sharply to 15,700 units. This is a drop of nearly 36 per cent as compared to the first quarter of the previous fiscal. A disappointing performance considering the fact that all other players in the same field, Bajaj, LML, TVS Suzuki and Maharashtra Scooters, have posted an increase of nearly 20 per cent on an average.

Production during the first quarter has fallen by a whopping 45 per cent as compared to the corresponding period of the previous fiscal. The company produced 14,288 scooters this quarter as compared to 26,044 last quarter. Though Bajaj Auto recorded a negligible dip in production, LML, TVS and Scooters India have reported an increase in production.