The Telegraph
Since 1st March, 1999
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IBP rally keeps experts guessing

Calcutta, June 1: Over the last nine trading sessions, nearly two-third of IBP’s floating stock changed hands as the stock gained a whopping 78.5 per cent.

Floating stock or ‘free float’ is the portion of a company’s listed share capital that is freely negotiable on the market.

In other words, it is the aggregate non-promoter holding in a company. In the case of IBP, it is 20.42 per cent of its Rs 22.14 crore equity.

Over the last nine trading sessions, 29.23 lakh shares of IBP, which represent a little over 14 per cent of the firm’s equity, were traded on the BSE and the NSE. Over 45.21 lakh shares of the company are freely negotiable on the market.

Mandatory curbs were imposed on Friday as IBP gained 20 per cent. Trading continued at the frozen price — Rs 398.60 — before all sellers disappeared, leaving a queue of buyers high and dry.

Such an amazing rally in IBP was last witnessed before the government sold 33.58 per cent of the company’s shares to Indian Oil Corporation in February last year.

That rally was in the hope of large capital gains arising from the cash offer that Indian Oil made at Rs 1,551 per share subsequent to the disinvestment.

The government continues to hold 26 per cent in IBP, while Indian Oil controls 53.58 per cent. Institutional holding in IBP is a little over 9 per cent, while the public holds 11 per cent.

The stock has been rallying for the last one month; it peaked over the last nine days. The rally defies the poor financial results of the company — IBP’s net profit plunged 55 per cent to Rs 89 crore.

Before the company announced its results last week, the market was abuzz with rumours. Some thought the company would issue bonus shares, while others said IBP would report phenomenal results.

The IBP management scotched rumours of bonus issue, and the results patently were disappointing. Even the dividend of Rs 14 per share does not justify the rally.

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