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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » LGL trading pattern

LGL trading pattern

3 posters

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1LGL trading pattern Empty LGL trading pattern Mon Jul 16, 2012 2:06 pm

prabashk


Senior Equity Analytic
Senior Equity Analytic


I think something is there other than dividend.

Right issue?

What do u think?

2LGL trading pattern Empty Re: LGL trading pattern Mon Jul 16, 2012 10:40 pm

hariesha


Vice President - Equity Analytics
Vice President - Equity Analytics

Probably YES.

But after giving 1.50 per share dividend, rights should be issued at a price above Rs.12.50 for NV share. This is when considered the cost involvement in dividend and rights processing. To issue a NV right @ 12.50 NV share should be moved close to Rs.25/-, as once announced share will have a drop due to present conditions.

A rights issue is possible only when controlling shareholders are in liquid position. Are they?

They sold LGL stake to EPF @ 48/-. This proceed itself and the dividend is sufficient Laugfs Holdings to fund a 1:4 rights at a price around 20/-.

BUT REMEMBER THESE ARE ONLY POSSIBILITIES AND SPECULATIONS. BUT THE LONG TERM OBJECTIVE OF THE COMPANY IS TO BECOME A DEVERCIFIED COMPANY. SO CASH CALLS ARE HIGHLY LIKILY.

3LGL trading pattern Empty Re: LGL trading pattern Tue Jul 17, 2012 9:28 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

If they want to go for rights issue, a dividend of 1.50 is too much IMO.. Still they could save some money offeing a .50 dividend..

4LGL trading pattern Empty Re: LGL trading pattern Tue Jul 17, 2012 9:54 am

hariesha


Vice President - Equity Analytics
Vice President - Equity Analytics

But then you cannot convince investors. Now company is offering a good dividend yield, by declaring a dividend of 1.50 per share. They can have a re-rating for the share price, which I think they have achieved to some extent already.

5LGL trading pattern Empty Re: LGL trading pattern Tue Jul 17, 2012 10:54 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Hmmm Hariesha good point.. and ur right.. Wink
Since LGL has passed its growth stage, it makes sense to convince investors for further investment and they needed a good div growth ratio too..
They've achieved the share price target to a greater extent now, so the 1.50 div worked for them it seems..

However, can they keep up the pace??

Also it could be not be a wise idea to announce a rghts issue at this time.. cuz they pay 1.50 and ask money from the invstors again, so the actaul dividend may price very less..

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