Shanthi Gears in top gear on takeover buzz

Gears surged 12.46% to Rs 75.90 at 10:45 IST on BSE on reports Suzlon Energy, through its Belgium-based unit, is planning to buy a substantial stake in the company.
Shares of Suzlon Energy were down 1.72% at Rs 237.75.

Meanwhile, the BSE Sensex was down 100.20 points, or 0.66%, at 15017.19.

On BSE, 3.06 lakh shares were traded in the Shanthi Gears counter. The scrip had an average daily volume of 22,831 shares in the past one quarter.

The stock hit a high of Rs 80.85 and a low of Rs 71 so far during the day. The stock had a 52-week high of Rs 114.90 on 4 January 2008 and a 52-week low of Rs 48.05 on 24 March 2008.

The scrip had underperformed the market over the past one month till 7 August 2008, rising 6.65% compared to the Sensex’s 11.76% gain. It had, however, outperformed the market in the past one quarter, rising 3.61% compared to Sensex’s 12.82% fall.

The small-cap industrial gearbox maker has an equity capital of Rs 8.17 crore. Face value per share is Rs 1.

The current price of Rs 75.90 discounts its Q1 June 2008 annualised EPS of Rs 5.46, by a PE multiple of 13.90.

According to reports, Belgium-based Hansen Transmissions International NV, owned by Pune-based Suzlon Energy, is planing to buy between 50% and 100% of Shanthi Gears at around a 30% premium to the market price.

If the deal goes through, Hansen will have to make an open offer for additional 20% of Shanthi Gears in keeping with Indian laws, the reports suggested.

The net profit of Shanthi Gears rose 13.2% to Rs 11.17 crore on a 13.5% rise in sales to Rs 60.28 crore in Q1 June 2008 over Q1 June 2007.

Shanthi Gears manufactures and distributes gear boxes, gear wheels, geared motors, drafting units and conversion brackets. The company also distributes spares and complete sets of head stock gearing end conversions, coilers and related accessories and spare parts.