Stock Review: Kavveri Telecom Products

 

 

Kavveri Telecom Products provides telecom infrastructure products and related solutions. In January 2011, its promoters issued  equity and warrants to themselves at 113 per share to raise their stake to 38% from 14.6%. On crossing the 15% threshold limit, the promoters have floated an offer to buy additional 20% shares. It has reported impressive sales growth in the nine months ended December 2010 though higher input costs restricted profit growth. The promoters hiking their stake to 38% in the company shows their confidence in the company's future growth. The proceeds are likely to be used for acquisitions. Given this, investors are advised to continue holding their stake.

 

 

The racks and enclosures maker APW President has witnessed two consecutive tough years after growing its net profit at a cumulative annualised growth rate (CAGR) of 23.8% between FY04 and FY09. In FY11 so far, the company has posted net loss. On this background, the acquisition by Schneider Electric in January 2011 came as a positive surprise. Schneider has agreed to buy 55% of the current promoters, along with an open offer for another 20%. Considering the tough patch that the company is going through now and the spurt in valuations, investors should tender their shares in the offer.